Make your first payment at the beginning of the quarter

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Reference no: EM132019631

Suppose you have a total of $9,000 to invest over the next 3 years. Instead of investing the $9,000 as a lump sum (e.g. since you may need some of the money in case of a job loss, etc), you decide to make quarterly payments of $650 into an account earning 2.72% interest, compounded quarterly.

(a) Without doing any calculations, is it better to make your first payment at the beginning of the quarter, or wait to make your first payment at the end of the quarter? Briefly explain

(b) Now, confirm your decision from part (a) above by calculating the money in your account under each of these two approaches. Please clearly

Reference no: EM132019631

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