a.This is a case of ordinary annuity.
Amount accumulated in 30 years = 2,300*[{(1+0.15)30-1}/0.15]
= $999,913.84
b.Amount accumulated in 20 years = 2,300*[{(1+0.15)20-1}/0.15]
= $235,620.24
c.By delaying the deposits, Hal is incurring a significant opportunity cost. This cost is due to both the lost deposits of $23,000 and the lost compounding of interest on all the money for 10 years.
d.If beginning of year deposits, amount accumulated in 30 years = (1+0.15)* $999,913.84
= $1,149,900.916
Amount accumulated in 20 years = (1+0.15)* $235,620.24
= $270,963.276
Both deposits are more/higher due to extra year of compounding.
The incremental change in the 30 year annuity is much larger than on the 20 year deposit due to larger sum on which last year compounding occurs.
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