Shawn Bowker invested $10,000 in a money market account that will pay 5.75 percent compounded daily. How much will the interest on interest be after two years?

Question

Quizplus · Accepted Answer

The interest on interest is the difference between the compound interest and the simple interest. First, calculate the compound interest using the formula A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years. For daily compounding, n = 365. Then, calculate the simple interest using the formula SI = P * r * t. Subtract the simple interest from the compound interest to find the interest on interest.

Shawn Bowker Invested $10,000 in a Money Market Account That