Question
Will your CD rate enable you to meet your goals for retirement with an initial
principal of $1,000.00? Write a paragraph with your conclusions
principal of $1,000.00? Write a paragraph with your conclusions
Answers
Answer
How much money do you want to have available when you retire? 580,000
At what age would you like to retire? 60
Keep these amounts in mind as you go through the next parts of this project.
Inquire at a local bank or conduct an online search for “certificate of deposit
interest rates.” Gather the basic details for an actual CD account in today’s
economy. There will be many different accounts available. Choose one that you
think will grow quickly through time or that will suit your planning needs.
Research Topics for CDs Notes
minimum balance?
rate of interest?
compound period?
required term to keep account open?
fees, if any?
other notes?
information source?
(bank or website)
Compound interest is calculated with an exponential calculation. Since interest is
deposited directly back into the account so the total account value grows, the value of the account can be found with this formula: A=P(1+r/n)^nt
The following are the variables in the exponential function:
A, the amount in the account after interest is added
P, the principal originally deposited in the account
r, the annual rate of interest
n, the number of times, or frequency, that interest is compounded during the
year
t, the term (number of years) the account is open
For the account you chose, record the values of r and n
Variables Values
rate of interest (r)
compound period (n)
At what age would you like to retire? 60
Keep these amounts in mind as you go through the next parts of this project.
Inquire at a local bank or conduct an online search for “certificate of deposit
interest rates.” Gather the basic details for an actual CD account in today’s
economy. There will be many different accounts available. Choose one that you
think will grow quickly through time or that will suit your planning needs.
Research Topics for CDs Notes
minimum balance?
rate of interest?
compound period?
required term to keep account open?
fees, if any?
other notes?
information source?
(bank or website)
Compound interest is calculated with an exponential calculation. Since interest is
deposited directly back into the account so the total account value grows, the value of the account can be found with this formula: A=P(1+r/n)^nt
The following are the variables in the exponential function:
A, the amount in the account after interest is added
P, the principal originally deposited in the account
r, the annual rate of interest
n, the number of times, or frequency, that interest is compounded during the
year
t, the term (number of years) the account is open
For the account you chose, record the values of r and n
Variables Values
rate of interest (r)
compound period (n)
Answer
1,000.00
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