In the first month Karen deposits $200, so
\(a_1 = 200\text{.}\) Each month thereafter Karen receives 1% interest (one-twelfth of 12% annual interest) on the previous month’s balance, and then adds $200 to the total. For example, before she makes her deposit in the second month the account has
\begin{equation*}
200 + 0.01 (200) = 1.01(200)~\text{dollars}
\end{equation*}
She then adds $200 to this amount for a total of
\begin{equation*}
a_2 = 1.01(200) + 200 ~\text{dollars}
\end{equation*}
In general, after the
\(n^{th}\) deposit Karen’s account contains
\(a_n\) dollars. In the next month she earns 1% interest on that balance, giving her
\begin{equation*}
a_n + 1.01 a_n = 1.01 a_n ~\text{dollars}
\end{equation*}
Then she deposits another $200 for a total of
\begin{equation*}
a_{n+1} = 1.01 a_n + 200 ~\text{dollars}
\end{equation*}
Thus, the recursive sequence is defined by
\begin{equation*}
a_1 = 200, ~~~ a_{n+1} = 1.01 a_n + 200 ~\text{dollars}
\end{equation*}