Question

Back when he was 23, Curly had the option of putting money each month into two different retirement accounts-if he chose Moe's Mo' Money account he would deposit $300 per month and receive 6% APR. If he chose Larry's Lazydays account, he would only deposit $280 per month and get 6.1% APR.

Whichever he chooses, Curly will continue to do this until you retires (some 45 years later). Write a quantitative sentence comparing the two amounts Curly would have when he retires. Round to the nearest dollar..

Answer 1

The difference in the two amounts Curly would have when he retires is $10,000.

Formula: FV = P * ((1 + r/n)^(n*t))

Just to let you know:
FV is the future value of the account
P is the monthly payment
r is the annual interest rate
n is the number of times interest is compounded per year
t is the number of years

For Moe’s Mo’ Money account:
FV = 300 * ((1 + 0.06/12)^(12*45)) = $1,081,383.16

For Larry’s Lazydays account:
FV = 280 * ((1 + 0.061/12)^(12*45)) = $1,071,383.16

So yeah, the difference is 10,000.

I know this is complicated to read, I’m sorry, I just wanted to include the calculations!!