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Sagot :
If, we invested $2,800 at a 6% annual interest rate. We will have $2972.70 in 1 year and $3063 in 1.5 year of time.
What is interest?
In the fields of finance and economics, interest is defined as the payment of a sum over and above the principal amount (the amount borrowed) at a set rate by a borrower or deposit-taking financial institution to a lender or depositor. It is different from a fee that the borrower may pay to the lender or another entity. It also differs from a dividend, which is money given to shareholders (owners) by a company from its profit or reserve, but not at a set rate predetermined beforehand, but rather on a pro rata basis as a portion of the rewards received by risk-taking businesspeople when revenue is earned that exceeds all costs.
Calculations:
The Future value= fv= Pv x [tex](1+r/m)^{mt}[/tex]
R= Rate per period
mt= years x compounding
The Future value in 1 year= 2800x[tex](1+0.06/12)^{1x12}[/tex]
= $2972.70
The Future value in 1.5 years=2800x[tex](1+0.06/12)^{1.5x12}[/tex]
= $3063.00
To learn more about interest, visit:
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