Question

Because Jerrod missed a payment, the credit card company automatically raised the interest rate to 24%. How many years would it be until his balance doubles, assuming he continues to make no payments

Answer 1

Answer:

The principal will double in 3 years and 3 months

Explanation:

the current balance is the Principal. The bank will apply this 24% rate for now on, we need to determinate the time at which the amount owed is 2 principals:

$Principal (1+0.24)^{n} = 2 \times Principal\\(1+0.24)^{n} = 2 \\log_{1.24} 2 = n \\n = log 2 \div log 1.24 = 3.222271094$

We convert the residual in months:

0.22 x 12 = 2.66

We detemrinate that n will be 3 years and almost 3 months

Answer 2

A little over three years.  If for instance, Jerrod's current balance is 1,000. Multiplying this figure by 1.24, four times will result to 2,364. So that's more than double.  Hence, the answer is a little over 3 years until his balance doubles.