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Word problemsArithmeticMiddle schoolabout 1:52

Compound interest: $1000 at 5% compounded annually for 2 years. What is the amount?: animated lesson

A narrated, step-by-step word problems video lesson with captions. Final answer: Final amount = 1102.5; interest earned = 102.5.

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Video with a synthetic English voice and captions. Pick another language for subtitles in that language, or open the interactive version.

Video narrated by a synthetic voice (Piper TTS, en_US-ljspeech-high voice (LJ Speech dataset, public domain)); the steps come from our maths engine and the answer was checked independently. Download MP4 (0.7 MB) · Captions (WebVTT)

Steps on screen

1. The problem
Worked example
Compound interest: 1000 at 5% compounded annually for 2 years. What is the amount?
2. Steps, part 1
1. Read the problem
2. Identify the known values
3. $A = P\left(1 + \frac{r}{1}\right)^{1t}$
  Write the equation
4. Solve for A
3. Steps, part 2
1. Continue
2. Result
4. The answer
$\text{Final amount = 1102.5; interest earned = 102.5}$
A = 1102.5
5. Check
- Substituting A = 1102.5 back into A = P(1 + r/1)^(1·t), r as a decimal balances both sides ✓

Transcript

The problem. Here is the problem: Compound interest: 1000 at 5 percent compounded annually for 2 years. What is the amount? Principal 1000, annual rate 5 percent, compounded annually, time 2 years; the final amount is unknown. Compound interest, compounded annually; P equals 1000, r equals 5 percent, t equals 2; solve for A.

Steps, part 1. Read the problem. Principal 1000, annual rate 5 percent, compounded annually, time 2 years; the final amount is unknown. Identify the known values. Compound interest. Known: P equals 1000, r equals 5 percent, t equals 2. Unknown: final amount (A). Write the equation. A equals P(1 plus r/1) to the power 1 times t), r as a decimal (compounded annually). Solve for A. A equals 1000 times (1 plus 0.05 over 1) to the power 1 times 2).

Steps, part 2. Continue. Growth factor equals 1.1025. Result. A equals 1102.5.

The answer. So the answer is Final amount equals 1102.5; interest earned equals 102.5. Substitute the known values into A equals P(1 plus r/1) to the power 1 times t), r as a decimal and isolate A. Keep units consistent (for example miles, miles per hour and hours).

Check. Substituting A equals 1102.5 back into A equals P(1 plus r/1) to the power 1 times t), r as a decimal balances both sides, which checks out.

About word problems

Turn everyday situations about prices, speed, ages and interest into equations and solve them.

Compound interest: $1000 at 5% compounded annually for 2…