How much interest is earned in 10 years on $8000 deposited in an account that pays 7% interest, compounded monthly? Round your answer to the nearest cent.
A) $8046.67
B) $8077.29
C) $4846.37
D) $16,077.29
E) $8070.00

Question

Quizplus · Accepted Answer

We can use the formula A=P(1+r/n)^(nt) where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years. Plugging in the given values, we get A=8000(1+0.07/12)^(12*10) ≈ $16,077.29. Therefore, the interest earned is $16,077.29 - $8,000 = $8,077.29. Rounded to the nearest cent, this becomes $8077.29, which is answer choice B.

How Much Interest Is Earned in 10 Years on $8000