Jerry owes a loan shark $200. The loan shark charges Jerry 10% interest compounded monthly. (This means that every month the loan shark adds Jerry's interest amount to his loan, and the next month Jerry has to pay 10% on the new total). If Jerry doesn't make any payments, how much (in dollars) does the loan shark charge in interest the second month?
How much does the loan shark charge in interest the first month? ** First calculate how much the loan shark charges in interest the first month by multiplying the loan amount by the interest rate: $200 * 10% = $<<200*10*.01=20>>20
How much does Jerry owe after the first month? ** Now add the interest amount to the original amount of the loan to find Jerry's new total: $200 + $20 = $<<200+20=220>>220
How much does the loan shark charge in interest the second month? ** Now multiply the new total by 10% to find out how much Jerry owes the loan shark in interest the second month: $220 * 10% = $<<220*10*.01=22>>22
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