$1200 is invested at 6%p.a. for 42 months
how much interest is earned after 2 years?
interest after 2 years
= 1200(1.06)^2 - 1200
= ...
assuming compound interest
To calculate the interest earned after 2 years, we first need to find the total amount after 2 years.
The formula to find the total amount is:
Total Amount = Principal + (Principal * Interest Rate)
Given:
Principal (P) = $1200
Interest Rate (R) = 6% per year
First, we need to find the interest rate for 2 years. Since the interest rate is per year, we multiply the rate by the number of years:
Interest Rate for 2 years = 6% * 2 = 12%
Now, we can calculate the total amount after 2 years:
Total Amount = $1200 + ($1200 * 12%)
Total Amount = $1200 + ($1200 * 0.12)
Total Amount = $1200 + $144
Total Amount = $1344
To find the interest earned, we subtract the principal from the total amount:
Interest Earned = Total Amount - Principal
Interest Earned = $1344 - $1200
Interest Earned = $144
Therefore, the interest earned after 2 years is $144.
To calculate the interest earned after 2 years, we first need to convert the time period from years to months. Since there are 12 months in a year, 2 years is equal to 24 months.
Next, we can use the formula for calculating simple interest:
Interest = Principal x Rate x Time
In this case, the principal (P) is $1200, the rate (R) is 6% (or 0.06 as a decimal), and the time (T) is 24 months.
Plugging these values into the formula, we have:
Interest = $1200 x 0.06 x 24
Simplifying the calculation, we get:
Interest = $1728
Therefore, after 2 years (or 24 months), the interest earned would be $1728.