Question

John's account of 98.50 has been delinquent for 3 months. After 90 days office charges a 2% service charge, compounded monthly that is added to future bills. What would be the amount owed after 9 months? My math is 98.50 x 0.02 = 1.97 1.97 x 12 months = 23.64. Take 3 months off that and it leaves 17.73 add that to 98.50 = 116.23 for nine months. Please give break down Thanks

Answer 1

You did simple interest, supposed to compound and where did 12 months come from? It says 9 months.
compound for 6 months (9 months - 3 months)
98.50 * (1.02)^6
=98.50*1.12616
=110.93

Answer 2

How did you come up with (1.02)