How much interest you earn if interest is left to accumulate

Reference no: EM13260120

You invest $1,000 in a certificate of deposit that matures after 10 years and pays 5 percent interest, which is compounded annually until the certificate matures.

a. How much interest will you earn if the interest is left to accumulate?

b. How much interest will you earn if the interest is withdrawn each year?

c. Why are the answers to a and b different?

Reference no: EM13260120

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