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Question 117

Starting with 1000 dollars at 10% per year for 2 years, how do repeated growth and simple interest totals compare?

  1. Simple interest is 10 dollars higher.
  2. The totals are equal.
  3. Repeated growth is 10 dollars higher.Bonne réponse
  4. Repeated growth is 100 dollars higher.

Explication

Simple interest gives 1000 + 2 × 100 = 1200, while repeated growth gives 1000 × 1.10 × 1.10 = 1210. Repeated growth is therefore 10 dollars higher; calling them equal ignores growth on the first year's gain.

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