You want to open a savings plan for your future retirement. You are considering the following two options: Option 1: You deposit $1,000 at the end of each quarter for the first 10 years. At the end of 10 years, you make no further deposits, but you leave the amount accumulated at the end of 10 years for the next 15 years. Option 2: You do nothing for the first 10 years. Then you deposit $6,000 at the end of each year for the next 15 years. If your deposits or investments earn an interest rate of 6% compounded quarterly and you choose Option 2 over Option 1, then at the end of 25 years from now, you will have accumulated (a) $7,067 more. (b) $8,523 more. (c) $14,757 less. (d) $13,302 less.
You want to open a savings plan for your future retirement. You are considering the following two options:
Option 1: You deposit $1,000 at the end of each quarter for the first 10 years. At the end of 10 years, you make no further deposits, but you leave the amount accumulated at the end of 10 years for the next 15 years.
Option 2: You do nothing for the first 10 years. Then you deposit $6,000 at the end of each year for the next 15 years.
If your deposits or investments earn an interest rate of 6% compounded quarterly and you choose Option 2 over Option 1, then at the end of 25 years from now, you will have accumulated
(a) $7,067 more.
(b) $8,523 more.
(c) $14,757 less.
(d) $13,302 less.
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