Question

If you start with $100, and invest your money and get an annual 10% interest rate, how much money will you have in 2 years?

Answer 1

We have to find the final value FV of an investment.

The initial value is PV = $100.

The annual interest rate is r = 10% = 0.10 (we assume it not compounded).

The number of periods is n = 2 years.

We can express the final value with the following formula using the simple interest:

$\begin{gathered} FV=PV(1+n*r) \\ FV=100(1+2*0.10) \\ FV=100(1.2) \\ FV=120 \end{gathered}$

Answer: you will have $120 in 2 years.