Question

Who will end up with the largest amount of money invested at an annual rate of return of 9% over the next 42 years?

A) Manny saves $1,200 per year for the first 14 years and then stops putting any new money into the account for the remaining 28 years.

B) Jake saves nothing for the first 14 years and saves $1,200 per year for the next 14 years and then puts no more money into the account during the last 14 years.

C) Josh saves nothing for the first 14 years and then saves $1,200 per year for the remaining 28 years.

D) Blake saves nothing for the first 14 years and then saves $1,500 per year for 14 years then stops putting any new money into the account for the remaining 14 years.

E) Chris saves nothing for the first 10 years and saves $1,500 per year for the remaining 32 years.

Answer 1

A)	FV = ((1200*(1.09^14-1)/(0.09))*1.09^28 =	$       3,48,671.90
B)	FV = ((1200*(1.09^14-1)/(0.09))*1.09^14 =	$       1,30,423.54
C)	FV = ((1200*(1.09^28-1)/(0.09)) =	$       1,35,561.86
D)	FV = ((1500*(1.09^14-1)/(0.09))*1.09^14 =	$       1,30,423.54
E)	FV = ((1500*(1.09^32-1)/(0.09)) =	$       2,46,055.48
	Answer: Largest amount is given by Alternative A.