Answer: Richard will owe $2024 after 1 year if he takes advantage of this option.
Explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1 + r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = 1588.57
r = 24.5% = 24.5/100 = 0.245
n = 12 because it was compounded 12 times in a year.
t = 1 year
Therefore,.
A = 1588.57(1+0.245/12)^1 × 12
A = 1588.57(1+0.245/12)^12
A = 1588.57(1+0.0204)^12
A = 1588.57(1.0204)^12
A = $2024.2