Question

Logan owes $7,000 on his credit card. He stops using it, but he can’t afford to make any payments. The credit card has an 18% interest rate that compounds monthly. How much will he owe after 2 years?

Answer 1

$10,006.52

Explanation:

According to the question:

Principal (P) = $7000

Rate of interest (r) = 18%

Period of compounding (n) = 12.

Time (t) = 2 years.

We now that formula for future value is:

FV=P(1+r/n)^nt

Substitute the value in the above formula

FV=7000(1+0.18/12)^12*2

= $10,006.52