Question

Susan saved $500 at the end of every month in her retirement account for 10 years (during age 25-35) and then quit saving However, she did not make any withdrawal until she turned 65 (e, 30 years after she stopped saving). Her friend Cathy started saving $650 at the end of every month for 30 years during age 35-65. What will be the difference in accumulated balances in their retirement accounts at age 65 if both earned an average return of 8% (compounded monthly) during the entire period?

a $235,305
b $121.015
c $562,479
d $31,591

Answer 1

D

Step-by-step explanation:

`FV=((1+i)^n-1)/(i)\\i=.08/12\\`

Susan:

`500*((1+.08/12)^(12*10)-1)/(.08/12)*(1+.08/12)^((12*30))=1000324`]

Cathy:

`650*((1+.08/12)^(30*12)-1)/(.08/12)=968733.6`

1000324-968733.6= 31590.55= 31591= D