Question

Cameron has a balance of $10,200 on his credit card. He threw the card away so he can never use it again. He has 3.5 years to pay off the balance. The interest rate on his card is 21%.

At the end of the 3.5 years, how much money in interest alone will Cameron have paid?

When Cameron finally pays off his credit card, how much will he have paid in all?

Answer 1

the interest is $9,676.91 and the future value amount is $19,876.91

Explanation:

The computation is shown below;

The future value is

= Present value × (1 + rate of interest)^number of years

= $10,200 × (1 + 0.21)^3.5

= $19,876.91

Now the interest amount is

= Future value - present value

= $19,876.91 - $10,200

= $9,676.91

Hence, the interest is $9,676.91 and the future value amount is $19,876.91