Math question

Question

 you pay no interest for one year the interest is still calculated 15% per year, compounded monthly on the price of the merchandise. what would Lia pay for a $1950 computer system after one year

Answer 1

Compound interest formula:

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

 

A = final value

P = principal amount = $1950

r = interest rate as decimal = .15

n = number of times compounded each year = 12

t = time in years = 1

 

A = 1950(1+.15/12)¹²⁽¹⁾ = 1950(1.0125)¹² = $2,263.47

Answer 2

Amount paid after 1 year = 1950 (1 + 15/1200)¹² = 2263.47