Question: Allen Hamilton is considering two plans for building an education fund for his children. Plan A-Invest $2,000 each year for six years. This investment will

Allen Hamilton is considering two plans for building an education fund for his children.

Plan A-Invest $2,000 each year for six years. This investment will earn 10% annual interest.

Plan B-Invest $10,000 now, earning 8% annual interest for six years.

Requirement

1. Before making any calculations, which plan would you expect to provide the larger future amount? Using the tables provided in this appendix, calculate the future value of each plan. Which plan provides the larger amount at the end of six years?

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