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Mike invests R5,000.00 at 8% interest compounded annually for a period of 5 years. What was the interest in this period?
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Mike invests R5,000.00 at 8% interest compounded annually for a period of 5 years.

Since the interest is compounded annually (yearly), we use the interest rate and the number of periods as they have been given.

This means that the $r$ in our formula is $8\%$ and the $n$ is $5$.

The calculation looks as follows:

$A = P (1 + r)^n$

$A = 5000(1 + 0.08)^5$

$A = R7,346.64$

The interest amount:

$CI = A – P$

$CI = 7346,64 – 5000$

$CI = R2,346.64$
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