Question

An account had an initial deposit made and then interest was applied once a year at a fixed rate. The amount of money, in dollars, in the account after t years, was 103(1.02) t . What was the annual interest rate?

.02%
.03%
2%
3%

Answer 1

answer would be 2%

after 1 year = 103 x 1.02 = 105.06
after 2 years = 103 x 1.02 x1.02 = 107.16
and so on as compound interest, ie interest on top of interest already paid.