6. Twins Barbara and Mary are both age 27. Beginning at age 27, Barbara invests $2,000 per year for 10 years and then never sets aside another penny. Mary waits 10 years and then invests $2,000 per year for the next 30 years. Assuming they both earn 7%, how much will each twin have at age 67? What is the difference between how much each will have, and how do you explain the difference?

Question

Carley Pugh

Business

19 December, 12:34

6. Twins Barbara and Mary are both age 27. Beginning at age 27, Barbara invests $2,000 per year for 10 years and then never sets aside another penny. Mary waits 10 years and then invests $2,000 per year for the next 30 years. Assuming they both earn 7%, how much will each twin have at age 67? What is the difference between how much each will have, and how do you explain the difference?

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Answers (1)

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Bobby Hogan · Answer 1

Barbara will have $210,349

Mary will have $188,922

Explanation:

Total time of investment is 40 years = age 67 - age 27

After 10 years, Barbara will have $27,633 (this figure used "FV" calculation in excel = FV (7%,10,2000)

Then Barbara put all $27,633 in next 30 years then she will have $210,349 = 27,633 x (1+7%) ^30

Mary didn't now invest in first 10 years, but then invests $2,000 per year for the next 30 years, so she will have $188,922 = FV (7%,30,2000)