# Calculate the interest earned on \$1000 at 6% pa compounded monthly for 2 yrs, \$250 at 1% per month compounded monthly for 5 months and  \$4750 at 10% pa compounded semiannually for 10 years.

## Expert Answers The equation for calculating compound interest earned on a sum P for n periods with the interest rate applied in each period being r is given by P(1+r)^n - P

1. The principal P = \$1000, interest rate per month is 6/12 = 0.5% and the number of periods is 2*12 = 24

The interest earned is 1000(1 + .005)^24 - 1000 = \$127.15

2. The interest earned is 250(1.01)^5 - 250 = \$12.73

3. The interest earned is 4750(1 + 10/200)^20 - 4750 = \$7853.16

The interest earned in the three cases is \$127.15, \$12.73 and \$7853.16

Approved by eNotes Editorial Team

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