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

Answer:

$1545.65.

Step-by-step 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.

$A=P(1+\frac{r}{n})^{nt}$, 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. $13.66=\frac{13.66}{100}=0.1366$

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

$A=1,349.34(1+\frac{0.1366}{12})^{12*1$

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

$A=1.349.34(1.011383333)$

$A=1,349.34*1.145485275522$

$A=1,545.64910167397$ ≈ $$1545.65$

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