Investment Activity

Supplies: Calculator, Access to internet to research CD rates, graph paper.

Objective: Use compound interest formula to make sound financial decisions.

Show all work for full credit.

1. What does CD stand for in investments?
2. In your group/individually, decide on a bank in which you would like to invest $5000 for 4 years.

Bank Name:______________________

1. Find the interest rate that is applicable for a CD that meets the terms of your investment. (i.e. $5000 for 4 years. Note- You cannot invest in a product that requires more money or more time than $5000 and 48 months)

Interest rate:_____________(Make sure it is not written as a percent)

1. Use the following formula to complete the following:

gives the amount of money in an account after an elapsed time where:

A = amount after t years

P = Principle (initial amount)

r = rate of interest (as a decimal)

n = number of times compounded per year

t = number of years

t	A
0
6 months
1 year
5 years
1 Decade
20 years

1. Graph the table of values above to model your investment.

1. Use your graph to estimate how long it would take to have an account balance of $5600?

1. Use your graph to estimate how long it would take to double your investment?