## Financial math Compound Interest

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

### Financial math Compound Interest

MYP Math, Financial Mathematics, Compound Interest

How can we calculate the interest paid on a deposit of \$37,200 at 4% per annum compounded semi-annually for 5 years?

Thanks
Lucas

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

### Re: Financial math 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

$I=\37,200 \cdot (1+ \frac{2}{100})^10 –\37,200 =\8,146.59$

Hope these help!
nicole

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Joined: Mon Jan 28, 2013 8:10 pm

### Re: Financial math Compound Interest

Thanks Nicole!!
Lucas

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