You just received a $5,000 gift from your grandmother. You have decided to save this money so that you can gift it to your grandchildren 50 years from now. How much additional money will you have to gift to your grandchildren if you can earn an average of 8.5 percent instead of just 8 percent on your savings?
A)$47,318.09
B)$52,464.79
C)$55,211.16
D)$58,811.99
E)$60,923.52

Question

Quizplus · Accepted Answer

Future value = $5,000 F1F1F1S1F1F1F10 (1 + .085)⁵⁰ = $295,431.58Future value = $5,000 F1F1F1S1F1F1F10 (1 + .08)⁵⁰ = $234,508.06Difference = $295,431.58 - $234,508.06 = $60,923.52

You Just Received a $5,000 Gift from Your Grandmother