$12 000 is invested at 6% p.a. for 42 months. How much interest is earned each year and how much interest is earned after 2 years?
I will assume compound interest,
i = .06/12 = .005
amount = 12000(1.005)^42 = ....
subtract the original 12,000 to find the interest.
for interest earned after 2 years
= 12000(1.005)^24 - 12000
"How much interest is earned each year "
- this would require 42 different calculations, since the interest is not constant, but increases each successive month
To calculate the interest earned each year, we can use the simple interest formula:
Interest = Principal * Rate * Time
Given:
Principal (P) = $12,000
Rate of interest (R) = 6% per annum (which means 6/100 = 0.06 as a decimal)
Time (T) = 42 months (for each year, there are 12 months)
To find the interest earned each year, we need to divide the 42 months by 12 to get the number of years:
Years (T) = 42 months / 12 months/year = 3.5 years
Now, we can calculate the interest earned each year:
Interest = Principal * Rate * Time
Interest = $12,000 * 0.06 * 3.5
To find the interest earned after 2 years, we need to calculate the interest for 2 years instead of 3.5:
Years (T) = 2 years
Interest = Principal * Rate * Time
Interest = $12,000 * 0.06 * 2
To get the actual interest amounts, we can perform the calculations:
Interest earned each year = $12,000 * 0.06 * 3.5 = $2520
Interest earned after 2 years = $12,000 * 0.06 * 2 = $1440
Therefore, the interest earned each year is $2520, and the interest earned after 2 years is $1440.