Difference in Savings Account Balance

Toni adds $3,000 to her savings on the first day of each year. Tim adds $3,000 to his savings on the last day of each year. They both earn a 9% rate of return. What is the difference in their savings account balances at the end of thirty years? (Points: 2) $35,822.73 $36,803.03 $38,911.21 $39,803.04 $40,115.31

Answer: $36,803.03

FVA = W x (1 + i) n - 1 where FVA is the future value i W is the amount required to deposit i is the interest rate n is the period

FVA = 3,000 x (1 + 0.09) 30 - 1 0.09 FVA = 408,922.62

FVA = W x (1 + i) n - 1 x (1 + i) where FVA is the future value i W is the amount required to deposit i is the interest rate n is the period

FVA = 3,000 x (1 + 0.09) 30 - 1 x (1 + 0.09) 0.09 FVA = 445,725.65

445,725.65 - 408,922.62 = 36,803.03