final loan amount of a $500 credit card loan with a 16% compound interest rate, compounded monthly, for a 1-year term
To calculate the final loan amount, we can use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
A = the final loan amount
P = the principal amount (the initial loan amount)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = time in years
In this case:
P = $500
r = 16% = 0.16
n = 12 (compounded monthly)
t = 1 year
Using these values, we can plug them into the formula:
A = 500(1 + 0.16/12)^(12*1)
A = 500(1 + 0.013333)^12
A = 500(1.013333)^12
A ≈ 500(1.175543)
A ≈ $587.77
Therefore, the final loan amount of a $500 credit card loan with a 16% compound interest rate, compounded monthly, for a 1-year term would be approximately $587.77.