Question

You put $1000 into a savings account yielding 6% annual interest; you left the money in for two years. How much interest do you get at the end of those two years?

Answer 1

Assuming annual compounding:
`color(white)("XXX")color(green)($1123.60)`

Explanation:

Each year the investment would increase by `6%`
or stated anther way, each year the investment would become `1.06` times what it had been.

With an initial investment of `$1000`
after `1` year, the investment would be worth `$1000 xx 1.06`
after `2` years, the investment would be worth `($1000xx 1.06) xx 1.06`

In general, after `n` years the investment would be worth:
`color(white)("XXX")$1000xx(1.06)^n`

For the specific case of `2` years
`color(white)("XXX")$1000xx(1.06)^2=$1123.60`