SOLUTION: Hi, I am having trouble with this problem, I would appreciate it if you could help me with the question: A certain department store requires its credit card customer to pay intere

Question 1065903: Hi, I am having trouble with this problem, I would appreciate it if you could help me with the question:
A certain department store requires its credit card customer to pay interest on unpaid bills at the rate of 18% per year compounded monthly. I f a customer buys a television set for $500 on credit and makes no payments for one year, how much is owed at the end of the year?
Answer by KMST(5328) (Show Source): You can put this solution on YOUR website!
A percentage is a ratio,
and it can often be seen as a fraction, with for denominator,
or as a decimal:
.
The monthly interest rate, as a decimal, would be

The interest each month would be
.
If a month starts with a certain ,
at the end of the month, the balance will be
.
Then, at the end of the next month,
that new balance would be multiplied times again to get
.
After months, the new balance would be , and so on.
Starting with $500 balance,
after months the balance would be
.
(The exact result is ,
but I expect the store to round fairly to $712.88).
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