Question

Find the interest on a Principal Balance of $5,000 over the course of 15 years with an interest rate of 3.25% compounded monthly. Round to 2 decimal places.

a. $3135.84
b. $613,751.75
c. $8135.84
d. $5207.02

Answer 1

The correct answer is A: $3135.84

To find the total balance on the account all we need to do is use the compound interest formula.

It would be:

y = 5000(1 + 0.0325/12)^(15*12)

Evaluating this will give you a total of 8135.84

Now, just subtract off the original 5000 and you have the amount of interest.