Calculated the amount to be paid back after 3 years on a $3000 credit card loan with an interest rate of 15% compounded yearly.

1 answer

To calculate the amount to be paid back after 3 years on a credit card loan with an initial principal amount of $3000 and an interest rate of 15% compounded yearly, you can use the formula for compound interest:

\[ A = P(1 + r)^t \]

where:

  • \(A\) is the amount of money accumulated after n years, including interest.
  • \(P\) is the principal amount (the initial amount of money).
  • \(r\) is the annual interest rate (decimal).
  • \(t\) is the number of years the money is invested or borrowed.

In this case:

  • \(P = 3000\)
  • \(r = 0.15\) (15% as a decimal)
  • \(t = 3\)

Plugging in the values:

\[ A = 3000(1 + 0.15)^3 \]

Now calculate \(1 + 0.15\):

\[ 1 + 0.15 = 1.15 \]

Now raise it to the power of 3:

\[ 1.15^3 \approx 1.520875 \]

Now multiply this by the principal amount:

\[ A \approx 3000 \times 1.520875 \approx 4562.63 \]

Thus, the amount to be paid back after 3 years on a $3000 credit card loan with a 15% interest rate compounded yearly is approximately $4562.63.