Asked by Heidi
Tommy owes 3000 on his credit card. He is paying 14.5% interest compounded monthly. If it takes him 4 years to pay off the balance, what was the total amount that he ended up paying.
Okay, so it gives me the equation a=p(1+r/n)^nt
I did 3000(1+.145/12)^48 and got $5339.52
Is this correct?
Okay, so it gives me the equation a=p(1+r/n)^nt
I did 3000(1+.145/12)^48 and got $5339.52
Is this correct?
Answers
Answered by
Steve
This is the formula for compound interest on a fixed deposit.
It is not the formula for loan amortization, which takes into account the declining balance.
Better check you formula list.
However, if that's the formula you were supposed to use, you did it right.
It is not the formula for loan amortization, which takes into account the declining balance.
Better check you formula list.
However, if that's the formula you were supposed to use, you did it right.
Answered by
Heidi
It is the formula my teacher gave me so I suppose that's what I'm supposed to do. Thank you.
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