Question

an investment of $6,599.20 earns 4.2% compounded monthly over 7 years how much interest is earned on the investment

Answer 1

Interest earned on the investment is; $2237.31254875

Explanation:

Given: Principal (P) = $6, 599.20 r= 4.2% and t = 7 years.

Formula for annual compound interest, including principal sum is:

`A = P(1+(r)/(100n))^(nt)` .....[1]

where ;

A represents the total amount , including interest.

P represents the initial deposits

r represents the rate of interest

t represents the number of times that the interest is compounded per year

n represents the number time that interest is compounded per year

Here, n = 12

therefore,

Substituting the values of P= $6, 599.20 r= 4.2% and t = 7 years in equation [1];

`A = 6599.20(1+(4.2)/(1200))^(7 * 12) = 6559.20(1+0.0035)^(84)`

Simplify:

A = $8796.51254875

We have to find the interest is earned on the investment;

Use the formula:

A = I + P or

I = A - P

where,

I represents the interest earned on the investment;

we have;

I = 8796.51254875 - 6559.20 = $2237.31254875

Therefore, the interest earned on the investment is; $2237.31254875