Question

Suppose you have 100$ in a savings account earning 2% interest a year. After five years, how much would you have?

A. more than $102
B. exactly $102
C. less than $102
D. None of the above

Answer 1

Answer: A. more than $102

Explanation:

The formula for compound interest(compounded yearly) is ;

A = P(1+r)^n

P= principal =$100

r = yearly rate = 0.02

n = number of years. = 5

A = 100(1+0.02)^5

A = 100(1.02)^5

A = $110.41

Therefore, it's more than $102