Sixteen years ago,Alicia invested $500.Eight years ago,Travis invested $900.Today,both Alicia's and Travis' investments are each worth $2,400.Assume that both Alicia and Travis continue to earn their respective rates of return.Which one of the following statements is correct concerning these investments?

Question

Quizplus · Accepted Answer

Alicia: $2,400 = $500 × (1 + r)¹⁶; r = 10.30 percentTravis: $2,400 = $900 × (1 + r)⁸; r = 13.04 percent Since both Alicia and Travis have equal account values today and since Travis earns the higher rate of return, his account had to be worth less than Alicia's account one year ago.

Sixteen Years Ago,Alicia Invested $500