Question

Greg deposits $2000 into an account that pays simple interest at a rate of 6% per year. How much interest will he be paid in the first 5 years?

Answer 1

Since the number increases, each year Greg has 106% of what he had last year. Divide 106 by 100 to get 1.06, which we will multiply by 2000 five times. ((1.06 x 2000)^5) This is 2676.45, rounded.

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Answer 2

Because the number increases, every year he has 106% of what he had the previous year. We can use this to get a multiplier, we divide 106 by 100 which is equal to 1.06, this is our multiplier. now we use multiply 2000 and 1.06 5 times (or alternatively we could do 2000x1.06 to the power of 5) this equals 2676.4511552 which is then rounded to 2676.45

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