Tom and Antonio both want to open savings accounts today. Tom wants to have $1,000 in his savings account six years from now. Antonio wants to have $1,000 in his savings account three years from now. Tom needs to deposit more money into his account today than does Antonio.

Question

Quizplus · Accepted Answer

Since both aim for the same final amount but Tom has a longer time frame, he can deposit less initially due to the compound interest accruing over a longer period, assuming the interest rate is positive and the same for both accounts.

Tom and Antonio Both Want to Open Savings Accounts Today