Answer:
$16422.83
Step-by-step explanation:
Given that:
Debt in credit card = $12000
Interest rate = 4%
Time for which Tom does not make any payment = 8 years
The debt is compounding annually.
To find:
The total debt = ?
Solution:
This problem is nothing but a problem of compound interest in which we have to find the amount after 8 years compounding annually at a rate of 4% for the principal amount of $12000.
So, Principal, P = $12000
Rate of interest, R = 4%
Time, T = 8 years
Formula for Amount is given as:
[tex]A = P(1+\frac{R}{100})^T[/tex]
Putting all the given values:
[tex]A = 12000(1+\frac{4}{100})^8\\\Rightarrow A = 12000(1+0.04)^8\\\Rightarrow A = 12000(1.04)^8\\\Rightarrow A = 12000\times 1.36856905\\\Rightarrow A = \$16422.83[/tex]
So, the Tom owes a total of $16422.83 after 8 years.
