00:01
All right, so this is a great real -life problem about credit card interest.
00:03
We're going to need the compounding interest formula, which looks like this, where a is your final amount, p is your starting amount.
00:12
1 plus r, this is the rate, the interest rate, divided by the number of times it's compounded, raise to the number of times it's compounded times the time.
00:23
So a 24 % rate, that's going to be my r, but i'm going to use 0 .24 the decimal.
00:29
If it's compounded monthly, that means the n value is 12.
00:33
That rate's going to get divided into the 12 months of the year, and it's going to be taken 12 different times.
00:39
So that's why n appears these two times here.
00:41
The $500 purchase, that's going to be the principal that we start with, and there are no payment...