7
QuizMultiple Choice

Compound Interest

Question 7 • Academy- Financial Algebra A 27

An investment of $9,875 earns 4.8% interest compounded monthly over 12 years. Approximately how much interest is earned on the investment?

Answer
A
$4,740
B
$7,458
C
$7,672
D
$17,567

Explanation

Use the compound-interest formula: A = 9,875(1 + 0.048/12)^(12 × 12). The monthly rate is 0.004, and after 144 months the investment is worth about $17,547. Subtracting the original $9,875 gives about $7,672 in interest, so the correct choice is $7,672.

AI-written and checked against the verified answer.

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