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25 August, 02:15

Your credit card company charges a monthly compound interest rate of 2.5%. If you have an outstanding balance (money that you owe) of $2500, how much would it cost you to pay off this debt 2 years later? (Assuming no additional charges on the credit card.) You can round the answer to the nearest integer.

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  1. 25 August, 02:25
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    FV = $4521.81

    Explanation:

    Giving the following information:

    Your credit card company charges a monthly compound interest rate of 2.5%.

    Debt = $2500

    n = 24 (monthly)

    We need to use the following formula to calculate the final value of this debt.

    FV = PV * (1+i) ^n

    PV = present value

    FV = 2500 * (1+0.025) ^24

    FV = $4521.81
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