1) According to the table, what has the investor done with money earned through interest?

2) From looking at the table, explain the concept of compound interest.

3) According to the table, if the interest rate on this account were 10 percent, how much money would you have in the account at the end of the first year?

4) According to the table, if you added $50 to this account every year, what effect would it have on the interest rate that you earned?

According to the table, the investment has doubled in worth by the start of which year?

Table:

Start of Year Principal Amount Interest earned at 5% Principal at end of year

– $100 $5 $105

1 $105 $5.25 $110

2 $110.25 $5.51 $115.76

3 $115.76 $5.79 $121.55

4 $121.55 $6.08 $127.63

And it just follows that pattern