Question

Mrs. Olga’s credit card charges an interest rate of 19% compounded annually. If her current balance is $250, what will her balance be after 3 years?

Answer 1

$421.30

Yearly Componded Interest

$250 * 19% = $47.50 = $297.50 <-- Year One Balance

$297.50 * 19% = $56.53 = $354.03 <-- Year Two Balance

$354.03 * 19% = $67.27 = $421.30 <-- Year Three Balance

Answer 2

$421.29

Explanation:

$250

19%

3 years

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• $250*1.19³= $421.29