a bank credit card charges interest at the rate of 21% per year compounded monthly. If a senior in college charges $1500 to pay for college expenses, and intends to pay it in one year, what will she have to pay?

Question

anonymous · Answer

1500*(1+.21/12)^12

anonymous · Answer

1847.16

anonymous · Answer

how did you know to use that particular formula?

anonymous · Answer

The formula for compounding interest is
AV = PV * (1+r/n)^(rt)
AV is accumulated value
PV is present value or principle
r is annual interest rate
n is number of compounding periods per year
t is number of years