Investment Opportunities

1
Investment Opportunities

• Individual Option

2
2 year CD vs. 5 year CD

• Company Name
• GE Capital Bank
• 1.15 interest rate
• Minimum Investment
• 500

• Company Name
• GE Capital Bank
• 2.00 interest rate
• Minimum Investment
• 500

3
Functions of Plans

• 2 Year CD Plan
• f(x) 5000(1.0115)x

• 5 Year CD Plan
• f(x) 5000(1.0200)x

4
Function for Investors Plan

• f(x) 5000 50x

5
Proposed Profits of Plans

•  

Plan Function Year 1 Year 2 Year 3 Year 4 Year 5
2 Year CD f(x) 5000(1.0115)x 5057.50 5115.66 5174.49 5234.00 5294.19
5 Year CD f(x) 5000(1.0200)x 5100.00 5202.00 5306.04 5412.16 5520.40
Investor f(x) 5000 50x 5050.00 5100.00 5150.00 5200.00 5250.00
6
Linear vs. Exponential

• The Investors plan is a linear function
  because it is a slope intercept based function of
  f(x) 50x 5000, where the x variable is never
  brought to an exponent higher than 1. The 5 year
  CD and 2 year CD are exponential functions
  because the interest rate is multiplied by an
  exponent variable representing the number of
  years paid on the investment.

7
Average Rate of Change

• Five Year CD Plan
• f(3) f(2)
  f(5)-f(3)
• 3-2
  5-3
• 5000(1.02)3 5000(1.02)2
  5000(1.02)5 5000(1.02)3
• 1
  2
• 5306.04 5202
  5520.40 - 5306.04
• 1
  2
• 104.04
  214.36
• 
  2
• 
  107.18
• This shows that in the long run the 5 Year CD
  plan would be the most lucrative. The Investors
  plan would earn more between the years of 2 and
  3, but afterward it would make more than 50 less
  per year than the 5 year CD plan.

• Investors Plan
• f(3) f(2)
  f(5) f(3)
• 3-2
  5-3
• 5000 50(3) 500050(2)
  500050(5) 500050(3)
• 1
  2
• 5150 5100
  5250 5150
• 1
  2
• 150.00
  100
• 
  2
• 
  50.00

8
Alternate Proposal

• 1.02 in the function represents a 2.00
  investment rate. This plan that you proposed is
  the same plan as the 5 year CD plan I presented
  to you. Your plan is neither better nor worse in
  terms of creating a profit. The outcome will be
  the same.

9
Conclusion

• In conclusion, I believe we should follow the 5
  Year CD plan. This plan will make in 5 years at
  least 225 more than the next best plan (the 2
  year CD plan). The waiting for the 5 Year CD plan
  to fully mature is the option that will have the
  most benefit in the form of the largest profit.