education fund

Lex Rolf is considering two plans for building an education fund for his children.

Plan A---Invest $2,000 each year to earn 10% annually for six years.
Plan B---Invest $10,000 now, to earn 8% annually for six years.

Before making any calculations, which plan would you expect to provide the larger future amount? Calculate the future value of each plan. Which plan provides the larger amount at the end of six years?

"Future Value of Annuity of $1 at 10% for 6 years (Exhibit 12A-4)" Future Value
Plan A:


"Future Value of $1 at 8% for 6 years (Exhibit 12A-2)" Future Value
Plan B: