When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $600 at the end of each quarter into an account paying 8.1% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same interest rate, but make no further deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $600 at the end of each quarte in an account paying 8.1% interest, compounded quarterly for 35 years. Complete parts (a) through (e) below. a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the following questions. Choose the correct answer below. O A. Joe will have more in his account after 45 years. Sarah contributed more money overall, but Joe was earning 8.1% interest per quarter for 35 years. O B. Sarah will have more in her account after 45 years. Sarah contributed more overall, so she will have more money in her account. OC. Both Joe and Sarah will have the same amount of money in their accounts because they were both earning 8.1% interest on their money for 35 years. O D. Sarah will have more in her account after 45 years. Joe earned interest for 10 more years than Sarah, but Sarah contributed monthly payments for a lot longer than Joe.
When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $600 at the end of each quarter into an account paying 8.1% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same interest rate, but make no further deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $600 at the end of each quarte in an account paying 8.1% interest, compounded quarterly for 35 years. Complete parts (a) through (e) below. a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the following questions. Choose the correct answer below. O A. Joe will have more in his account after 45 years. Sarah contributed more money overall, but Joe was earning 8.1% interest per quarter for 35 years. O B. Sarah will have more in her account after 45 years. Sarah contributed more overall, so she will have more money in her account. OC. Both Joe and Sarah will have the same amount of money in their accounts because they were both earning 8.1% interest on their money for 35 years. O D. Sarah will have more in her account after 45 years. Joe earned interest for 10 more years than Sarah, but Sarah contributed monthly payments for a lot longer than Joe.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $600 at the
end of each quarter into an account paying 8.1% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same
interest rate, but make no further deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $600 at the end of each quarter
in an account paying 8.1% interest, compounded quarterly for 35 years. Complete parts (a) through (e) below.
a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the
following questions. Choose the correct answer below.
O A. Joe will have more in his account after 45 years. Sarah contributed more money overall, but Joe was earning 8.1% interest per quarter for 35 years.
Sarah will have more in her account after 45 years. Sarah contributed more overall, so she will have more money in her account.
B.
O C. Both Joe and Sarah will have the same amount of money in their accounts because they were both earning 8.1% interest on their money for 35 years.
D. Sarah will have more in her account after 45 years. Joe earned interest for 10 more years than Sarah, but Sarah contributed monthly payments for a lot longer
than Joe.
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