This question is about financial management. It is to be noted that it would take around 2.9 years for her balance to increase from $300 to $450.
What is the calculation for the above?
Note that according to the question,
After 4 years, Emma would owe about $525 for her original purchase of $300.
The equation will be:
300 * (1 + x)[tex]^{4}[/tex] = 525 (This is based on the compound interest formula_
⇒ (1+x)[tex]^{4}[/tex] = 7/4 (If we divide both sides by 300)
Hence
x = 0.1502
= 15.02%
When the balance ups from $300 to $450,
We can state that:
300 * ( 1+ 15.02%) [tex]^{y}[/tex] = 450
⇒ Hence, y = 2.9 years.
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