Chapter 4 - Lesson 2
Deposits in Banks

Many online calculators can help you compute interest on savings accounts. A variety of financial calculators can be found at the Bankrate.com site. Use the calculators to answer the following questions.

Suggested keywords: interest calculators, Bankrate.com
Web site: http://www.bankrate.com/latc/calculators/savings.asp

Your Name:

Today's Date:

Question 1:
From this page, click the ''CD interest calculator'' link. Calculate how much you would earn if you invested $1,000 in a 36-month CD at an interest rate of 5% compounded monthly. Compounded annually? What is the APY for both?

Question 2:
From the link above, click the ''What interest rates do you need to reach your savings goal?'' link. Calculate the required nominal and effective interest rates you would need if your desired value of savings in five years is $5,000; you currently have $4,000 saved; and there are 12 compound periods annually.

Question 3:
From the link above, click the ''Watch your savings grow with regular deposits'' link. Suppose you start with an initial amount of $1,000 and you make monthly deposits of $50 for 10 years into an account paying 4% interest compounded monthly. Calculate how much you would have at the end of the 10-year period.