DAT ACHEIVER math Q14

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a fixed savings account entitled to a yearly compound interest rate of 2% was opened with a single deposit of $1000. what will be the account balance 2 years from now?

im using the equation I=Prt and keep having the answer as $1040.00. the answer from achiever states its $1040.40 which doesnt make sense to me. any help is appreciated. thanks!

 

[crax]

Formula doesnt apply to compounding interest. (so it seems). If you plug it in twice doing it yearly, you will find the correct answer
1,000*.02*1=20
(1,000+20)*.02*1=20.4
(1,000+20+20.4)=1040.4

 

[TXpredent]

yup, I had a question exactly like that on the Math Destroyer, apparently I=Prt doesn't work. You just gotta do it twice.