Calculate to final loan amount of a $500 credit card loan with a %16 compound interest rate, compounded monthly, for a 1-year term.
-$580.00
-$86.14
-$586.14
-$583.20
The final loan amount can be calculated using the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final loan amount
P = principal loan amount ($500)
r = interest rate per period (16% or 0.16)
n = number of compounding periods per year (12)
t = number of years (1)
A = 500(1 + 0.16/12)^(12*1)
A = 500(1 + 0.01333)^(12)
A = 500(1.01333)^12
A = 500(1.174756)
A = $587.38
Therefore, the final loan amount is approximately $587.38. However, only the closest option provided is $586.14, so the answer would be $586.14.