Albert and Samuel are given $10,000 each by their grandparents. Albert puts his money into the stock market immediately, earning 5% interest each year. Samuel holds onto his money for 2 years, before also investing in the stock market at the same interest rate as Albert. After 4 years, how much more money does Albert have?

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Correct Answer: **B.** *$1130*

Albert’s money after 4 years is equal to 10,000 x (1.05)^{4}, according to the interest equation FV = PV*(1+I)^{n}, where FV is future value, PV is present value, I is interest rate, and n is number of years. Likewise, Samuel’s money value is 10,000 x (1.05)^{2}, with the only difference being the number of years. Taking the difference of these two values, we find that Albert will have about $1130 more after 4 years.

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