Advanced MathVery hardBalance after two years of 5% interest
Advanced Math practice question
An account with $600 earns 5% interest each year, compounded annually. What is the balance, in dollars, after 2 years?
Answer: 661.5 or 661.50
600 × 1.05² = 661.50.
Common wrong answers
- If you answered 630
- 630 is after one year.
- If you answered 660
- 660 adds $30 twice, ignoring compounding.
- If you answered 694.58
- 694.58 is after three years.
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