you purchase a five-year savings bond. The Value of the bond increases with Simple Interest by 5% each year. After five years, what is the total percentage increase from the bond's initial value?

(a) 25.0%
(b) 25.8%
(c) 27.6%
(d) 28.4%
(e) None of the above

Question

you purchase a five-year savings bond.  The Value of the bond increases with Simple Interest by 5% each year. After five years, what is the total percentage increase from the bond's initial value?

(a) 25.0%
(b) 25.8%
(c) 27.6% 
(d) 28.4%
(e) None of the above

anonymous · Answer

first yr: 100% x 105/100 = 105%
second year: 105% x 105/100 = 110.25%
third yr: 110.25% x 105/100 = ... etc...
Do you understand it? :)

anonymous · Answer

yup, thank you very much

anonymous · Answer

in simple interest the interest earned is not taken into account