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Q: Credit card charges compounded monthly ( Answered 4 out of 5 stars,   0 Comments )
Question  
Subject: Credit card charges compounded monthly
Category: Miscellaneous
Asked by: fredewq-ga
List Price: $7.50
Posted: 02 Nov 2002 17:01 PST
Expires: 02 Dec 2002 17:01 PST
Question ID: 96886
My credit card charges 21.3% APR, compounded monthly, on unpaid
balances. If my current balance is $756 and I don't make any payments
for 6 months, how much will I owe? (Hint: Use the compound interest
formula to write the balance of your credit card as a function of
time.)
Please show work. Thanks
Answer  
Subject: Re: Credit card charges compounded monthly
Answered By: haversian-ga on 02 Nov 2002 17:24 PST
Rated:4 out of 5 stars
 
F(t) = P(1 + i/n)^(nt)  (i is the yearly interest rate, n is the
number of compoundings per year (12 in the case of monthly compounded
interest), and t is the time in years)

In your case, i = .213, n = 12, and t = 0.5

756 * (1 + .213/12)^(12*0.5) = $840.1725
fredewq-ga rated this answer:4 out of 5 stars
For your information I am a disabled student and this is my last term
in mathmatics. I had surgery 2 weeks before school started and I have
found it very difficult to to keep up. By the way my GPA is 3.85!

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