Question

A bank credit card charges interest at the rate of 24% per year, compounded monthly. If a senior in college charges $1,500 to pay for college expenses, and intends to pay it in one ye
what will he have to pay? (Round your answer to the nearest cent.)

$

Answer 1

Answer: 1902.36

Step-by-step explanation:

When interest is compounded monthly , the formula to find the accumulated amount is

$A=P(1+\dfrac{r}{12})^{12t}$ , where P = principal value , r = rate of interest , t = time.

As per given,

r= 24% =  0.24

P= $1500

t= 1 year

Put all value in formula , we get

$A= 1500(1+\dfrac{0.24}{12})^{12\times 1}\\\\=1500(1+0.02)^{12}\\\\=1500(1.02)^{12}\\\\=1500(1.26824179456)\approx1902.36$

Hence, he need to pay $1902.36.