Answer:
Interest earned on the investment is; $2237.31254875
Step-by-step explanation:
Given: Principal (P) = $6, 599.20 r= 4.2% and t = 7 years.
Formula for annual compound interest, including principal sum is:
A = P(1+\frac{r}{100n})^{nt} .....[1]
where ;
A represents the total amount , including interest.
P represents the initial deposits
r represents the rate of interest
t represents the number of times that the interest is compounded per year
n represents the number time that interest is compounded per year
Here, n = 12
therefore,
Substituting the values of P= $6, 599.20 r= 4.2% and t = 7 years in equation [1];
A = 6599.20(1+\frac{4.2}{1200})^{7 \times 12} = 6559.20(1+0.0035)^{84}
Simplify:
A = $8796.51254875
We have to find the interest is earned on the investment;
Use the formula:
A = I + P or
I = A - P
where,
I represents the interest earned on the investment;
we have;
I = 8796.51254875 - 6559.20 = 2237.31254875
Therefore, the interest earned on the investment is; $2237.31
