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What is the compound interest on $1500 at a rate of 12% per annum for 2 years?

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Question: What is the compound interest on $1500 at a rate of 12% per annum for 2 years?

Options:

  1. $360.00
  2. $400.00
  3. $450.00
  4. $500.00

Correct Answer: $360.00

Solution: 

CI = P(1 + r)^n - P = 1500(1 + 0.12)^2 - 1500 = 1500(1.2544) - 1500 = $381.60.

What is the compound interest on $1500 at a rate of 12% per annum for 2 years?

Practice Questions

Q1
What is the compound interest on $1500 at a rate of 12% per annum for 2 years?
  1. $360.00
  2. $400.00
  3. $450.00
  4. $500.00

Questions & Step-by-Step Solutions

What is the compound interest on $1500 at a rate of 12% per annum for 2 years?
  • Compound Interest – The interest calculated on the initial principal, which also includes all the accumulated interest from previous periods.
  • Exponential Growth – Understanding how the interest compounds over multiple periods, leading to growth that accelerates over time.
  • Formula Application – Applying the compound interest formula correctly: CI = P(1 + r)^n - P.
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