Calculate the final amount earned on a R2500 investment at a rate of 3% compound interest per year for 7 months.
First, we need to convert the 7-month period into a fraction of a year. Since there are 12 months in a year, 7/12 of a year would be:
7/12 = 0.5833
Next, we can use the compound interest formula:
A = P(1 + r/n)^(nt)
where:
A = final amount
P = initial amount (R2500)
r = interest rate (3% or 0.03)
n = number of times the interest is compounded per year (typically 12)
t = time in years (0.5833 for 7 months)
A = 2500(1 + 0.03/12)^(12*0.5833)
A = 2500(1.0025)^7
A = 2500(1.018)
A = R2,545.02
The final amount earned on a R2500 investment at a rate of 3% compound interest per year for 7 months is R2,545.02.