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 Warked
2
Retirement Account $5000.00 $6250 00 $781250
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
Retirement Account 55000.00 $10,000 $15.000
Which retirement option would be worth more at the end of 20 years?
Option #1
Option #2
They are both equal at 20 years,