What is the compounded amount for K1000 deposited at 12.5% p.a compounded monthly after two years?

Answer 1

To calculate the compounded amount, we can use the formula:

A = P(1 + r/n)^(nt)

Where:
A = the compounded amount
P = the principal amount (K1000)
r = the annual interest rate (12.5% or 0.125)
n = the number of times interest is compounded per year (12 monthly)
t = the number of years (2 years)

Substituting the given values into the formula:

A = 1000(1 + 0.125/12)^(12*2)

Let's solve this equation step by step:

A = 1000(1 + 0.0104167)^(24)
A = 1000(1.0104167)^(24)
A = 1000(1.2800842)

A ≈ K1280.08

Therefore, the compounded amount after two years would be approximately K1280.08.