Fred and Max each want to have $10,000 saved ﬁve years from now. Fred can earn 4.35%, compounded annually, on his savings and Max can earn 4.50%, compounded annually, on his
Savings. Both Fred and Max are going to deposit one lump sum today and will not add any
Additional funds to their accounts. Given this, Max _____ deposit _____ Fred to achieve the goal.
A) Must; more than
B) Must; at least as much as
C) Must; as much or more than
D) Can; less than
E) Can; the same amount as

Question

Quizplus · Accepted Answer

Max can deposit less than Fred because he earns a higher interest rate, allowing his savings to grow faster to reach the $10,000 goal in five years.

Fred and Max Each Want to Have $10,000 Saved ﬁVe