Walmart charges 1.25% / month on the unpaid balance of a charge account. Interest is compounded monthly. A customer charges $600 and does not pay her bill for 6 months. What is her bill at that

time?

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- Nov 29th 2009, 11:00 PMNuscCompound
Walmart charges 1.25% / month on the unpaid balance of a charge account. Interest is compounded monthly. A customer charges $600 and does not pay her bill for 6 months. What is her bill at that

time? - Nov 30th 2009, 12:18 AMCaptainBlack
The basic growth of the debt is governed by:

$\displaystyle X_n=(1+r)X_{n-1}$

where $\displaystyle X_n$ is the amount owing after $\displaystyle n$ months (so $\displaystyle X_0=600$ dollars) and $\displaystyle r$ is the interest rate as a decimal fraction (so $\displaystyle 1.25\% = 0.0125$)

So:

$\displaystyle

X_n=(1+r)^n X_0

$

All of which should be in your notes, so where exactly are you having problems.

CB