Which of these 20-year plans is best? All are at 8% annually. Plan A: $\$ 960$ each year for 10 years, and then let the accumulated amount grow for 10 years.
Plan B: One payment of $\$ 7,680$ now, and let it grow.
A) Plan B is better than Plan $\mathbf { A }$.
B) Plan $\mathbf { A }$ is better than Plan B.
C) There is no difference between Plan $\mathbf { A }$ and Plan B.

Question

Quizplus · Accepted Answer

Plan B is better because the entire amount is invested upfront, allowing it to compound for the full 20 years, whereas Plan A only allows the accumulated amount to grow for the last 10 years.

Which of These 20-Year Plans Is Best? All Are at 8