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Modise invests 20 000 for 12 years at 9% per annum compounded annually.

1. Calculate the amount that he will receive after 12 years.
2. How much interest did he earn?


User Busilinks
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1 Answer

4 votes

Answer:

We can use the formula for compound interest to calculate the amount that Modise will receive after 12 years:

A = P(1 + r/n)^(nt)

where:

P = the principal amount (the initial investment)

r = the annual interest rate (as a decimal)

n = the number of times the interest is compounded per year

t = the number of years

In this case, P = 20,000, r = 0.09 (9% expressed as a decimal), n = 1 (compounded annually), and t = 12. Plugging these values into the formula, we get:

A = 20,000(1 + 0.09/1)^(1*12)

= 20,000(1.09)^12

= 20,000(2.367)

= 47,340

Therefore, Modise will receive an amount of R47,340 after 12 years.

To calculate the amount of interest earned, we can subtract the initial investment from the total amount received:

Interest = A - P

= 47,340 - 20,000

= 27,340

Therefore, Modise earned R27,340 in interest over the 12-year period.

User Sagar Kacha
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