If are invested at a rate of in COMPOUNDinterest then the interest is applied to the entire balance. Find the future value FV of an annuity. In financial mathematics this result is the Future Value of Annuity Due.
S P 1 r 1 r n 1 r.
When you multiply by 1005 it adds the interest to the starting amount. At the end of second month the man owes. So to find the new amount owing after one month it is the initial amount plus interest. The balances then form an geometricsequence with common ratio.