Louisa and Bart are twins, aged 20. Advanced for their age in some respects, they were both working and also planning their financial future. Both felt they could conunit $5,000 per year for their retirement expected at age 65. However, Louisa planned to start right away on her commiunent by investing $5,000 per year in her tax free savings account for the next 15 years and then make no further commiunent to this account until she reached retirement at age 65 (thirty years). She would leave her money in the tax-free account, accumulating interest during this 30-year period.

Bart, on the otl1er hand, was going to spend freely for the next 15 years and then make his commiunent of$5,000 per year to the tax-free savings account for the following 30 years, until his retirement at age 65.

a. How much would Louisa and Bart have in their tax-free retirement account if yields (interest rates) are 10 percent throughout their lifetime?

b. How much would Louisa and Bart have in their tax-free retirement account if yields (interest rates) are 3 percent throughout their lifetime?