Question

Your sister just deposited $13,500 into an investment account. She believes that she will earn an annual return of 10.4 percent for the next 10 years. You believe that you will only be able to earn an annual return of 9.6 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 10 years

Answer 1

14518.41

Step-by-step explanation:

We would determine the future value of the sisters investment and use it to determine the amount to be deposited by the other sister

The formula for calculating future value:

FV = P (1 + r) n

FV = Future value

P = Present value

R = interest rate

N = number of years

13500 (1.104)^10 = $36,309.85

$36,309.85 = a(1.096)^10

a = $36,309.85 / 2.500953

a = $14518.41