Question

Suzette and Bridgett are sisters. Suzette deposits $30,000 at the start of each year for 15 years into an account that earns 8.5% compounded annually. Bridgett also makes annual deposits of $30,000 into a similar account that pays 8.5%. Which sister will accumulate the highest account balance after 15 years? Assume no withdrawals are made.

Answer 1

Suzette makes more

Explanation:

Suzette = 30000 x 1.085^15 = 101992.28

Bridgett = 8.5/100 = 0.85, 0.85 x 30000 = 2550, then use simple interest formula (P(1+rt) , 30000 + (15x2550) = 68250

Suzette - 101992.28 - compound interest

Bridgett - 68250 - simple interest