Question: MR. Ali is considering two different savings plans. The first plan would have his deposit $500 every six months, and he would receive interest at

MR. Ali is considering two different savings plans. The first plan would have

his deposit $500 every six months, and he would receive interest at a 7%

annual rate, compounded semi-annually.

Under the second plan he would deposit $1,000 every year with a rate of interest of 7.5%, compounded annually. The initial deposit with Plan 1 would be made six months from now

and, with Plan 2, one year from now.

What is the future value of the first plan and second plan at the end of 15 years? Which plan should MR.Ali use, assuming that his only concern is with the value of his savings at the end of 15 years?

Please explain to me in step by step manner to evaluate my understanding able to derive the answer.

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