Question

Suppose the interest rate on your credit card is 16% compounded quarterly and you currently owe $2000 on it. If you don’t make any payments for 3 years, how much will you owe in 3 years?

Question 11 options:

	3152-3162
	3162-3172
	3172-3182
	3182-3192
	None of the above

Answer 1

We can solve it by using compound interest formula:

Where,
A = Amount you owe after 3 years
P = Amount you owe today
i = rate of interest
n = number of years
a = number of compounding in a year

When compounding is quarterly, there will be 4 compoundings in a year, which means a = 4.

Now, Substituting the values, we get:

Therefore, you will owe $3,202 at the end of 3 years.

From the options, we can see that none of the given choices matches the correct answer. So "None of the above" is the correct option.