Question

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Henry Jackson invests $58,700 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Henry withdraws the accumulated amount of money. Compute the amount Henry would withdraw assuming the investment earns simple interest. (Round answers to O decimal places, e.g. 458,581.) Total withdrawns LINK TO TEXT LINK TO TEXT LINK TO VIDEO Click here to view factor tables Compute the amount Henry would withdraw assuming the investment earns Interest compounded annually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Total withdrawn LINK TO TEXT LINK TO TEXT LINK TO VIDEO Click here to view factor tables Compute the amount Henry would withdraw assuming the investment earns interest compounded semiannually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to o decimal places, e.g. 458,581.) Total withdrawns

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) Simple Interest 3 Total Amount Withdrawn 4 = amount invested +(amount invested * i*n) 5 = 58700+(58700*8%*8) 6 = $ 96268 7 Thus the correct answer is $ 96268 8 9 Part 2) Annual Compounding 10 Total amount withdrawn 11 = amount invested *(1+i)an 12 = 58700*(1.08)^8 13 = 58700*1.85093 14 = $ 108650 15 Thus the correct answer is $ 108650 16 17 Part 3) Semi annual Compounding 18 Total amount withdrawn 19 = amount invested *(1+i/2))^{n*2) 20 = 58700*(1.04)*16 21 = 58700*1.87298 22 = $ 109944 23 Thus the correct answer is $ 109944 24 25 Note 26 In the above equations 27 interest = i-8% 28 number of years/periods = n =8