Activity I: A young engineer decides to save $240 per year toward retirement in 40 years.
- If he invests this sum at the end of every year at 9%, then how much will be accumulated by retirement time?
- If by astute investing the interest rate could be raised to 12%, then what sum could be saved?
- If he deposits one fourth of this annual amount each quarter ($60 per quarter) in an interest bearing account earning a nominal annual interest rate of 12%, compounded quarterly, how much could be saved by retirement time?
- In part (c), then what annual effective interest rate is being earned?
Activity II: Maurice Micklewhite has decided to replant his garden. Show him what the cost is of making an erroneous decision at various stages of the project, starting with conceptual design and ending with the ongoing maintenance of the garden.