If you borrow $1 000 now at 10% interest for 5 years, what is the compound interest owed at the end of the fifth year?
A)$1 000
B)$1 100
C)$1 610.51
D)$610.51
E)$500

Question

Quizplus · Accepted Answer

The compound interest can be calculated using the formula A = P(1 + r/n)^(nt), where P is the principal amount ($1,000), r is the annual interest rate (0.10), n is the number of times interest is compounded per year (1 for annually), and t is the number of years (5). The total amount A after 5 years is $1,610.51, so the compound interest owed is $1,610.51 - $1,000 = $610.51.

If You Borrow $1 000 Now at 10% Interest for 5