Advanced MathVery hardAmount after two years of compound interest
Advanced Math practice question
An investment of $2,000 grows by 10% each year, with the growth compounded annually. What is its value, in dollars, after 2 years?
Answer: 2420
2,000 × 1.1² = 2,000 × 1.21 = 2,420.
Common wrong answers
- If you answered 2200
- 2200 is after one year.
- If you answered 2400
- 2400 adds 10% of 2,000 twice, ignoring compounding.
- If you answered 2662
- 2662 is after three years.
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