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

question 75

Multiple Choice

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) $10,925.44
• C) $2,497.63
• D) $1,092.48

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Definitions:

Equivalent Cash

A term typically used to describe a sum of money that has the same value as another form of financial instrument or asset.

Compounded Semi-annually

Involves the calculation and addition of interest to the principal sum twice per year.

Lump Payment

A single, one-time payment made for a significant amount instead of breaking the payment into installments.

Compounded Quarterly

Interest calculation method where the interest is added to the principal every three months or four times a year.