Interest-on-Interest Consider a $200 deposit earning 8 percent interest per year for three years.How much total interest is earned on interest (excluding interest earned on the original deposit)?
A)$3.94
B)$24.00
C)$48.00
D)$51.94

Question

Quizplus · Accepted Answer

The interest-on-interest is calculated by subtracting the simple interest from the compound interest. The compound interest for 3 years is $51.94, and the simple interest is $48.00. Thus, the interest-on-interest is $51.94 - $48.00 = $3.94.

Interest-On-Interest Consider a $200 Deposit Earning 8 Percent Interest Per