## MYP Mathematics, Compound Interest

number, algebra, geometry and trigonometry, statistics and probability, discrete mathematics.

### MYP Mathematics, Compound Interest

MYP Maths, Financial Mathematics, Compound Interest

How can we calculate the interest paid on a deposit of \$6000 at 6% per annum compounded semi-annually for 2 years?

Thanks
Lucas

Posts: 0
Joined: Mon Jan 28, 2013 8:05 pm

### Re: MYP Mathematics, Compound Interest

MYP Mathematics, Financial Mathematics, Compound Interest

Compounded semi-annually means interest is added to the principal semi-annually.
The general compounding formula is:

$F=P \cdot (1+ \frac{r}{100})^n$

and $I=P \cdot (1+ \frac{r}{100})^n –P$

Where F is the future value of the investment, P the principal, r is the interest rate per compound period and n is the number of compounding periods.

Regarding your question about the interest paid we will use the following formula

$I=\6000 \cdot (1+ \frac{3}{100})^4 -6000=\753.05$

Hope these help!
miranda

Posts: 268
Joined: Mon Jan 28, 2013 8:03 pm

### Re: MYP Mathematics, Compound Interest

thanks miranda!!
Lucas

Posts: 0
Joined: Mon Jan 28, 2013 8:05 pm