Question

Edgar accumulated $4,000 in credit card debt. If the interest rate is 30% per year, and he does not make any payments for 2 years, how much will he owe (in dollars) on this debt in 2 years by each method of compounding? (Simplify your answers completely. Round your answers to the nearest cent.)

Answer 1

Answer:

$7,459.12

Step-by-step explanation:

The formula for continuous compounding is

A = Pe^(rt), where P is the original amount, A is the accumulated amount, r is the interest rate as a decimal fraction, and t is the number of years.  We want to know how much he will owe on this original $5,000 credit card debt after 2 years.

A = $5,000e^(0.20*2)

  = $7,459.12

Step-by-step explanation:

hope this helps