Page 3 of 5 Part 3: Your Investment Over the Years Suppose you can open a certificate of deposit account with an initial principal of $45,000.00. Complete the table to see the value of the CD account. Use the interest rate (r = ) and how often it is compounded per year (n = ) that you researched in Part 2. Show all work. ***Make sure to convert the percent to a decimal*** If you do not show your work no credit will be given.*** (3 points) _ + CD Account Lalcumtluns CD Account Value (A) Term (t) A = P(1 + L)\" 5 years 10 years 20 years \fPage4of5ll Part 4: Will You Be Able to Retire When You Want? 1) Which variable has the most impact on growing your money? If you could increase one of the variables in the compound interest formula, which would have the most impact on growing your money? Before you complete the next set of calculations, predict whether an increase in the principal, the rate, or the frequency of compounding will increase your account balance more. (lpt) Using a term of 50 years in all cases, calculate the account balance in each case to see which variable has the most impact on the amount. (3 points) nt You should use your calculator for these calculations. A = P(1 + %) Increase Principal (P) Principal Interest Rate Compound Account Balance Frequency P = $15,000.00 r = 5% A = P = $25,000.00 r = 5% n = P = $35,000.00 r = 5% Increase Rate (r) Principal Interest Rate Compound Account Balance Frequency P = $25,000.00 r = 4% n = 12 A = P = $25,000.00 r = 5% n = 12 A = P = $25,000.00 r = 6% n = 12 A = Page 5 of 5 Increase Compound Frequency (n) Principal Interest Rate Compound Account Balance Frequency P = $25,000.00 r = 5% n = 4 A = P = $25,000.00 r = 5% n = 12 A = P = $25, 000. 00 2) Was your prediction accurate? What surprised you about the results? (1 point) 2) Was your prediction accurate? What surprised you about the results? (1 point) 3) How much would you like to have when you retire? 4) What initial principal would you need to invest in the CD account in order to meet your retirement goals? Calculate this amount and clearly show how you got it. Make sure it is enough to meet the goals you set in part 1. Do not guess and check but actually solve the equation for the initial principal, P starting with nI A : P(1 + %) .(2 points)