Question

(continued from the previous question) Which of the following statements are correct about the problem you solved in the previous question? (select all that apply - i.e. just one or as many as all of them) If the retirement account had earned 2% instead of 4%, on 12/31/15 you would have collected a higher amount. If you had contributed $7,000 per year instead of $5,000, on 12/31/15 you would have collected a higher amount. If you redo the problem using simple interest instead of compound interest, the amount you will collect on 12/31/15 will be lower If you redo the problem using interest that compounds quarterly instead of annually, the amount you will collect on 12/31/15 will be higher

Answer 1

The correct answer is point (2) and (4)

(2) If you had contributed 7000 instead of 5000 per year you will collect higher amount on 12-31-2015

Yes , the statement is correct the more we contribute more we will get

(4) If we calculate interest quaterly instead of annually we will get higher amount.

Yes, the statement is also correct . we will get the higher amount when we compound quaterly instead of annually.

Incorrect answers

(1) Because if the rate of interest decreases we will get the less interest . So, the statement is incorrect .

(3) Because as the no. of year is only 1 when we find interest with simple interest method it will give same interest as compound interest .

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