3a.

Suppose you plan on saving to buy a new car. Rather than take out a loan, you have decided to save $12,000 per year for the next three years. There are three ways you can do this. You can save $1000 per month at the end of each month for the next three years (Plan A). You can save $12,000 per year at the BEGINNING of the year for the next three years (Plan B), or you can save $12,000 per year at the END of each year for the next three years (Plan C). How much money will you have at the end of three years if you earn 5% per year on your savings?

3.b.

You would have different amounts for Plan A, B, and C in the question above (if not, you did something wrong!!!). Explain intuitively why your answers are different. Your answer should say something about the time value of money and the time over which a return is made.