Question & Answer: At the end of the 10 years, Alan withdraws the accumulated amount of money…..

1.Computation of the amount Alan would withdraw assuming the investment earns simple interest

Simple interest formula = PTR/100

here principle = $37,700

time = 10years

interest rate = 10%

simple interest = (37,700 * 10 * 10)/100 = $ 37,700

Total amount can be withdrawn by alan = (principle = simple interest) = 37,700 + 37,700 =$ 75,400

2.Compute the amount Alan would withdraw assuming the investment earns compound interest:

compound interest formula = p(1+r/100)ⁿ

= 37,700(1+10/100)¹⁰

= 37,700(11/10)¹⁰

= 37,700(1.1)¹⁰

   = 37,700 * 2.5937

= $ 97,784

Total amount can be withdrawn by alan    = $ 97,784.09