Question

Kelly invested 9750 at 2.5% p.a, interest compounded annually. Calculate the interest earned over 5 years.

Answer 1

Earned interest = 1281,23

Explanation:

Let C = 9750 be the invested capital, and i = 2.5% be the annual compound interest, And C(5) the capital after 5 years :

we recall that the compound interest equation is written as :

C(n) = C * ( 1 + i ) ^ n
while n is the number of years, we can replace the values. Thus, we wil have :
C (5) = 9750 * ( 1 + 0.025 ) ^ 5
C (5) = 11031,23
So, the earned interest over 5 years is equal to 11031,23 - 9750 = 1281,23