K3000 is invested at an interest rate of 7% per annum compounded annually for 5 years. How much interest is generated from this investment?
To calculate the amount of interest generated from the investment, we can use the formula:
Interest = Principal × (1 + Rate/100)^Time - Principal
Where:
Principal = K3000
Rate = 7%
Time = 5 years
Let's plug in the values into the formula:
Interest = K3000 × (1 + 7/100)^5 - K3000
= K3000 × (1.07)^5 - K3000
Calculating the value:
Interest = K3000 × 1.403 - K3000
= K4209 - K3000
= K1209
Therefore, the interest generated from this investment is K1209.
To calculate the interest generated from an investment, you can use the formula:
Interest = Principal * (1 + Rate/100)^Time - Principal
Where:
Principal = K3000 (initial investment)
Rate = 7% per annum
Time = 5 years
Let's calculate the interest generated step by step:
Step 1: Calculate the value of the investment after 5 years.
Value = Principal * (1 + Rate/100)^Time
= K3000 * (1 + 7/100)^5
= K3000 * (1.07)^5
= K3000 * 1.402551
Step 2: Calculate the interest generated.
Interest = Value - Principal
= K3000 * 1.402551 - K3000
= K4027.65 - K3000
= K1027.65
Therefore, the interest generated from this investment is K1027.65.