$10,000 is invested at 7% compounded annually. Over the next years, how much of the investment's increase in value represents:
a. Earnings strictly on the original $10,000 principal?
b. Earnings on re-invested earnings? (This amount reflects the cumulative effect of compounding.)

Question

Quizplus · Accepted Answer

The Answer of $10,000 is invested at 7% compounded annually. Over the next years, how much of the investment's increase in value represents:
a. Earnings strictly on the original $10,000 principal?
b. Earnings on re-invested earnings? (This amount reflects the cumulative effect of compounding.)

$10,000 Is Invested at 7% Compounded Annually