Karen White deposited $3,800 today in an account paying 6 percent interest annually. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.) What would be the simple interest earned on this investment in 5 years? Simple interest on investment   $  With annual compounding, how much interest-on-interest would Karen earn in 5 years? Interest-on-interest   $

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A:

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.