Question

10 years ago, Alicia invested 9000 at 5% interest. How much more money would she have had today if she had invested the money at 6% instead of 5%? Interest is compounded annually

Answer 1

By calculating the future value of Alicia's investment at 5% interest and 6% interest, we can find the difference in money she would have had today. The difference is $441.95.

Step-by-step explanation:

To calculate the difference in the amount of money Alicia would have had if she had invested at 6% instead of 5%, we need to calculate the future value of two investments:

Subtracting the future value at 5% from the future value at 6% will give us the difference. Let's calculate:

Future value at 5%: FV_5 = 9000 * 1.05^10 = $14,511.62

Future value at 6%: FV_6 = 9000 * 1.06^10 = $14,953.57

Difference in money = FV_6 - FV_5 = $14,953.57 - $14,511.62 = $441.95