1. Compound interest and its effects Understanding the Impact of Compounding There are many reasons why people don't save: "I don't have any extra money." "I promise to start next year," "I have $100. . . what will that do?" "Td rather pay extra on my bils and get those token care of first." Many poople who did establish a retirement plan have found that, years inte their plan, they made three mistakes: - They started too late. - Ther put away too littie. - They invested too conservatively. And these pitfalls are magnified when you consider compound interest. Consider the compound interest effect in the foofowing two scenarios. (Note: in your calculations, use either the formula or the financial calculator. Round your answers to the neavest cent.) Sean, age 35 , is starting tis sovings plan this year by putting away $2,700.00 at the end of every year unta he reaches age 65 . He will deposit this money at his local savings and loan at an interest rate 6%. The future value annuity interest factor is 79.0582 . Sean, age 35 , is starting his savings plan this year by putting away $2,700,00 at the end of every year until he reaches age 65 . He will deposit this money at his local sovings and loan at an interest rate of 6%. The future value annuity interest factor is 79.0582 . Based on the information provided, by the time Sean turns 65 , he will have Wette, age 40 , is starting her savings plan this year by putting away $2,700.00 at the end of every year until she reaches age 65 . She will deposit this money at her local savings and loan at an interest rate of 6%. The future value annulty interest factor is 54.8645 . Based on the information provided, by the time Yvette turns 65 , she will have Sean started his investment program five years earlier and set aside more than Yvette. By the time Sean turns 65 , he will have accumulated more than Wette