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Felix has $100 in an account that earns 5% interest compounded annually.
To the nearest cent, how much interest will he earn in 2 years?
The $100 increases by 5%, or 1.05, every year, and to find the interest after two years, we use the formula above. His value after the first year raises to $105, and then again by 5%, which is 110.49.
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