Answer :
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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