
Find the interest for the 2nd year on a $2,000 investment for 2 years, compounded at 8% p.a.

To find the interest for the 2nd year on a $2,000 investment compounded annually at 8% per annum, we follow these steps:

1. **Calculate the total amount after the 1st year**:
   
   \[
   A_1 = P \times (1 + r) = 2000 \times (1 + 0.08) = 2000 \times 1.08 = 2160
   \]

2. **Use this as the principal for the 2nd year** and calculate the total amount after the 2nd year:

   \[
   A_2 = 2160 \times (1 + 0.08) = 2160 \times 1.08 = 2332.8
   \]

3. **Interest for the 2nd year** is the difference between the amount at the end of the 2nd year and the amount at the end of the 1st year:

   \[
   \text{Interest for 2nd year} = A_2 - A_1 = 2332.8 - 2160 = 172.8
   \]

So, the interest for the 2nd year is **$172.80**.

Would you like further clarification on any part of this?

Here are 5 related questions:
1. How would the result change if the interest were compounded quarterly?
2. What is the total interest earned over the two years?
3. How does simple interest compare with compound interest over two years at the same rate?
4. How does the formula change if compounded monthly?
5. What if the principal was $3,000 instead of $2,000?

**Tip**: Compound interest grows faster than simple interest because it earns interest on both the initial principal and the interest added over time.

Find the interest for the 2nd year on a $2,000 investment for 2 years, compounded at 8% p.a.

Discover how to calculate the interest for the 2nd year on a $2,000 investment compounded annually at 8%. This detailed solution uses the compound interest formula and explains step-by-step how to find the interest for the second year. Suitable for high school students in Grades 9-11.

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