Question

$1000 is invested at 2.9% annual interest for 6 months.

a. Simple Interest b. Compound Interest

Answer 1

a. Simple interest = $174

b. Compund interest = $1187.1

Explanation:

Given the following data;

Principal, P = $1000

Interest, R = 2.9%

Time, T = 6 months

a. To find the simple interest;

S.I = (PRT)/100

S.I = (1000*2.9*6)/100

S.I = 17400/100

S.I = $174

b. To find the compound interest;

`A = P(1 + (r)/(100))^(t)`

Substituting into the formula, we have;

`A = 1000(1 + (2.9)/(100))^(6)`

`A = 1000(1 + 0.029)^(6)`

`A = 1000(1.029)^(6)`

`A = 1000(1.1871)`

A = $1187.1