Question

A customer purchases a television set for $800 using a credit card. the interest is

charged on any unpaid balance at the rate of 18% per year compounded monthly. if
the customer makes no payment for one year, how much is owed at the end of the
year? (not including any penalties.)

Answer 1

FUTURE VALUE=956.48$

Explanation:

i=18%=0.18

pv =$800

compound monthly =12

eff=(1+0.18/12)^12 -1

=19.56% =0.1956

f= pv(1+eff)^n here n=1 year eff=0.1956

=800*(1+0.1956)^1

=$956.48