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To solve this problem, we need to calculate the interest earned using the compound interest formula:

\[
A = P \left(1 + \frac{r}{n}\right)^{nt}
\]

Where:
- $ A $ is the amount after interest.
- $ P = 12,500 $ is the initial deposit.
- $ r = 0.025 $ is the annual interest rate (2.5%).
- $ n = 12 $ because the interest is compounded monthly.
- $ t = 4 $ is the time in years.

We are asked to find the interest, so first we calculate $ A $ and then subtract the principal to get the interest.

### Step 1: Calculate the total amount $ A $
\[
A = 12,500 \left(1 + \frac{0.025}{12}\right)^{12 \times 4}
\]

\[
A = 12,500 \left(1 + 0.0020833\right)^{48}
\]

\[
A = 12,500 \left(1.0020833\right)^{48}
\]

\[
A \approx 12,500 \times 1.104941
\]

\[
A \approx 13,811.76
\]

### Step 2: Calculate the interest
\[
\text{Interest} = A - P = 13,811.76 - 12,500 = 1,311.76
\]

### Step 3: Round to the nearest dollar
\[
\text{Interest} \approx 1,312
\]

So, the interest Jack will receive after 4 years is **$1,312**.

Would you like more details or have any questions?

Here are 5 related questions to explore:
1. How would the interest change if the interest rate were 3% p.a.?
2. What if the interest were compounded quarterly instead of monthly?
3. How much total amount would Jack have in his account after 4 years?
4. How does compound interest differ from simple interest in this scenario?
5. How would the interest change if the investment period were extended to 6 years?

**Tip**: The more frequently interest is compounded, the higher the interest earned, due to the effect of compounding more often.

Jack deposits $12,500 in a bank at an interest rate of 2.5% p.a., compounded monthly. The interest he will receive after 4 years is $______, correct to the nearest dollar.

Calculate the compound interest earned on a $12,500 deposit at 2.5% per annum, compounded monthly, over 4 years. Using the compound interest formula, the total interest is approximately $1,312. Suitable for students in Grades 9-12.

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