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?

Answer 1

A = P (1 + r/n)^nt
A = 1,349.34(1+0.1366/12)^12
A = 1545.65

answer: he will owe $1545.65 after one year

Answer 2

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,

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

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

$A=\ 1,349.34(1.011383333)^{12}$

$A=\ 1,349.34*1.145485275522$

$A=\ 1,545.64910167397\approx \ 1545.65$

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