Show how timing affects future values (Learning Objective 3)

Assume that you make the following investments:

a. You invest a lump sum of $5,000 for four years at 12% interest. What is the investment’s value at the end of four years?

b. In a different account earning 12% interest, you invest $1,250 at the end of each year for four years. What is the investment’s value at the end of four years?

c. What general rule of thumb explains the difference in the investments future values?