Question

Jerrod owes $2,000 on a credit card that charges him an annual percentage rate of 18%. If Jerrod stopped making payments, how long would it be before the balance on his credit card reached $4,000?

Answer 1

If Jerrod stop making payments then the due payment in one year is:

2000 + 18% of 2000 = 2360.

In second year, the due payment is: 2360 + 18% of 2360 = 2784.80

In the third year, the due payment is: 2784.8 + 18% of 2784.8 = 3286

In the fourth year, 3286 + 18% of 3286 = 3877.48

So, in the beginning two months ( approx) fifth year, the due payment will reach 4000.

So, the answer is four years 2 months.

thanks!