Jensen needs to pay 8691.07$ to clear off her debt at the end of 4 years
Step-by-step explanation:
Step by step solution-
Details as given in the question-
Purchase cost of furniture- 4800$
Term of credit- 4 years
Annual percent rate charged- 16%
Condition- No down payment done at the beginning
Amount needed to be re-payed at the end of the credit term
We know that
Amount= Principal*(1+rate/100) ^time (for compounded interest rate type)
Substituing the values of principal as purchase cost, rate and time
Amount= 4800*(116/100)⁴
Amount needed to be re-payed to ward off the credit = 8691.07$