The compound interest on a principal amount of RM1200 for 2 years at an annual interest rate of 10% compounded semi-annually is:
To calculate the compound interest, we need to use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (RM1200)
r = the annual interest rate (10% = 0.10)
n = the number of times that interest is compounded per year (semi-annually = 2)
t = the number of years the money is invested (2 years)
Plugging in the values, we get:
A = 1200(1 + 0.10/2)^(2*2)
= 1200(1 + 0.05)^4
= 1200(1.05)^4
≈ 1200(1.21550625)
≈ 1458.61
Therefore, the compound interest on a principal amount of RM1200 for 2 years at an annual interest rate of 10% compounded semi-annually is approximately RM258.61.