Precalculus (6th Edition) Blitzer

Published by Pearson
ISBN 10: 0-13446-914-3
ISBN 13: 978-0-13446-914-0

Chapter 10 - Section 10.3 - Geoetric Sequences and Series - Exercise Set - Page 1075: 84


$98,888$ dollars.

Work Step by Step

Step 1. For the lump-sum investment, we have $P_1=40,000, r=0.065, n=1, t=25$ Thus $A_1=P_1(1+r)^{t}=40,000(1+0.065)^{25}\approx193,108$ Step 2. For the annuity, we have $P_2=1600, r=0.065, n=1, t=25$ Thus $A_2=\frac{P_2[(1+r)^t-1]}{r}=\frac{1600[(1+0.065)^{25}-1]}{0.065}\approx94,220$ Step 3. Thus, the difference between the two investments is $A_2-A_1=193,108-94,220=98,888$ dollars.
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