Question

Anita has two options for how to invest $1,000. Plan A: put the 1,000 in an account that pays $100 per year. Plan B: put the 1,000 in an account that pays 5 percent interest per year. What statement is true? Plan A will be worth more than plan B after two years. Plan A will be worth more than plan B after one year. Plan B will be worth more than plan A after three years. Plan B will be worth more than plan A after four years.

Answer 1

True Plan A will be worth more than plan B after two years.

True Plan A will be worth more than plan B after one year.

False Plan B will be worth more than plan A after three years.

False Plan B will be worth more than plan A after four years.

Explanation:

plan A proves 10% Standard interest as it is $100 every year

plan B proves $50 per year Standard interest and may increase if this was CI interest as it may include interest on interest but nothing was mentioned that Plan B was CI type interest or any different from plan B type.

Because of this we can only agree option 1+2 out of 1-4 is true.