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It depends on the compounding. Simple interest (no compounding), would be the same amount of interest each year. So 2000.00 x 5% = 100.00 each year. So for 10 years is 1000.00

If it is compounded annually, then

  1. at the end of the first year you have 2100.00, so
  2. the 2nd year you have 5% on 2100.00 = 105.00, and the total end of 2nd year is 2205.00, then
  3. the third year you have 5% on 2205.00 = 110.25, so the total at the end of that year the total is 2315.25,

Keep going and you have 3257.79, and the interest earned is 1257.79; there is actually a formula to calculate this (for compounding):

Future value = (Present value)*(1 + rate)^(term). Which in this case the 5% rate is 0.05, and the term is 10.

If it were compounded monthly, then the 10 year term is 120 months, and the rate is 0.05/12, and the answer is 3294.02

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Q: How much would 2000.00 become in 10 years at 5 percent interest?
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