compute the Future Values |Mathematics
Use this Bankrate’s Simple Savings calculator to complete Scenario 1: http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx. You will enter the Initial Amount of Savings (Present Value), Annual Interest Rate (Rate of Return), and Number of Periods/Years into the calculator. The calculator will compute the Future Values.
In this scenario you will look at the impact of interest rates on your savings. Suppose that you have $2,000 of savings. You don’t anticipate needing to dip into these funds in the next five years. Based on the information provided in the table, calculate the future value (FV) of $2,000 at the end of years 1 and 5 if it were to be completely invested in each of the different cash management products.
Enter your answers in the indicated cells of the table below. The Restrictions/Fees on Product Usage column relates to question 2 of Scenario 1.
| Product | Annual Interest Rate | Restrictions/Fees on Product Usage | FV at end of Year 1
|
FV at end of Year 5
|
| Checking Account | 0.00% | · No minimum
· No limit on withdrawals |
Answer:
Inputs: Interest Rate per Time Period: Number of Time Periods: Present Value: |
Answer:
Inputs: Interest Rate per Time Period: Number of Time Periods: Present Value: |
| Savings Account | 1.50% | · No minimum
· Limited to 3 withdrawals per month |
Answer:
Inputs: Interest Rate per Time Period: Number of Time Periods: Present Value: |
Answer:
Inputs: Interest Rate per Time Period: Number of Time Periods: Present Value: |
| Certificate of Deposit (CD) | 5% | · $500 minimum balance
· Early withdrawal penalty: 180 days of interest plus $25 |
Answer:
Inputs: Interest Rate per Time Period: Number of Time Periods: Present Value:
|
Answer:
Inputs: Interest Rate per Time Period: Number of Time Periods: Present Value: |
