A year ago, you deposited $30,000 into a retirement savings account at a fixed rate of 5.5 percent. Today, you could earn a fixed rate of 6.5 percent on a similar type account. However, your rate is fixed and cannot be adjusted. How much less could you have deposited last year if you could have earned a fixed rate of 6.5 percent and still have the same amount as you currently will when you retire 38 years from today?
A)$2,118.42 less
B)$3,333.33 less
C)$5,417.09 less
D)$7,274.12 less
E)$9,234.97 less

Question

Quizplus · Accepted Answer

Future value = $30,000 F1F1F1S1F1F1F10 (1 + .055)³⁸⁺¹ = $242,084.61Present value = $242,084.61 F1F1F1S1F1F1F10 [1/(1 + .065)³⁸⁺¹] = $20,765.03Difference = $30,000 - $20,765.03 = $9,234.97

A Year Ago, You Deposited $30,000 into a Retirement Savings