£3000 is invested for 2 years at 3.8% per annum compound interest. What is the total interest earned over the 2 years?
We can use the following formula: Amount after n years' compound interest = Initial amount x (1 + r)n r = The interest rate in decimal form. n = Number of years. Simply plug the values into our formula: £3000 x (1.038)2 = £3232.33 This gives us the TOTAL value of the investment after 2 years. We only want to find out the total interest earned, so we need to subtract the original value from the new value: £3232.33 - £3000 = £232.33 Answer: Interested earned over 2 years is equal to £232.33.
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