Lets say that you have $1,200.00 available each year (i.e., $100 per month) to invest for the

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Question:

Let’s say that you have $1,200.00 available each year (i.e., $100 per month) to invest for the next 10 consecutive years. You could invest $100.00 at the beginning of each month for the next 120 months. Alternatively, you could invest $1,200.00 at the beginning of each year for the next 10 years. For each of the above scenarios assume an annual interest rate of 3% compounded annually and an annual interest rate of 2.75% compounded quarterly.

Compute the future value of these options at the end of the ten-year timeline.

Post your ending amounts at the end of the ten period.

Explain how the time value of money affects your personal savings and investment decisions.

Discuss how inflation relates to the time value of money.