Five friends all open investment accounts today. Which one will withdraw the largest amount of money from their account assuming that they each withdraw their funds at the end of their initial investment period?
A) John, who invests $1,000 for eight years at 6% simple interest.
B) Terry, who invests $1,000 for four years at 9% with interest compounded annually.
C) Alicia, who invests $800 for ten years at 11% with interest compounded annually.
D) Kristi, who invests $1,200 for six years at 8% simple interest.
E) Roger, who invests $900 for nine years at 9% with interest compounded annually.

Question

Quizplus · Accepted Answer

Alicia's investment grows the most due to the combination of a high interest rate (11%) and the benefit of annual compounding over a ten-year period, which allows interest to be earned on previously earned interest.

Five Friends All Open Investment Accounts Today