## 23 Jun PERSONAL FINANCIAL LITERACY

PERSONAL FINANCIAL LITERACY : A TIME TO SPEND, A TIME TO SAVE : 02.04 : INTEREST RATES AND INFLATION

For your assignment, you will compare savings options and make a recommendation as to which option would earn the most interest after taxes and inflation.

### Part One—Select Two Savings Options

Select one savings option from the Simple Interest column and one from the Compound Interest column to compare:

Simple InterestCompound InterestOption A—earns 2.5% simple interest per yearOption D—earns 2% compound interest per yearOption B—earns 3% simple interest per yearOption E—earns 2.5% compound interest per yearOption C—earns 3.5% simple interest per yearOption F—earns 3% compound interest per year

### Part Two—Crunch the Numbers

Calculate the after-tax real rate of return earned on \$5,000 by your selected savings options over a period of three years. This will help your comparison. Remember, the real rate of return includes taxes on the interest earned and inflation. For this assignment, use a tax rate of 10% and an average cumulative rate of 3%.

You will submit your calculations as part of your assignment. Need help? Check out the steps to calculate the after-tax real rate of return:

### Step 4: Find the after-tax real rate of return

Compile your calculations and make a recommendation. Of the savings options that you chose, which would you recommend a depositor use? Use complete sentences to explain why one option would be more beneficial than the other based on the after-tax rate of return.

### What to Submit

Submit your selected savings options, calculations, and recommendation to 02.04 Interest Rates and Inflation.

### ASSESSMENT

1. Complete the reading and activities.
2. Review the rubric before completing and submitting this activity.
3. Complete parts one, two, and three.
4. Submit your work to 02.04 Interest Rates and Inflation.

#### Rubric

Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.

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