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Q
uantitative
R
easoning &
P
roblem
S
olving
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5. What would be the advantage or disadvantage of investing in an annuity rather than just buying a CD
that earns compound interest?
A
Successful Performance
Successful application of your learning looks like this
As you begin to apply what you’ve learned, you should have a good idea of what success looks like.
A SUCCESSFUL
PERFORMANCE
I compare two investment strategies. I...
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Successfully use the financial functions of Excel to compare two investment strategies
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Document my work in comparing two investment strategies
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Demonstrate competence in calculating various financial functions
D
emonstrate Your Understanding
Apply it and show you know in context!
1. To help your newborn pay for college, you start a savings account when she is born. How much
money do you need to invest now in order to have $40,000 for her when she turns 18? Assume that
you can find an investment that pays 12%, compounded daily.
2. The scenario in problem 1 looks nice, but you don’t have that kind of money to invest now. Instead
you plan to invest $50 a month (same interest rate, same number of years). Will you have $40,000
for her when she turns 18?
3. Saving for retirement in 30 years, you plan to deposit $100 each month in an annuity that earns 9%
interest. How much money will your annuity have when you retire?
4. Bill and his employer invested a total of $810 in a retirement account that grew untouched for 44
years at 8.5%, compounded daily. How much money did Bill have in this account when he retired?