Question

Peter deposits 150 850 kina in the bank which offers 12 ¼% per annum interest calculate the interest earned after 5 years if it is compounded annually

Answer 1

After 5 years the interest earned is $117,979

Explanation:

Compound interest is represented by the following equation.

`\text{ Compound interest= P}(1+R)^t-P`

Then, for a principal of $150,850 with an interest of 12.25% annually. After 5 years:

`\begin{gathered} \text{ Compound interest= 150850(1+0.1225)}^5-150850 \\ \text{ Compound interest= \$117,979} \end{gathered}`