Question

1. Brad spent $1,200 on a credit card this

month. The credit card charges 24.77%
interest compounded continuously. If
Brad does not have to pay any monthly
minimums and makes no payments, how
long will it take until Brad owes the
credit card company $2,400?

Answer 1

about 3 years

Explanation:

Using the compound interest formula;

A = P(1+r)^t

Given

Amount A == $2400

Principal P = $1200

rate = 24.77% = 0.2477

Substitute the given values

2400 = 1200(1+0.2477)^t

2400/1200 = (1+0.2477)^t

2 = (1+0.2477)^t

ln 2 = tln1.2477

t = ln2/ln1.2477

t = 3.13

Hence it will take about 3 years until Brad owes the credit card company $2,400