Question

money planning
part 3 of 3 1 2 3 trying to earn
you got it right - just one more to go!
yi wang is 27 years old and has $12,000 in savings. she can either
1 put her money in a no - interest checking account (that is, has 0% return),
2 put it in a savings account and earn 3.5% annual interest, or
3 put it into a retirement account of stocks and bonds earning 7% annual gains
the following graph shows the value of the three different accounts at various times.
value of account at different interest rates
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0,000
0 5 10 15 20 25
years
— no - interest (0%) — 3.5% savings — 7% retirement
question 1: 20 years from now, yi will be 47. at that time, how much more would her $12,000 investment be worth if yi put this money in the savings account (3.5%) instead of keeping this money in a no - interest checking account (0%)?
your answer should be within $2000 of the exact amount. $
question 2: how much longer will it take for yis $12,000 to grow to $20,000 at 3.5% than at 7%?
your answer should be within 1 year of the exact number of years. years

Explanation:

Step1: Identify 20yr values from graph

From the graph:

• 3.5% savings at 20 years: $\$24,000$
• 0% no-interest at 20 years: $\$12,000$

Step2: Calculate difference for Q1

$\$24,000 - \$12,000 = \$12,000$

Step3: Find years to $\$20,000$ for each

From the graph:

• 3.5% savings to $\$20,000$: 20 years
• 7% retirement to $\$20,000$: 10 years

Step4: Calculate time difference for Q2

$20 - 10 = 10$ years

Answer:

Question 1: $\$12,000$
Question 2: 10 years