Tom and Antonio both want to open savings accounts today. Tom wants to have $1,000 in his savings account six years from now. Antonio wants to have $1,000 in his savings account three years from now. Antonio needs to deposit twice the amount of money today as Tom.

Question

Quizplus · Accepted Answer

The amount Antonio needs to deposit today to have $1,000 in three years is less than what Tom needs to deposit today to have $1,000 in six years, assuming a positive interest rate. The longer the money is invested, the more it can grow due to compound interest, so Tom can deposit a smaller amount initially compared to Antonio for the same future value.

Tom and Antonio Both Want to Open Savings Accounts Today