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# Consider the two savings plans below

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Consider the two savings plans below. Compare the balances in each plan after 88 years. Which person deposited more money in the​ plan? Which of the two investment strategies is​ better? Yolanda deposits ​\$100 per month in an account with an APR of 55​%, while Zach deposits \$ 1000 at the end of each year in an account with an APR of 5.55​%. The balance in Yolanda saving plan after 88 years was ​\$

​(Round the final answer to the nearest cent as needed. Round all intermediate values to seven decimal places as​ needed.)

Oct 25, 2017

#1
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This is the formula you would use to compare the two:

Your interest rate should be 5.5% APR and NOT 55% APR !!!.

FV = P x {[1 + R]^N - 1 / R}

Yolanda's Account:

FV = 100 x {[1 + 0.055/12]^(88*12) - 1 / (0.055/12)}

FV = 100 x {[1.00458333....]^1,056 - 1 / (0.00458333....)}

FV = 100 x { 124.0785711 / 0.00458333}

FV = 100 x                      27,071.6882353.......

FV =\$2,707,168.82 - The balance of Yolanda's account after 88 years.

Zach" Account:

FV =1,000 x {[1 + 0.055]^88 -1 / 0.055}

FV =1,000 x {[1.055]^88 - 1 / 0.055}

FV =1,000 x          2,004.15625580...........

FV =\$   2,004,156.26 - The balance of Zach's account after 88 years.

Oct 25, 2017
edited by Guest  Oct 25, 2017
#2
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It's actually 5% and then 5.5% I typed it wrong... still don't know the Answer

Guest Oct 26, 2017