If a scholarship fund increases by 15% each year and starts with $10,000, what w
Practice Questions
Q1
If a scholarship fund increases by 15% each year and starts with $10,000, what will be the amount after 2 years? (2023)
$12,000
$12,250
$12,500
$12,800
Questions & Step-by-Step Solutions
If a scholarship fund increases by 15% each year and starts with $10,000, what will be the amount after 2 years? (2023)
Step 1: Start with the initial amount of the scholarship fund, which is $10,000.
Step 2: Calculate the amount after 1 year by multiplying the initial amount by 1.15 (which represents a 15% increase). This gives you $10,000 * 1.15 = $11,500.
Step 3: Now, take the amount after 1 year, which is $11,500, and calculate the amount after the 2nd year by multiplying it again by 1.15. This gives you $11,500 * 1.15 = $13,225.
Step 4: The final amount after 2 years is $13,225.
Compound Interest – The question tests the understanding of how to calculate compound interest, where the interest earned is reinvested to earn more interest in subsequent periods.
