Show how timing affects future values (Learning Objective 3)

Assume that you make the following investments:

a. You invest a lump sum of \(\$ 5,000\) for four years at \(12 \%\) interest. What is the investment's value at the end of four years?

b. In a different account earning \(12 \%\) interest, you invest \(\$ 1,250\) at the end of each year for four years. What is the investment's value at the end of four years?

c. What general rule of thumb explains the difference in the investments' future values?