Question

In how many years will account b have more money than account a? How do you set up the equation?

Answer 1

Take into account that earnings for accounts A and B can be written as follow:

account A:

500 + 60t

account B:

500(1 + 0.06)^t = 500(1.06)^t

Now, if you replace for different values of t, in order to compare the earnings for each account, you can determine what is the value of t which makes earnings from account A greater than earnings from account B.

For instance, if you use t=22 and t=23

500 + 60(22) = 1820

500(1.06)^22 = 1801.76

500 + 60(23) = 1880

500(1.06)^23 = 1909.87

As you can notice, after t = 23 years the earnings from account B are greater than earnings from account B.