Calculating Interest and Growth

The video tutorial explains how the amount of money in a savings account increases by 5% each year. Starting with $110 at the end of year 3, the tutorial demonstrates how to calculate the account's value at the end of year 4 by multiplying the current amount by 1.05. This multiplier accounts for the 5% interest, which is derived from adding 100% of the current amount to 5% of it. The final calculation shows the value of the savings account in year 4.

What is the annual percentage increase of the savings account?

• 15%

• 10%

• 5%

• 3%

If the account is worth $110 after 3 years, what is the formula to find its value after 4 years?

• $110 * 1.05

• $110 * 1.10

• $110 * 1.03

• $110 * 1.15

How do you convert a 5% increase to a decimal for calculation purposes?

• 0.5

• 5.0

• 0.05

• 0.005

What is the purpose of multiplying by 1.05 in the calculation?

• To add 10% interest

• To subtract 5% interest

• To account for 100% of the original amount plus 5% interest

• To double the original amount

What will be the value of the account after 4 years if it was $110 after 3 years?

• $115.50

• $116.00

• $115.00

• $120.00