Question

Chris made a $6925 purchase on his credit card that has an annual interest rate of 18% that compounds continuously. If he does not make a payment for three years, how much does he owe at the end of the three years?

Answer 1

$11,883.35

Step-by-step explanation:

The formula for calculating continuous compounding is given below

F=p*e^it

In this question:

F=future value of the amount borrowed today=?

p=amount borrowed today/Purchases made by chris through credit card=$6,925

e=mathematical constant=2.7183

i=interest per annum=18% per annum

t=number of years=3 in this case

F=6,925*e^18%*3

F=$11,883.35