Thandi invests R20 000 at 10 percent per year, compounded yearly. What is her investment worth after three years?

1. The rate is quoted per year and the interest is added once a year, so the units already agree. 2. With compound interest each year earns interest on the balance at the start of that year. 3. A 10 percent rate multiplies the balance by 1.10 at the end of every year. 4. After one year the balance is 20 000 multiplied by 1.10, which is R22 000. 5. After two years it is 22 000 multiplied by 1.10, which is R24 200. 6. After three years it is 24 200 multiplied by 1.10, which is R26 620. 7. The R26 000 answer is the trap for using simple interest, which adds a flat R2000 each year. 8. The R24 200 answer stops after two years and the R22 000 answer stops after one year. _Source: Siyavula Mathematics Grade 12 (Everything Maths, CC BY 4.0), Chapter 3: Finance_