Steve has a bank account that earns 10% interest every year. He puts $100 in it, and then 10 each year. How much money is in it after two years?
Thoughts? Step-by-step reasoning:
After one year it earns $10 in interest because 100 x .1 = 10. It has $120 in it after a year because 100 + 10 + 10 = 120. In the second year it earns $12 in interest because 120 x .1 = 12. In the second year it has $142 in it because 120 + 12 + 10 = 142.
Thus, the answer is 142.