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Homework answers / question archive / An investment today of $3200 will earn 2
An investment today of $3200 will earn 2.1% compounded monthly for the first 2.5 years and 3.25% compounded semi-annually for the next 3.5 years. Find the total interest earned.
Computation of Total Interest Earned:
Amount = Principal*(1+Rate)^Number of Compounding Periods
= $3,200*(1+2.1%/12)^(2.5*12) * (1+3.5%/2)^(3.5*2)
= $3,200*1.1899
Amount = $3,807.78
Total Interest Earned = Amount - Principal
= $3,807.78 = $3,200
Total Interest Earned = $607.78
