For a 7-day Hawaii vacation, Beth borrowed $2,990 for 5 months at an annual rate of 11.7%, compounded monthly.What did she owe?
A)$3,185.54
B)$3,138.63
C)$3,595.53
D)$6,371.09
E)$3,994.82

Question

Quizplus · Accepted Answer

First, we need to calculate the monthly interest rate:

11.7% / 12 = 0.975% per month

Next, we need to find the total number of months Beth borrowed the money for:

5 months x 1 month/30 days = 150 days
150 days / 30 days = 5 months

Now we can use the compound interest formula:

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

Where:
A = amount owed
P = principal (amount borrowed)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = time in years

Plugging in our values:

A = $2,990(1 + 0.011625)^(12*5/12)
A = $2,990(1.011625)^5
A = $3,138.63

Therefore, Beth owed $3,138.63 at the end of her 7-day Hawaii vacation. Answer B is the only option that matches this amount.

For a 7-Day Hawaii Vacation, Beth Borrowed $2,990 for 5