Question

You invest $1,686.00 at the beginning of every year and your friend invests $1,686.00 at the end of every year. If you both earn an annual rate of return of 6.72%, how much more money will you have after 13.0 years?

Answer 1

After 13 years, you will have approximately $1,411.93 more money than your friend.

Step-by-step explanation:

To calculate how much more money you will have after 13 years, we need to calculate the future value of the investment for both you and your friend. Since you invest $1,686.00 at the beginning of every year, we can use the formula for compound interest to calculate the future value:

Future Value = Principal * (1 + Rate)^Time

For you, the future value will be: $1,686.00 * (1 + 0.0672)^13. For your friend, the future value will be: $1,686.00 * (1 + 0.0672)^12. We can then subtract your friend's future value from your future value to find the difference.

Calculating the future value:

For you: $1,686.00 * (1.0672)^13 ≈ $30,894.16

For your friend: $1,686.00 * (1.0672)^12 ≈ $29,482.23

The difference in money will be: $30,894.16 - $29,482.23 ≈ $1,411.93. So, you will have approximately $1,411.93 more money after 13 years.