463,948 views
14 votes
14 votes
When a child is born,

her grandfather decides to $300 in an account that earns inter
plans to make no other deposits of withdrawals for 18 years. When the child turns 18
the money in the account will be a birthday gift. The grandfather is choosing between
options:
• Option 1: An account that grows by 7.5% each year.
Option 2: An account thật grows by $35 each year.
Which option will result in a better 18th birthday gift? Explain your reasoning.

User Farcaller
by
3.1k points

2 Answers

11 votes
11 votes
Option 2 7.5 of 300 is around $22 so option two gives her more money
User Aurumpurum
by
2.8k points
19 votes
19 votes
option 2 because in option one 7.5% of $300 is $22.50 so more would be put in if he chose the second option
User Elsurudo
by
3.5k points
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