ou invest $2,000.00 in a stock plan and another $2,000.00 in a savings account. The stock plan decreases by 7% the first year and gains 10% the second year. The savings account earns a 3.7% APR and compounds annually. What is the difference in earnings between the stock and savings account at the end of the second year?
After the first year, the stock plan decreases by 7%, resulting in a value of $2,000.00 - (0.07 * $2,000.00) = $1,860.00.
After the second year, the stock plan gains 10%, resulting in a value of $1,860.00 + (0.10 * $1,860.00) = $2,046.00.
The savings account earns interest at a rate of 3.7% APR, compounded annually. After the first year, the value of the savings account is $2,000.00 * (1 + 0.037) = $2,074.00.
After the second year, the value of the savings account is $2,074.00 * (1 + 0.037) = $2,148.34.
The difference in earnings between the stock plan and the savings account at the end of the second year is $2,148.34 - $2,046.00 = $102.34.
Therefore, the difference in earnings between the stock plan and the savings account at the end of the second year is $102.34.