Question

Stephanie has a credit card balance of $11,300. Her APR is 12% and the interest is compounded daily. If she makes no payments on her card for a year what happens to her balance at the end of 12 months

Answer 1

Stephanie's credit card balance at the end of 12 months would be $11,735.26.

Step-by-step explanation:

To calculate the balance at the end of 12 months, we need to use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

• A is the final amount (balance)
• P is the initial amount (credit card balance)
• r is the annual interest rate (APR) in decimal form
• n is the number of times the interest is compounded per year (365 for daily compound interest)
• t is the number of years (1 in this case since it's 12 months)

Plugging in the given values, we have:

A = 11300 * (1 + (0.12/365))^(365*1) = $11,735.26

Therefore, Stephanie's balance at the end of 12 months would be $11,735.26.