An account was opened with $1,000 ten years ago. Today, the account balance is $1,500. If the account paid interest compounded annually, how much interest on interest was earned?
A) $86.20
B) $93.10
C) $102.39
D) $130.28
E) $500.00

Question

Quizplus · Accepted Answer

The correct answer is A because the interest on interest is the difference between the total interest earned and the simple interest earned. The total interest earned is $500, and the simple interest earned is $413.80. Therefore, the interest on interest is $86.20.

An Account Was Opened with $1,000 Ten Years Ago