Andy borrowed money four years ago at 13.2 % compounded monthly. He now owes a total of $13,743. How much of this is interest?
A) $8,129
B) $7,114
C) $5,614
D) $9,492
E) $11,611

Question

Quizplus · Accepted Answer

To find the interest, we need to calculate the principal amount first. Using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount owed ($13,743), r is the annual interest rate (0.132), n is the number of times interest is compounded per year (12), and t is the time in years (4). Solving for P gives us the principal, and the interest is A - P. The interest calculated is approximately $5,614.

Andy Borrowed Money Four Years Ago at 13