Sue and Neal Are Twins

question 1

Multiple Choice

Sue and Neal are twins.Sue invests $5,000 at 7 percent when she is 25 years old.Neal invests $5,000 at 7 percent when he is 30 years old.Both investments compound interest annually.Both Sue and Neal retire at age 60.Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts?

• A)Sue will have less money when she retires than Neal.
• B)Neal will earn more interest on interest than Sue.
• C)Neal will earn more compound interest than Sue.
• D)If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings.
• E)Sue will have more money than Neal as long as they retire at the same time.

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Definitions:

Amount Owed

The total sum of money that is due or required to be paid to another party.

Interest Rate

The fraction of a monetary sum levied for the privilege of utilizing it, often indicated as a percentage per annum.

Term Deposits

A type of bank deposit that is held at a financial institution for a fixed term or period, where the money can be withdrawn only after the term ends or by giving a predetermined notice.

Purchase Date

The date on which a buyer acquires possession or ownership of an item or investment.