Beth saves $2,500 a year from age 25 until age 34 (inclusive) and invests the money in an account earning ten percent annually.
2 answers:
Answer:
False
Bill will have less than Beth
Explanation:
let us compare the amounts accumulated by the two individuals at age 65 to see which is more.
Money accumulated by Bill at age 65:
Since bill saves $2500 a year for 30 years, amount saved at the end of 30 years = 2500 X 30 = $75000.
Money accumulated by Beth at age 65:
Beth saves $2,500 a year from age 25 until age 34: Amount saved = 2500 X 9 = $22500
Invests the money in an account earning ten percent annually for 31 years.
Assuming it was at a simple interest rate,
The interest at the end of the 31st year will be:
Therefore total amount at age 65 = $22, 500 + 69750 = $92,250.
∴ This shows that Bill will have less money than Beth. Primarily due to the fact that he started investing at a lot later time than Beth.
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