Anne invests R6000 for 3 years at 12,5% p.a compounded quarterly. How much interest will she earn after 3 years?
First we will calculate the final amount using the equation
A = P(1 + )nt
in which
A = the final amount of rupees = ?
P = the biginning amount of rupees = 6000
r = the rate expressed as a decimal = 0.125
n = the number of times per year the interest is compounded = 4
t = the number of years = 3
A = 6000(1 + )4*3
A = 6000(1 + .03125)12
A = 6000(1.03125)12
A = R8679.98
Interest = A - P = R8679.98 - R6000 = R2679.98
Edwin