Suppose you have $100 in a savings account earning 2 percent interest a year. after five years, would you have more than $102, exactly $102 or less than $102?

more than $102
less than $102
exactly $102

Hey there! Hello!

For this problem, take the interest equation into account: .  is the interest,  is the principal amount that will be invested,  is the rate of interest per year (expressed in decimal form, where 90% is 0.9, for example), and  is the amount of time. Let's solve the amount of money gained from interest after one year:





That means 2 dollars are earned after one year. If $102 is the total after one year, and interest is earned yearly, it surely can't be $102 at the end of five years. So, let's solve for five years this time:





So, at the end of five years, $110 will be earned. This is more than $102 dollars, meaning that your first answer choice is the correct one. 

Hope this helped you out! Feel free to ask me any additional questions you may have. :-)

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