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Order the steps: two years of compound interest

Exercise and reference answers

Steps
  1. Apply the rate to the original principal
  2. Add that interest to get the amount after one year
  3. Treat that amount as the base for the second year
  4. Apply the rate to it to get the second year's interest
  5. Add again to reach the amount after two years

Explanation

Each year's amount becomes the next year's principal. Source: syllabus Maths, Ch 7 Comparing Quantities.
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