AnIndividual Retirement Account(IRA) is an account in which the saver does not pay income tax on the amount deposited but is not allowed to withdraw the money until retirement. (The saver pays income tax at that point, but his or her tax bracket is much lower then.)

Marlene Silva wishes to have an IRA that will be worth $100,000 when she retires at age 65. (Round your answers to the nearest cent.)

(a) How much must she deposit at age31at83

8

%

compounded daily?

$

(b) If, at age 65, she arranges for the monthly interest to be sent to her, how much will she receive each thirty-day month?

$

A certificate of deposit (CD) is an agreement between a bank and a saver in which the bank guarantees an interest rate and the saver commits to leaving his or her deposit in the account for an agreed-upon period of time.

First National Bank offers two-year CDs at9.17%compounded daily, and Citywide Savings offers two-year CDs at9.18%compounded quarterly. Compute the annual yield for each institution. (Round your answers to two decimal places.)FNB%CS%

You earn interest on interest; that is what compounding means.