EncryptCo has two possible plans for accumulating money for capital projects. One plan is to save $100,000 per year, independent of growth. The second plan is to start with $80,000 per year and increase the annual contribution by 5% each year. The money will accumulate interest at 4% nominal annual, compounded quarterly. Which plan will have more money after 10 years? (6 marks)

An endowment to purchase equipment for physically handicapped people was received on January 1, 2021. The endowment will pay at the end of each year starting 3 years from the end of 2021 and after that for 5 more years. The first payment will be $20,000 and each payment after will increase by 15% until the final payment is made. (a) Draw a cash flow diagram for the endowment. (2 marks) (b) Calculate the value of the endowment on January 1, 2021 if interest rate is 3% nominal annual compounded annually. (5 marks)

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