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supermario supermario
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11 years ago
You owe 900 dollars on your credit card. You do not pay your credit card for a full year. The interest rate is 21% per year, compounded daily.

a) What is the total amount owed?
b) How much of that is interest fees?
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#1
11 years ago
Quote from: supermario (11 years ago)
You owe 900 dollars on your credit card. You do not pay your credit card for a full year. The interest rate is 21% per year, compounded daily.

a) What is the total amount owed?
b) How much of that is interest fees?


You need to use A = P(1 + i)^n

P is 900, i is 0.21 divided by 365 (because compounded daily).

n is 365 (which represents the number of compounding periods)

A is the amount, which is what we're looking for.

A = 900(1 + (0.21/365))^365 = 1110.24

Therefore, you owe 1110.24, (1110.24 - 900 = 210.24 of which is interest (this answers part b)).

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Diesel
supermario Author
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#2
11 years ago
Thanks man Slight Smile
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