Problema Solution
Before leaving overseas on a three year trip to india, i leave a sum of money in an account that pays 6% p.a. compounded half-yearly. When i return from the trip, there is 7455.79 dollars in my account. How much inteest has been added since i have been away?
Answer provided by our tutors
A = $7,455.79
r = 0.06 or 6% annual rate
n = 3 years
P = the principal
I = A - P
Amount after n=3 years
A = P( 1 + r/2)^(2n)
P(1 + r/2)^(2n) = A
P(1 + 0.06/2)^(2*3) = 7455.79
........
click here to see the equation solved for P
........
P = $6,244.11
I = $7,455.79 - $6,244.11
I = $1,211.68
$1,211.68 interest has been added in 3 years time.