Question

find the difference between the simple interest and compound interest on 2500 for 2 years at 4% per annum , compound interest being reckoned semi annually

Answer 1

Answer:

Results are below.

Step-by-step explanation:

Giving the following information:

Principal (P)= $2,500

Interest rate= 4%

Number of periods= 2 years

First, we will determine the interest earned using the simple interest formula:

I= P*r*t

I= 2,500*0.04*2

I=$200

Now, using the compound interest formula:

I= [P*(1 + r)^t] - P

r= 0.04/2= 0.02 (semi annual interest rate)

t=2*2= 4 semesters

I= [2,500*(1.02^4)] - 2,500

I= $206.08