A bank offers a cash advance credit card at an interest rate of 24%, and no payments required for 3 years. What amount is closest to what you will owe if you borrow $3000 now and make no payments?
A) $4000 B.) $5000 C). $6000
Answer: The amount owing increases by 24% each year. The amount owing at the end of one year is $3000(1.24) and the amount owing at the end of 3 years is $3000(1.24)3 which is equal to $5719.87, which is closest to $6000. Answer C.
