Answer:
$110.41
Explanation:
Provided that the interest is a<em> "compounding interest," </em>you will have $110.41 in 5 years. A compounding interest allows you to<em><u> calculate the interest you can earn on your </u></em><em><u>accumulated interest over time in addition to your deposit</u></em>.
Let's calculate the interest on a yearly basis.
1. First year = $100 x 20% (0.02) = $2
<em>You have to add $2 to the initial deposit of $100.</em>
2. Second year = $102 x 20% (0.02) = $2.04
3. Third year = $104.04 x 20% (0.02) = $2.0808
- 104.04 + $2.0808 = $106.1208
4. Fourth year = $106.1208 x 20% (0.02) = $2.122416
- $106.1208 + $2.122416 = $108.243216
5. Fifth year = $108.243216 x 20% (0.02) = $2.16486432
- $108.243216 + $2.16486432 = $110.408 or $110.41
<em>After five years, you will have $110.41.</em>