Question

Nan and Neal are twins. Nan invests $5,000 at 7 percent at age 25. Neal invests $5,000 at 7 percent at age 30. Both investments compound interest annually. Both twins retire at age 60 and neither adds nor withdraws funds prior to retirement. Which statement is correct?

Answer 1

Resulta are below.

Step-by-step explanation:

Giving the following information:

Nan:

Initial investment= $5,000

Interest rate= 7% compounded annually

Number of years= 60 - 25= 35

Neal:

Initial investment= $5,000

Interest rate= 7% compounded annually

Number of years= 60 - 30= 30

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

Nan:

FV= 5,000*(1.07^35)

FV= $53,382.31

Neal:

FV= 5,000*(1.07^30)

FV= $38,061.28