3. 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?" "I'd rather pay extra on my bilis and get those taken care of first." Many people who did establish a retirement plan have found that, years into their plan, they made three mistakes: - They started too late. - They put away too little. - They invested too conservatively. And these pitfalls are magnified when you consider compound interest. Consider the compound interest effect in the following two scenarios. (Note: In your calculations, use either the formula or the financial calculator. Round your answers to the nearest cent.) Clancy, age 25 , is starting his savings plan this year by putting away $2,025.00 at the end of every year until he reaches age 65 . He will deposit this money at his local savings and loan at an interest rate of 6%. The compounding factor is 79.060 . Clancy, age 25 , is starting his savings plan this year by putting away $2,025.00 at the end of every year until he reaches age 65 . He will deposit this money at his local savings and loan at an interest rate of 6%. The compounding factor is 79.060 . Based on the information provided, by the time Clancy turns 65 , he will have Elieen, age 30 , is starting her savings plan this year by putting away $2,025.00 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 compounding factor is 54.860 . Based on the information provided, by the time Elleen turns 65 , she will have Clancy started his investment program five years earlier than Eileen and Invested a total of \$ Clancy tums 65 , he will have accumulated more than Eleen. during those extra years. By the time