If you have a $600 balance on a credit card that charges 17% interest compounded monthly, how
Long will it take that amount to reach $3,000 if you don't make any payments?
A)9.53 years
B)10.25 years
C)114.41 years
D)0.85 years

Question

Quizplus · Accepted Answer

The problem can be solved using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($600), r is the annual interest rate (17% or 0.17), n is the number of times that interest is compounded per year (monthly compounding means n=12), and t is the time the money is invested or borrowed for, in years. Rearranging the formula to solve for t gives us the time it will take for the $600 to grow to $3,000 at an interest rate of 17% compounded monthly. Plugging the numbers into the formula and solving for t gives a result of approximately 9.53 years.

If You Have a $600 Balance on a Credit Card