E5.2 (LO 1, 2) Simple and Compound Interest Computations
Alan Jackson invests $20,000 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
Use Excel's financial functions to solve.
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.
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a
cell), into the yellow shaded input cells.
a. Total withdrawn
b. Total withdrawn
c. Total withdrawn
, Solution: E5.2 (LO 1, 2) Simple and Compound Interest Computations
Alan Jackson invests $20,000 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
Use Excel's financial functions to solve.
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.
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a
cell), into the yellow shaded input cells.
a. Total withdrawn $ 32,800
b. Total withdrawn $ 37,019
c. Total withdrawn $ 37,460
Alan Jackson invests $20,000 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
Use Excel's financial functions to solve.
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.
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a
cell), into the yellow shaded input cells.
a. Total withdrawn
b. Total withdrawn
c. Total withdrawn
, Solution: E5.2 (LO 1, 2) Simple and Compound Interest Computations
Alan Jackson invests $20,000 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
Use Excel's financial functions to solve.
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.
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a
cell), into the yellow shaded input cells.
a. Total withdrawn $ 32,800
b. Total withdrawn $ 37,019
c. Total withdrawn $ 37,460
