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.)
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.
