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Order the steps: three years of compounding

Exercise and reference answers

Steps
  1. Apply the rate to the original principal for year one
  2. Add that interest to get the amount after year one
  3. Apply the rate to that amount for year two
  4. Add again to get the amount after year two
  5. Repeat once more for the amount after year three

Explanation

Each year's amount becomes the next year's base, which is the whole mechanism. Source: syllabus Maths, Ch 7 Comparing Quantities.
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