Question
Which would amount to more money on December 31 of this year: $500 invested on January 1st of this year at 10% annual interest compounded quarterly; or a lump sum payment of $580?
(a) the $500 investment (b) both are the same
(c) the $580 lump sum (d) there is not enough information to determine
(a) the $500 investment (b) both are the same
(c) the $580 lump sum (d) there is not enough information to determine
Answers
500*(1 + .025)^4 = 551.91
The lump sum ($580) is more.
The lump sum ($580) is more.
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