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A business owner applies for a credit card to cover $13,000 in emergency expenses.
The credit card charges 19.99% annual interest compounded continuously. If no payments are made for 2 years, what will the balance on the card be, rounded to the nearest penny?
$15,855.25
$15,876.65
$19,337.60
$19,389.84

User Amp
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1 Answer

4 votes

Answer:

(d) $19,389.84

Explanation:

You want to know the credit card balance after 2 years if the initial balance is $13,000 and the interest rate is 19.99% compounded continuously.

Continuous interest

The formula for the value of the account is ...

A = P·e^(rt)

where P is the principal amount borrowed, r is the annual interest rate, and t is the number of years.

For the given values, the account balance will be ...

A = $13000·e^(0.1999·2) ≈ $19389.84

The balance on the card will be $19,389.84, choice D.

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PLEASE ANSWER QUICKLY WILL GIVE POINTS!! A business owner applies for a credit card-example-1