A) Bruce and Shelia are talking about their saving account. Bruce says that his account pays 10% annual interest compounded yearly and that Shelia should move her savings to his bank since hers only offers a (stated) annual percentage rate (apr) of 9.8%. Shelia, however, argues that it would make no sense to do so since her bank account compounds monthly and hence it actually provides better interest payments. Who is right? a) bruce b) sheila c) the two accounts are exactly equivalent d) not enough information is provided. Show calculations, please.
B) Henry is assessing his retirement strategy, as he plans to retire 10 years from now; currently, he has $300,000 in a savings account paying 4% annual interest, compounded quarterly. He also knows that he will receive $200,000 as termination payout from his life insurance 5 years from now, and he plans to add this money to his savings account until the moment when he retires. If everything goes according to his plan, how much would Henry have in savings 10 years from now, when he will be retiring?
C) Suppose you must make 5 annual $1,000 payments, the first one at the beginning of year 5 (end of the 4th year from now). To accumulate the money to make these payments, you will make 3 equal deposits into an investment account, the first to be made 1 year from today. Assuming a 10% interest rate on the investment account, what is the amount of these 3 deposits?