Sue and Neal are twins.Sue invests $5,000 at 7 percent when she is 25 years old.Neal invests $5,000 at 7 percent when he is 30 years old.Both investments compound interest annually.Both Sue and Neal retire at age 60.Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts?
A)Sue will have less money when she retires than Neal.
B)Neal will earn more interest on interest than Sue.
C)Neal will earn more compound interest than Sue.
D)If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings.
E)Sue will have more money than Neal as long as they retire at the same time.

Question

Quizplus · Accepted Answer

Sue starts investing 5 years earlier than Neal, allowing her investment more time to compound annually at the same interest rate. Therefore, by the time they both retire at age 60, Sue will have accumulated more interest, resulting in a larger total amount in her investment account compared to Neal's.

Sue and Neal Are Twins