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If you charge $500 on a credit card today, how much will the balance be in two years (assuming
fees) if the credit card has a 10% APR that is compounded-
A. once a year?
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B. once a month?
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C. once a week?



Answer :

GinnyAnswer

Final answer:

Explanation of how to calculate credit card balance with compound interest for different compounding frequencies.


Explanation:

To calculate the balance on a credit card after a certain time period with compound interest, you can use the formula:

P = P0 * (1 + r/n)nt

where:

  • P is the ending balance
  • P0 is the initial principal (amount charged)
  • r is the annual interest rate (in decimal form)
  • n is the number of times interest is compounded per year
  • t is the number of years

A. For compounding once a year with a 10% APR over 2 years, the balance will be [tex]$610.51.

B. For monthly compounding, the balance will be $[/tex]621.05.

C. With weekly compounding, the balance will be $622.04.


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