Time Value of Money, Opportunity Cost, andIncome Taxes WorksheetFP/100 Version 1University of Phoenix MaterialTime Value of Money, Opportunity Cost, and Income Taxes WorksheetScenario 1: Time Value of Money / Cash Management Products1.Use this Bankrates Simple Savings calculator to complete Scenario 1:http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx. You will enter the InitialAmount of Savings (Present Value), Annual Interest Rate (Rate of Return), and Number ofPeriods/Years into the calculator. The calculator will compute the Future Values.In this scenario, you will look at the impact of interest rates on your savings. Suppose that you have$2,000 of savings. You dont anticipate needing to dip into these f unds in the next f ive years. Basedon the inf ormation provided in the table, calculate the f uture value (FV) of $2,000 at the end of years1 and 5 if it were to be completely invested in each of the dif ferent cash management products.Enter your answers in the indicated cells of the table below. The Restrictions/Fees on Product Usagecolumn relates to question 2 of Scenario 1.ProductCheckingAccountSavingsAccountCertificateof Deposit(CD)AnnualInterestRate0.00%1.50%5%Restrictions/Fees onProduct Usage No minimum No limit onwithdrawals No minimum Limited to 3withdrawals permonth $500 minimumbalance Early withdrawalpenalty: 180 daysof interest plus $25FV at end of Year 1 ...
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