Question

Elliot invests 15000 in an investment certificate that pays 2% compounded annually. How much interest will he have earned in 2 years?

Answer 1

Answer:

First year:

$15300

Second year:

$15606

Step-by-step explanation:

First year:

300 is 2% of 15000, so we add that. The result we have is $15300.

Second year:

306 is 2% of 15300, so we add that to the original value. The result is $15606.

Side note:

All you need to know is the Interest Rate Formula: $p(1+r/100)^n$. By the way, that's the simple compound interest rate formula. The simple interest rate formula is $p+(r/100)^n$.