Question

A family has a newborn baby and decides to invest $300 into an account that will earn interest. They plan to give her the full amount of money in the account on her 18th birthday. They have two choices: Option 1: An account that grows by 12% each year Option 2: An account that grows by $30 each year. Which option will result in a better 18th birthday gift? Justify your choice and explain your reasoning.​

Answer 1

Option 1 is better. 12% of $300 is $36, so even in just the first year, it grows by $6 more than if they picked the other option. I hope this helps :)