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1. (5 points) Lessons for Life. Suppose you invest in an account with an APR of 7.2% compounded monthly. Which investment plan will yield more
1. (5 points) Lessons for Life. Suppose you invest in an account with an APR of 7.2% compounded monthly. Which investment plan will yield more money by the time you are 65 years old? Hint: In some parts of the problem stated below, you may have to use the Fixed Deferred Annuity (1 + p)? -1 Formula F = 1 where p= and T = tk, and/or the General Compounding p k -- Formula F =P :) where t is time in years. a) Investment Plan 1. You make regular payments of $100 at the beginning of each month for 10 years, when you are between 25-35 years of age. After that, you stop the monthly payments and let the money grow. How much money will there be in the account 30 years later when you turn 65 years old? b) Investment Plan 2. You decide to wait until you get a permanent job, and then start making payments of $100 at the beginning of each month for 30 years, when you are between 35-65 years of age. How much money will there be in the account when you turn 65 years old? c) Compare your results from parts a) and b) above. What is the lesson leamed
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