Andy deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Barb also deposited $3,000 this morning at 5 percent interest, compounded annually. Andy will withdraw his interest earnings and spend it as soon as possible. Barb will reinvest her interest earnings into her account. Given this, which one of the following statements is true?
A) Barb will earn more interest in Year 1 than Andy will.
B) Andy will earn more interest in Year 3 than Barb will.
C) Barb will earn more interest in Year 2 than Andy.
D) After five years, Andy and Barb will both have earned the same amount of interest.
E) Andy will earn compound interest.
Correct Answer:
Verified
Q1: Your goal is to have $1 million
Q2: The interest earned on both the initial
Q4: Which one of the following variables is
Q5: Terry is calculating the present value of
Q6: Which one of these will increase the
Q7: Chang Lee is going to receive $20,000
Q8: Which one of the following will produce
Q9: The process of determining the present value
Q10: Kurt won a lottery and will receive
Q11: This afternoon, you deposited $1,000 into a
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents