Compounding: Dat Nguyen is depositing $17,500 in an account paying an annual interest rate of 8.25 percent compounded monthly. What is the interest-on-interest after six years?
A) $8,662.50
B) $734.40
C) $2,497.63
D) $1,092.48

Question

Quizplus · Accepted Answer

The interest-on-interest is calculated by finding the total compound interest and subtracting the simple interest. The compound interest is $10,497.63, and the simple interest is $8,000, so the interest-on-interest is $2,497.63.

Compounding: Dat Nguyen Is Depositing $17,500 in an Account Paying