At age 24 you invest $1,000 that earns 9 percent each year. At age 34 you...

Question

Question

At age 24 you invest $1,000 that earns 9 percent each year. At age 34 you invest $1,000 that earns 12 percent per year.

In which case would you have more money at age 60?

business finance

Answer 1

Answer #1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Case A:

A=$1000*(1.09)^36

=$1000*22.25122503

=$22,251.23(Approx)

Case B:

A=$1000*(1.12)^26

=$1000*19.04007214

=$19040.07(Approx).

Hence $1000 invested at 9% per year at age 24 would have higher future value at age 60.

Answer 2

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