Answer:
Jill's investment has a higher (by far) ending value than Jack.
Explanation:
Giving the following information:
From age 20 to 30 Jack invested $2,000 per year in his IRA, and never saved another penny in his life. From age 20 to 65, Jill invested $2,000 per year in her IRA.
Jack:
We need to calculate the final value of the firsts 10 deposits. The ending value of the investment until he is 65.
First 10 deposits:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit= 2,000
n=10
i= 0.10
FV= {2,000*[(1.10^10)-1]}/ 0.10= $31,874.83
Now, the 35 years:
FV= PV*(1+i)^n
FV= 31,874.83*1.10^35= $895,760.40
Jill:
We need to calculate the final value of 45 deposits of $2,000:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit= 2,000
i= 0.10
n= 45
FV= {2,000*[(1.10^45)-1]}/0.10= 1,437,809.67
Jill's investment has a higher (by far) ending value than Jack.
