Compound

Quote:

Originally Posted by Nusc

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?

The basic growth of the debt is governed by:

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

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

So:

$<br /> X_n=(1+r)^n X_0<br />$

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

CB