Kevin just deposited $13,000 into his savings account at Traditions Bank.The bank will pay .87 percent interest,compounded annually,on this account.How much interest on interest will he earn over the next 5 years?
A)$8.67
B)$9.93
C)$8.92
D)$9.49
E)$9.73

Question

Quizplus · Accepted Answer

The interest on interest is calculated by finding the compound interest and subtracting the simple interest. Compound interest for 5 years is $13,000 * (1 + 0.0087)^5 - $13,000. Simple interest is $13,000 * 0.0087 * 5. The difference gives the interest on interest.

Kevin Just Deposited $13,000 into His Savings Account at Traditions