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: