PLEASE SOLVE!!!!!

Name: Date: Plan Ahead Exponentially Portfolio Worksheet PRECALCULUS ***DIRECTIONS: Before beginning, select FILE > MAKE A COPY. Complete the discussion and then convert the final submission to PDF (Download as a pdf or print as a pdf) and submit in Drop Box.*** Part 1: Dream Big! It's never too early to plan for your future. Even though you are just starting out in life, it is valuable to learn something about planning for your retirement now. There are a variety of accounts you can use to save for retirement. Once you are working full time, your employer may offer a program of contributions to a retirement account of your choice. Individual retirement accounts (IRAs) and 401(k) accounts have become very popular. There are several factors that help you choose the right account for you, including the taxability of the account and whether you can use some of the money if you need to at any time. At this point in your life, certificates of deposit (CDs) may be more practical. You may save for several years and then decide to use some or all of your money for something before retirement, possibly a house. You, the depositor, agree to leave your money, the principal, in the account for a specific length of time, the term. In return, the bank pays you a percentage of your principal, the rate, in interest. When the term is over, you can most often keep the account open and continue growing your money. Very rarely will you see interest calculated annually (once a year). In today's banking world, interest is calculated more frequently. Interest may be added to accounts quarterly (four times a year), monthly (twelve times a year), or even daily (365 times a year). The amount of interest you receive each time compounds because the rate is calculated on the total in the account, the sum of your principal and all interest payments you have received to date. In this portfolio, you will explore the growth of a savings account through time and come to appreciate how long it takes to reach your goal. Part 1: Research how much you need to retire today if you were about 65 years old. (1pt) Amount: Source: How much money do you want to have available when you retire? At what age would you like to retire? Page 2 of 5 Keep these amounts in mind as you go through the next parts of this project. Part 2: Research Certificates of Deposit (1pt) 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 em _ minimum balance rate of interest rate of interest compound period required term to keep account open 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 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 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)