compound interest 7th grade

Question

karen bought a pair of shoes for $350. she charges them to her credit card which charges a 15% compound interest rate. how much will karen owe for the shoes at the end of 2 years?

Answer 1

A=350e^2(.15)

= about $472.45 if compounded continuously

if compounded annually, then

A = 350(1+.15)^2 = about $462.88

if compounded daily monthly or quarterly

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

A=350(1+.15/n)^2n where n = number of compounding periods per year

n=365.25 for daily, n=12 for monthly and n= 4 for quarterly compounding

assuming r=.15= 15% is the APR, annual percentage rate