Question

1. Research the highest interest rate (APY—annual percent yield) for 2-year and 5-year CDs. Document the company's name, interest rate, and minimum investment. The minimum investment must be less than or equal to $5,000.

2. Create the functions that represent the 2-year and 5-year CDs with your $5,000 investment. Use these functions to determine the amount you will be paid when the CD matures (the length of time for the specific CD). Show your work.

Answer 1

3. An investor comes to your office. He says that if you give him the $5,000, he will add on an additional $50 each year to what he owes you. Create the function for this investor's plan.
4. Create a table showing the value of the two CDs and the investor's plan for 5 years.

Year 1
Year 2
Year 3
Year 4
Year 5
2-year CD
 
 
 
 
 
5-year CD
 
 
 
 
 
Investor
 
 
 
 
 
5. Explain to your friends how to prove that the investor's plan is a linear function and the CDs are exponential functions. Use complete sentences.
6. Find the average rate of change for the investor's plan and the 5-year CD between years 2 and 3, and between years 3 and 5. Explain what this shows in complete sentences.
7. One of your friends suggests another 5-year option that gives interest based on the function k(x) = 5000(1.02)x. Explain what the 1.02 represents in terms of the CD and if it is a better plan than the 5-year CD you found. Use complete sentences.
8. Make a final recommendation on what plan you and your friends should follow. Consider that you cannot collect your money from a CD until it has fully matured. Your recommendation should be at least three sentences long.