Jozy Altidore invested $8,000 at 7% annual interest, and left the money invested

Question

Jozy Altidore invested $8,000 at 7% annual interest, and left the money invested without withdrawing any of the interest for 11 years. At the end of the 11 years, Jozy withdrew the accumulated amount of money. Click here to view the factor table (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) What amount did Jozy withdraw, assuming the investment earns simple interest? Accumulated amount erest compounded annually? (Round answer to 2 decimal places, e.g. 25.25.) Accumulated amount

Explanation / Answer

Solution a:

Invested amount = $8,000

rate of interest = 7%

Period of investment = 11 years

Interest amount = $8,000*7%*11 = $6,160

Accumulated amount = $8,000 + $6,160 = $14,160

Solution b:

Accumulated amount on the basis compunded interest = P * (1+r)^t

= $8,000 (1+0.07)^11 = $16,838.82

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