4) a)Suppose someone plans to put $100 in to a bank saving account and keep it there for 2- years. One bank in town is offering a 5% annual interest rate with daily compounding based on a 365 day year and another bank is offering 5% annual interest rate with daily compounding based on a 360 day year. How much will someone have in 2-years with each bank? What effective annual rate is each bank in part a) actually offering? Suppose a third bank in town is offering quarterly compounding. Will that bank have to offer more or less than 5% annual interest in order to compete with the other two banks? b) c) a calculation to support your answer 5) Suppose a 62-year old person owns their home (no debt) worth about $1.2 million dollars. They have no retirement saving so they want to borrow against the value of their home. A company offers them a reverse mortgage based on 60% of the value of their house. A reverse mortgage is basically an annuity If the offer is based on 5% annual interest and quarterly compounding, what is the largest fair payment the 62-year old can receive if they live to be 82 assuming the annuity is an ordinary annuity? Show a calculation a) b)If the terms are the same but the annuity is instead an annuity due, how does that change the answer to part a)? Show a calculation Suppose the 62-year old does in fact pass away when they are 82 after purchasing the Ordinary annuity from part a). Assuming 5% annual interest and quarterly compounding what is the present value of the inheritance the 62-year old will pass on to their heirs? c)