If you have a $200 investment that earns 10% per year, and you let the money grow, how much money would you have total at the end of 2 years?
If you're like 34% of Americans, you answered $240. And you answered wrong.
Only 18% of Americans surveyed got the correct answer, $242. (It's $20 interest for the first year, then $22 interest on $220 for the second year.)
Amazingly, 48% of Americans either gave an even worse answer or copped out. No wonder the economy is in the toilet.
If you're like 34% of Americans, you answered $240. And you answered wrong.
Only 18% of Americans surveyed got the correct answer, $242. (It's $20 interest for the first year, then $22 interest on $220 for the second year.)
Amazingly, 48% of Americans either gave an even worse answer or copped out. No wonder the economy is in the toilet.
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captpackrat
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That is a correct answer for a starting value of $100
Unless the interest is compounded monthly, in which case the amount would be approximately $244.08. Compounded daily it would be something like $244.28.
So given that the period is unspecified I would accept $240 as the correct order-of-magnitude estimate. The error introduced by ignoring compounding over this period is never more than two percent, which is fine for a mental computation and adequate to check whether your accountant is robbing you blind. (Robbing you subtly requires a more detailed audit, of course.)
Where can I get in on that action? :-P