$[$Related to Solved Problem

$3\mathrm{.}1$A$]$

Suppose that you are considering investing

$$$$1$ comma $5001,500$

in one of the following bank CDs$.$

bullet$$

CD$1,$ which will pay an interest rate of

$66\%$

per year for three years

bullet$$

CD$2,$ which will pay an interest rate of

$1010\%$

the first$$ year,

$99\%$

the second$$ year, and

$33\%$

the third year

The future value of CD $1$ is

$$$$1786\mathrm{.}521786\mathrm{.}52,$

and the future value of CD $2$ is

$$$$1841\mathrm{.}361841\mathrm{.}36.$

$($Round your responses to the nearest$$ cent.$)$

Given the future values you$$ calculated, which CD should be$$ chosen?

A$.$

CD

$11$

should be chosen.

B$.$

CD

$22$

should be chosen.

Part $2$

Now suppose for CD $2$ the interest rates stay the same but the order in which they are paid changes such that CD $2$ pays an interest rate of

$33\%$

the first$$ year,

$99\%$

the second$$ year, and

$1010\%$

the third year. What is the future value of new CD$2?$

The future value of new CD $2$ is

$$$$1857\mathrm{.}561857\mathrm{.}56.$

$($Round your responses to the nearest$$ cent.$)$

Part $3$

We also have a third CD in which you might

investlong dash$$one

that pays an interest rate of

$33\%$

the first two years and an interest rate of

$1313\%$

the third year.

Part $4$

How does the future value of this investment compare to the other$$ two?

The future value of CD $3$ is

greater

greater

less

than the future value of CD $1$ and

less

less

greater

than the future value of CD $2.$

Part $5$

Which is the best$$ investment?

The best investment is CD

$2$

$2$

$3$

$1$

$.$