Randy Owen invested $9,000 at 5% annual interest, and left the money invested wi

Question

Randy Owen invested $9,000 at 5% annual interest, and left the money invested without withdrawing any of the interest for 12 years. At the end of the 12 years, Randy withdrew the accumulated amount of money. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

a) What amount did Randy withdraw, assuming the investment earns simple interest?

$_______________

(b) What amount did Randy withdraw, assuming the investment earns interest compounded annually? (Round answer to 2 decimal places,

$_____________________

Explanation / Answer

1) Amount withdrawn using simple interest = 9000+( 9000*5%*12)

= 9000+5400 i.e 14400

2) Amount withdraewn by andy using compound interest = 9000(1+0.05)^12

= 9000*1.7958 i.e 16162.71

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