The goal of this assignment is to use compound interest formulas to investigate and compare savings situations.

you are the financial consultant for a young couple who are in need of financial advice.

in this economy, everyone is looking to earn the most they can on their savings. you have been hired as a financial consultant to 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 nestegg wish to invest in a no-risk savings account. they currently have $25,000 in an account bearing 5.25% annual interest, compounded continuously. the following options are available to them:

i. keep the money in the account they currently have

ii. invest the money in an account bearing 5.875% annual interest, compounded annually

iii. invest the money in an account bearing 5.5% annual interest, compounded quarterly

assignment steps:

step #1: determine the equation for the value for the investment as a function of time for each of the three options.

step #2: the couple is hoping to have $35,000 saved for a down payment on a house within six years. calculate the value of each option.

step #3: write a brief summary to the couple that describes the implications of these options.