Suppose you enter into a monthly deposit scheme with a bank, where you have your salary account.

The bank will deduct $25 from your salary account in every month and the first payment (deduction) will be made one month from now (so, what type of annuity is this?).

If you are planning to maintain the account for the next 3 years, how much money will you have when you close your account 3 years from now?

Suppose the interest rate is 6%.

a. Use a formula to calculate the future value of this annuity.

b. Use the financial calculator to compute the future value (clearly identify N, I/Y, PV, and PMT).

c. What will be the future value if the first payment was made immediately? Use both approaches separately for this part. [Hint: what type of annuity is it now?]