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Phillip has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the second year if the investment earns simple interest compounded annually
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22 votes
22 votes
Phillip has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the second year if the investment earns simple interest compounded annually

User Mythereal
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1 Answer

7 votes
7 votes

Answer:

end of year 1

interest = 200 * 10 / 100 * 1

= principal * rate * time / 100

= 20

adding to the principal + interest

amount for second year : 200 + 20 = 220

now calculating interest for second year

interest = 220 * 10 /100 * 1

= 22

final amount after 2 years is

220 + 22

= $242 is the answer!

User Wlangstroth
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2.8k points
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