Question

Two brothers Steven and Walter each inherit 41000. Steven invests his inheritance in a savings account with an annual return of 2.7% while Walter invests his inheritance in a cd paying 6.4% annually. How much more money than Steven does Walter have after 1 year

Answer 1

Answer:

Walter earns $1,517 more than Stevens in one year.

Step-by-step explanation:

Giving the following information:

Two brothers Steven and Walter each inherit $41,000

Steven:

Annual return= 2.7%

Walter:

Annual return= 6.4%

To determine the future value for the brothers, we need to use the following formula:

FV= PV*(1+i)^n

Steven:

FV= 41,000*1.027= $42,107

Walter:

FV= 41,000*1.064= $43,624

Difference= 43,624 - 42,107= $1,517

Walter earns $1,517 more than Stevens in one year.