Explain how much interest on interest was earned

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Q. Five years ago, $1,200 was deposited into a savings account paying 4.5 percent interest. Today, the balance in the account is $1,495. If interest paid on the account was compounded annually, how much interest on interest was earned?

Q. You are thinking of buying a 10,000$ bond paying 6% semi-annually. The bond will mature in 7 years. If you would like to make 8% return on your investment, what is the amount you would be willing to pay for this bond?

Reference no: EM1352341

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