Five friends all open investment accounts today. Which one will withdraw the largest amount of money from their account assuming that they each withdraw their funds at the end of their initial
Investment period?
A) John, who invests $1,000 for eight years at 6% simple interest.
B) Terry, who invests $1,000 for four years at 9% with interest compounded annually.
C) Alicia, who invests $800 for ten years at 11% with interest compounded annually.
D) Kristi, who invests $1,200 for six years at 8% simple interest.
E) Roger, who invests $900 for nine years at 9% with interest compounded annually.

Question

Quizplus · Accepted Answer

Alicia will withdraw the largest amount of money from her account. This can be calculated using the compound interest formula:

A = P(1 + r/n)^(nt)

Where A is the amount after time t, P is the principal amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years.

Plugging in the values for Alicia's investment:

A = 800(1 + 0.11/1)^(1*10) = $2,267.14

Therefore, Alicia will have the largest amount in her account after 10 years, compared to the other options.

Five Friends All Open Investment Accounts Today