Multiple choice

Population of a town increases 2.5\% annually but is decreased by 0.5\% every year due to migration. What will be the percentage of increase in 2 years?

  1. 5

  2. 4.04

  3. 4

  4. 3.96

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The net annual increase is 2.5% - 0.5% = 2%. However, percentage increase compounds annually. After 2 years, the factor is (1.02)^2 = 1.0404, giving a 4.04% total increase. Option A (5%) incorrectly adds the rates, while C (4%) uses simple interest instead of compound.