Scenario: Wendy and John each deposit $2,000 in a bank account at different rates of interest. Wendy receives interest on her deposit at an annual rate of 6 percent, while John receives interest at an annual rate of 9 percent.
-Refer to the scenario above.What will be the difference between the future values of John's deposit and Wendy's deposit after 3 years?

Question

Quizplus · Accepted Answer

First, we calculate the future value of each account after 3 years using the formula:

Future Value = Present Value x (1 + interest rate)^number of years

For Wendy, 
Future Value = 2,000 x (1 + 0.06)^3 
Future Value = $2,385.96

For John, 
Future Value = 2,000 x (1 + 0.09)^3 
Future Value = $2,692.99

The difference between the future values of the two accounts is:

2,692.99 - 2,385.96 = $307.03

Therefore, the correct option is C, which is $208.03.

Scenario: Wendy and John Each Deposit $2,000 in a Bank