Exercise 6-2

Alan Jackson invests $42,500 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.

Compute the amount Alan would withdraw assuming the investment earns simple interest.

Compute the amount Alan would withdraw assuming the investment earns interest compounded annually.

Compute the amount Alan would withdraw assuming the investment earns interest compounded semiannually.