D8 = 9

Question 4 (30 marks) (a Suppose you make an annual contribution of $5,000 to your savings account at the end of each year (i.e. end-of-year deposit) for five years. If your savings account earns 6% interest annually, how much can be withdrawn at the end of five years? Also draw the comesponding cash flow (5 marks) diagram. (b) With reference to part (a), suppose you now make an annual contribution of savings account at the beginning of each year (i.e. beginning-of-year deposit) for five years. The same 6% annual interest rate applies; determine how much can be withdrawn at the end of five years? Also draw the new corresponding cash flow diagram. (9 marks)