Question

Suppose you deposit $250 into an account for two years. The account earns 5% interest per year.

how much did you earn in two years
What does the deposit amount to after two years?

Answer 1

a) initial amount * interest rate ^ years

So, 250*1.05^2 = $275.63

You have earned 275.63 - 250 = $25.63

b) after two years the amount is left at the aforementioned $275.63