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Alan Jackson invests $40,200 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. Compute the amount Alan would withdraw assuming the investment earns simple interest.

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hyderali230

Answer:

Alan will withdraw $74,407.

Explanation:

Use future value formula to calculate the amount of to be withdraw after 8 years.

FV = PV x ( 1 + r )^n

PV = Invested amount = $40,200

r = rate of interest = 8% = 0.08

n = number of years = 8 years

FV = $40,200 x ( 1 + 0.08 )^8

FV = $40,200 x ( 1.08 )^8

FV = $74,407.39

The amount Alan would withdraw assuming the investment earns simple interest is $74,407.

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