A company offers a bonus retirement plans for its executive

Last updated: 3/14/2024

A company offers a bonus retirement plans for its executive employees The employees are presented with 2 options Option 1 They will start an account 5000 and each year earn 25 on the money in the account i e a growth factor of 1 25 Years Worked 0 1 2 Retirement Account 5000 00 6250 00 7812 50 Option 2 They will start an account 5000 and each year and each year there after continue to add 5000 to the account Years Worked 0 1 2 Retirement Account 5000 00 10 000 15 000 Which retirement option would be worth more at the end of 20 years Option 1 Option 2 O They are both equal at 20 years