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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