questionPrincipal: $12,000 in Simple Interest Account
Interest Year 1: ($12,000 x 5%) + $600 = $12,600
Interest Year 10: ($12,000 x 5%) + $6000 = $18,000
Interest Year 20: ($12,000 x 5%) + $12000 = $24,000
Total Savings After 20 Years: $12,000 + 20 years of simple interest = $24,000
Principal: $12,000 in Compound Interest Account
Interest Year 1: ($12,000 x 5%) + $600 = $12,600
Interest Year 10: ($12,000 + $6,615.94) + ($18,615.94 x 5%) = $19546.74
Interest Year 20: ($12,000 + $18,323.40) + ($30,323.40 x 5%) = $31,839.57
Total Savings After 20 Years: $12,000 + $20 years of compound interest = $31,839.57
Patrick has $12,000 saved for medical school from gifts and summer jobs. Because the cost of college has risen each year, Patrick knows he needs a savings account that will help him meet these increases. In the 10 remaining years before he receives his medical degree, which of the following would most help Patrick to meet these increases?