Question

An investment of $9,875 earns 4.8% interest compounded monthly over 12 years. Approximately how much interest is earned on the investment?
a.
$4,740
b.
$7,458
c.
$7,672
d.
$17,567

Answer 1

A = 9875*(1 + 0.048/12)^(12*12) = 9875*(1.004)^144 ≈ 9875*(1.77678) ≈ $17,545.72.
Interest = 17,545.72 − 9,875 ≈ $7,670.72 ≈ $7,672.

Answer: c. $7,672