Respuesta :

adioabiola

Here, we are required to determine how much interest 2000 would earn compounded annually in two years at the rate of 1.2.

The interest earned is I = 880

To calculate the final amount A',

  • The system can be assessed in terms of simple interest annually.

  • Fir the first year, A = P(rt)
  • where, r = 1.2 and t = 1.

Therefore;

  • A = 2000(1.2×1).
  • A = 2400.

Therefore, during the second year, 2400 is the new Principal amount.

Therefore, A' = 2400 (1.2×1).

  • A' = 2880.

Therefore, the amount due after 2 years is 2880.

However, since the starting principal is 2000,

  • The interest is I = A' - P
  • i.e I = 2880 - 2000

Interest is therefore, I = 880.

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