 # Question & Answer: ted without withdrawing any of the interest for 10 years. At the end of the 10 years,…..

Exercise 6-2 (Part Level Submission)

Alan Jackson invests \$37,700 at 10% annual interest, leaving the money invested without withdrawing any of the interest for 10 years. At the end of the 10 years, Alan withdraws the accumulated amount of money.

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Question & Answer: ted without withdrawing any of the interest for 10 years. At the end of the 10 years,…..
GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS \$13/PAGE    (a)  Your answer is correct.

Compute the amount Alan would withdraw assuming the investment earns simple interest. (Round answers to 0 decimal places, e.g. 458,581.)

 Total withdrawn \$ Attempts: 1 of 3 used    (b)  Your answer is correct.

(Use the table below.) Compute the amount Alan would withdraw assuming the investment earns interest compounded annually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

 Total withdrawn \$ Attempts: 1 of 3 used    (c)

(Use the table below.) Compute the amount Alan would withdraw assuming the investment earns interest compounded semiannually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

 Total withdrawn \$ a)

Total amount withdrawn = \$37,700 + (\$37,700*10%*10 years) = \$37,700 + \$37,700 = \$75,400

b)

Total amount withdrawn = \$37,700*1.1010 = \$97,784.09

c)

Number of semi-annual periods = 10 years * 2 = 20

Semi-annual interest rate = 10%/2 = 5% = 0.05

Total amount withdrawn = \$37,700*1.0520 = \$100,029.32