Question

Tetsuo's savings account has a balance of $1192. After 22 years, what will the amount of interest be at 1.5% compounded annually?

a.
$2622.40
c.
$467.98
b.
$450.98
d.
$461.98

Answer 1

First, we find 1% of 1192:  1192 / 100 = 11.92
Next, 1.5% of 1192:  11.92 x 1.5 = 17.88
Now, after one year, we know he had $1209.88
Because it changes to 1.5% of 1209.88, rather than 1192, you have to find 1% of 1209.88, and repeat the previous steps. I'm sure there is a easier way to do this for 22 years, but I don't remember it. The only answer that makes sense is A. $2622.40