P = Principle amount What you start with. r = Interest rate will be given in decimal form divide by 100 to make it a decimal. n = number of times it will be compounded

t = time (years)

Goal:

The goal is to use compound interest formulas to investigate and compare savings situations while using your writing skills to clearly communicate the solution.

Role:

You are the financial consultant for a young couple who need financial advice.

Situation:

In this recession, everyone is looking to earn the most they can on their savings. You have been hired as a financial consultant to help people determine the best options for their savings plans. Utilizing your compound interest skills, you need to convince the young couple of the best option for their savings.

Scenario:

Joe and Josephina Cougar wish to invest in a no-risk savings account. They currently have $25,000 in an account bearing 5.25% annual interest, compounded annually. The following options are available to them:

Option 1: Keep the money in the account they currently have at 5.25% compounded annually.

Option 2: Invest the money in an account bearing 5.67 % annual interest, compounded monthly.

Option 3: Invest the money in an account bearing 5.5 % annual interest, compounded quarterly.

a. Determine the equation for the value for the investment as a function of time for each of the three options.

b. Calculate the value for the three options after 6 years.

c. The couple is hoping to have $35,000 saved for a down payment on a house within six years. Write a summary to the couple that describes the implications of these options. Please use proper grammar and punctuation. Also, have a minimum of 6 sentences. Make sure to introduce yourself, state the options and the best course of action the couple should take.

Help Me Please