A demand loan for $8,000 with interest at 16% compounded quarterly was repaid after two years and eight months. What was the amount of interest paid?
A) $4138.26
B) $4155.67
C) $5265.03
D) $5236.19
E) $2763.81

Question

Quizplus · Accepted Answer

The interest is calculated using the formula for compound interest: A = P(1 + r/n)^(nt). Here, P = $8,000, r = 0.16, n = 4, and t = 2 + 8/12 = 2.6667 years. The total amount A is calculated, and then the interest is A - P.

A Demand Loan for $8,000 with Interest at 16% Compounded