Consider a $1,000 deposit earning 7 percent interest per year for six years What

Question

Consider a $1,000 deposit earning 7 percent interest per year for six years What is the future value? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Future value How much total interest is earned on the original deposit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Total interest earned How much is interest earned on interest? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Interest earned on interest

Explanation / Answer

Future Value = Amount * ( 1+ Rate of Interest /100) ^ Time

= $ 1,000 * (1+7/100) ^ 6

= $ 1,500.73

Hence the correct answer is $ 1,500.73

-------

Interest on original deposit = Amount * Rate * Time

= $ 1,000 * 7%*6

= $ 420

Hence the correct answer is $ 420

---------

Interest Earned on Interest = [ Future Value - Actual Value] - Interest on original deposit

= [ $ 1,500.73 - $ 1,000 ] - $ 420

= $ 80.73

Hence the correct answer is $ 80.73

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.