Jill Smyth, a 22-year-old university graduate, has just landed her first job and has planned to retire at age 62. She has decided to deopsit £5,000 every year in an individual savings account (ISA), which is tax-free for British citizens and gives a 5% per annum return.

a. If Jill continues to make end-of-year $5,000 deposits into the ISA, how much will she have accumulated in 40 years when she turns 62?

b. If Jill decides to wait until age 32 to begin making deposits into the ISA, how much will she have accumulated when she retires after 30 years?

c. Using your findings in parts a and b, discuss the impact of delaying deposits into the ISA for 10 years on the amount accumulated by the end of the period?

d. Rework parts a and b, assuming that Jill makes all deposits at the beginning, rather than the end, of each year. Discuss the effect of beginning-of-year deposits on the future value accumulated by the end of Jill’s sixty-second year.