Question

Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal invests $5,000 at 7 percent when he is 30 years old. Both investments compound interest annually. Both Sue and Neal retire at age 60. Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts? A. Sue will have less money when she retires than Neal. B. Neal will earn more interest on interest than Sue. C. Neal will earn more compound interest than Sue. D. If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings. E. Sue will have more money than Neal as long as they retire at the same time.

Answer 1

Option (E) is correct.

Step-by-step explanation:

Both Sue and Neal are twins. As per the information provided, Sue invest her money 5 years earlier than the Neal invest his money and both are retiring at the same age of 60.

Amount invested = $5000 each

Interest rate = 7%

Time period:

For Sue = 35 years

For Neal = 30 years

Therefore, Sue has more money in her account than the Neal after retiring at the age of 60, because sue invest her money five years earlier than the Neal.