Consider the savings plans for two investors—we’ll call them Mary and Bill—who began investing 10 years apart. Both put the same amount of money aside ($100 per month for 20 years for a total of $24,000). Mary and Bill earned the same interest rate, which was 8% compounded monthly. Mary started her investment at age 35, and Bill started his investment at age 45. By the age of 65, how much greater than Bill’s plan was Mary’s plan? (a) 122% (b) 48% (c) 89% (d) 55% (e) It is not greater.
Consider the savings plans for two investors—we’ll call them Mary and Bill—who began investing 10 years apart. Both put the same amount of money aside ($100 per month for 20 years for a total of $24,000). Mary and Bill earned the same interest rate, which was 8% compounded monthly. Mary started her investment at age 35, and Bill started his investment at age 45. By the age of 65, how much greater than Bill’s plan was Mary’s plan? (a) 122% (b) 48% (c) 89% (d) 55% (e) It is not greater.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider the savings plans for two investors—we’ll call them Mary and Bill—who began investing 10 years apart. Both put the same amount of money aside ($100 per month for 20 years for a total of $24,000). Mary and Bill earned the same interest rate, which was 8% compounded monthly. Mary started her investment at age 35, and Bill started his investment at age 45. By the age of 65, how much greater than Bill’s plan was Mary’s plan? (a) 122% (b) 48% (c) 89% (d) 55% (e) It is not greater.
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