Compounding: Chung Lee wants to invest $3,000 in an account paying 5.25 percent compounded quarterly. What is the interest on interest after four years?

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 $695.98, and the simple interest is $630.00. The difference, which is the interest on interest, is $65.98.

Compounding: Chung Lee Wants to Invest $3,000 in an Account