Isaac and Faith both want to have $5,000 in three years. Isaac expects to earn 8% on

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Question:

Isaac and Faith both want to have $5,000 in three years. Isaac expects to earn 8% on his investments and Faith expects a 7% rate of return. Both interest rates are compounded annually. Which one of the following statements is correct concerning the amount of money they each need to invest today?

A) Isaac needs to deposit $3,699.16 today.

B) Faith needs to deposit $3,081.49 today.

C) Both Faith and Isaac should deposit $3,969.16 today.

D) Faith needs to deposit $112.33 more than Isaac today.

E) Faith needs to deposit $173.33 more than Isaac today.