Question

If you have $100 in a savings account earning 3% interest per year, how much will you have in

two years?

Answer 1

The interest formula is as follows:

Amount Invested · Rate = Interest Earned

If we invest $100 at 3% interest per year,

how much do we earn that year?

Well based on our formula, we can simply multiply 100 · 3%.

Think of the 3% as 3/100.

So we have 100 · 3/100 and the 100's cancel and we're left with 3.

So $3 is earned in 1 year.

So after two years, you will have double that or $6.

Answer 2

$106

Explanation:

You have 100$ in savings account

Interest rate =3%

Time = 2 years

Total in 2 years:

• 100 + 2*3% = 100 *1.06= $106