Question

Victor has a credit card with an apr of 13.66%, compounded monthly. he currently owes a balance of $1,349.34. assuming that victor makes no purchases or payments, how much will he owe after one year, to the nearest cent? a. $1,349.34 b. $1,533.66 c. $1,545.65 d. $1,364.70

Answer 1

$1545.65.

Explanation:

We have been given that Victor has a credit card with an APR of 13.66%, compounded monthly. He currently owes a balance of $1,349.34.

To solve our given problem we will use compound interest formula.

`A=P(1+(r)/(n))^(nt)`, where,

A = Final amount after t years,

P = Principal amount,

r = Interest rate in decimal form,

n = Number of times interest is compounded per year,

t = Time in years.

Let us convert our given interest rate in decimal form.
`13.66=(13.66)/(100)=0.1366`

Upon substituting our given values in compound interest formula we will get,

`A=1,349.34(1+(0.1366)/(12))^{12*1`

`A=1,349.34(1+0.011383333)^{12`

`A=1.349.34(1.011383333)`

`A=1,349.34*1.145485275522`

`A=1,545.64910167397` ≈ $
`1545.65`

Therefore, Victor will owe an amount of $1545.65 after one year.