FIN 370 Course Great Wisdom / tutorialrank.com FIN 370 Course Great Wisdom / tutorialrank.com | Page 32

11.18 percent

10.64 percent

9.69 percent

Andy deposited $ 3,000 this morning into an account that pays 5 percent interest , compounded annually . Barb also deposited $ 3,000 this morning into an account that pays 5 percent interest , compounded annually . Andy will withdraw his interest earnings and spend it as soon as possible . Barb will reinvest her interest earnings into her account . Given this , which one of the following statements is true ?

Barb will earn more interest the second year than Andy .

Barb will earn more interest the first year than Andy will .

Andy will earn compound interest .

Andy will earn more interest in year three than Barb will .