Question

Eric has $90 in a savings account that earns 10% interest, compounded annually. To the nearest cent, how much interest will he earn in 2 years?

Answer 1

You start with finding `10%` of `90.`
`$90 * .1 = $9`
You add the money and the interest to get `$99` for the first year. However, the next year is different. It's compound interest, so you have to multiply `10%` by `$99`.
`$99 * .1 = $9.90`
`$99+ $9.90 = $108.90`
The total would then be `$108.90`.

That's it! Remember to keep on learning!
- Alana R.