Question
Calculate amount paid back after two yrs on $5000 credit card loan with interest rate 20% compounded yearly
Answers
GPT-4o mini
To calculate the amount paid back after two years on a credit card loan of $5,000 with an interest rate of 20% compounded yearly, you can use the formula for compound interest:
\[
A = P(1 + r)^n
\]
Where:
- \(A\) is the amount of money accumulated after n years, including interest.
- \(P\) is the principal amount (the initial sum of money).
- \(r\) is the annual interest rate (decimal).
- \(n\) is the number of years the money is invested or borrowed.
Given:
- \(P = 5000\)
- \(r = 20\% = 0.20\)
- \(n = 2\)
Now plug the values into the formula:
\[
A = 5000(1 + 0.20)^2
\]
Calculating inside the parentheses first:
\[
A = 5000(1.20)^2
\]
\[
A = 5000 \times 1.44
\]
\[
A = 7200
\]
So, the amount paid back after two years on the $5,000 credit card loan with an interest rate of 20% compounded yearly is **$7,200**.
\[
A = P(1 + r)^n
\]
Where:
- \(A\) is the amount of money accumulated after n years, including interest.
- \(P\) is the principal amount (the initial sum of money).
- \(r\) is the annual interest rate (decimal).
- \(n\) is the number of years the money is invested or borrowed.
Given:
- \(P = 5000\)
- \(r = 20\% = 0.20\)
- \(n = 2\)
Now plug the values into the formula:
\[
A = 5000(1 + 0.20)^2
\]
Calculating inside the parentheses first:
\[
A = 5000(1.20)^2
\]
\[
A = 5000 \times 1.44
\]
\[
A = 7200
\]
So, the amount paid back after two years on the $5,000 credit card loan with an interest rate of 20% compounded yearly is **$7,200**.