Final answer:
Using the formula for compound interest to calculate the future investment value of both Alexx and Spenser, it is possible to find out how much more money Alexx will have than Spenser after 30 years due to the higher annual return and the absence of an administrative fee.
Step-by-step explanation:
The question asks for a comparison between the future investment values for Alexx and Spenser, where Alexx invests directly with a 5% annual return, and Spenser invests through a retirement fund with a 4.75% annual return after accounting for a 0.25% administrative fee. To calculate the future value of these investments after 30 years, we use the formula for compound interest:
Future Value = Principal * (1 + rate)^years
For Alexx:
Future Value = $5,000 * (1 + 0.05)^30
For Spenser:
Future Value = $5,000 * (1 + 0.0475)^30
After calculating these two future values, subtract Spenser's future value from Alexx's to determine how much more Alexx will have than Spenser after 30 years.