Compound interest works by adding interest on top of what you already have.

In this case, you would start by looking at your current balance which is 2000 and calculate 3% of that amount and then add to the current balance. You then continue to add 3% onto the new total.

Let’s take a look:

Year 1:

2000 + (3% of 2000) = 2000 + (60) = 2060

Year 2:

2060 is the new total, so now we calculate 3... more

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