Answer:
a. Compute the amount Donald would withdraw assuming the investment earns simple interest.
future value = $58,800 x [1 + (10% x 10)] = $117,600
b. Compute the amount Donald would withdraw assuming the investment earns interest compounded annually.
future value = $58,000 x (1 + 10%)¹⁰ = $152,512
c. Compute the amount Donald would withdraw assuming the investment earns interest compounded annually.
this is identical to (b) = $152,512
the advantage of compound interest is that previously earned interest, will earn interest by itself.
