E6-2 (LOI,2) EXCEL (Simple and Compound Interest Computations) Alan Jackson inve

Question

E6-2 (LOI,2) EXCEL (Simple and Compound Interest Computations) Alan Jackson invests S20,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Alan withdraws the accumulated amount of money. Instructions (a) Compute the amount Alan would withdraw assuming the investment earns simple interest. (b) Compute the amount Alan would withdraw assuming the investment earns interest compounded annually (c) Compute the amount Alan would withdraw assuming the investment earns interest compounded semiannually

Explanation / Answer

Part -(a):- Simple Interest (1600*8)        12,800 Principle        20,000 Total withdrawn        32,800 Part -(b):- Interest compounded annually      1.85093 Future value (1@8% for 8 years)        20,000 Total withdrawn        37,019 Part -(c):- Interest compounded semi annually      1.87298 Future value (1@4% for 16 years)        20,000 Total withdrawn        37,460

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