Question

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 Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts? Sue will have less money when she retires than Neal. Neal will earn more interest on interest than Sue. Neal will earn more compound interest than Sue. If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings. Sue will have more money than Neal as long as they retire at the same time

Answer 1

Answer:

Sue will have more money than Neal as long as they retire at the same time

Explanation:

Both Neal and Sue invest the same amount ($5,000) at same interest rate (7%). In the compound interest rate formula only the time is differ. When they retire at age 60, Sue has 5 years more than Neal meaning Sue earn more interest than Neal.