AddieUnchained
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Sam is getting ready for a big date when he realizes that he has no money. His roommate, Bill, also has no money, but he has a credit card. Knowing that nobody will let Sam use Bill’s credit card, Sam asks Bill to pull out a cash advance for $120.00. Bill agrees under the condition that Sam is responsible for all interest that accrues on the cash advance which is a 30% interest rate, compounded monthly. 5 full years go by before the $120 cash advance is repaid. How much should Bill ask Sam to pay in interest for the cash advance?
a.
$3.88
b.
$112.80
c.
$120.00
d.
$232.80

Respuesta :

Amlia200
cash advance = 120

annual interest rate = 30% compounded monthly

term = 5 years

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

A = future value of the cash advance

P = principal or value of cash advance


r = interest rate

n = times interest is compounded

t = terms or years

A = 120 (1 + 30%/12)^12 * 5

A = 120 (1 + 0.025)^60

A = 120 (1.025)^60

A = 120 (4.40)

A = 528

528 total amount including principal.
528 - 120 = 408 total interest paid 
I hope this helps!!
373001607

Answer:

I just took the test, the answer is B.) $112.80


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