Question

Many credit card companies charge a compound interest rate of 1.8% per month on a credit card balance. Nelson owes $850 on a credit card. If he makes no purchases or payments, he will go deeper and deeper into debt.

Answer 1

The sequence will be

$850, 850 \times (1.018)^1, 850 \times (1.018)^2, 850 \times (1.018)^3, 850 \times (1.018)^4, ...$

That's

$850, 865.30, 880.875, 896.731, 912.872, ...$

Answer 2

Answer:

We will do $850(1.018)^{x}$ to know how much Nelson will go into debt with each passing month.

Step-by-step explanation:

Many credit card companies charge a compound interest rate of 1.8% per month on a credit card balance.

Means each month the rate increases exponentially.

Given is - Nelson owes $850 on a credit card and makes no purchases or payments, he will get into debt in the following way:

We will do $850(1.018)^{x}$

Here x represents the time.

$850 was for the first month.

$850(1.018)^{2}$ = $880.87 is for the 2nd month.

$850(1.018)^{3}$ = $896.73 is for the 3rd month.

$850(1.018)^{4}$ = $912.87 is for the fourth month.

$850(1.018)^{5}$ = $929.30 for fifth month and so on.