F00 · Introductory
F00 · Applied project
Two choices for Ana’s savings
Fictional case
It is February 2026. On 1 March Ana Lim will put $20,000 of her $26,000 savings into Lantern Coffee Co. and give up her $52,000 salary to run it. She wants to keep the other $6,000 as an emergency fund for the next two years, in case the business is slow to pay her or something goes wrong at home. Today it sits in a Coastline Bank savings account paying 1.5% a year. She has narrowed the choice to two accounts and asked you which to use, and why, in words she can follow. The banks, rates and Ana are fictional.
| Two-year certificate of deposit | High-yield savings account | |
|---|---|---|
| Bank | Coastline Bank | Sandpiper Online |
| Rate | 4.0% a year, fixed for two years | 3.2% a year, variable |
| Interest paid | Once a year, added to the balance | Monthly, added to the balance |
| Access | Locked for two years; early withdrawal costs six months’ interest | Withdraw any amount at any time |
| Deposit insurance | FDIC-insured bank | FDIC-insured bank |
Ana assumes inflation of 2.8% a year for the next two years. That is her working assumption, not a forecast. You will compare the choices on the four ideas this course is built on: time value (how much each grows), inflation (what the growth is worth in purchasing power), liquidity (what happens if she needs the money early) and risk (what could change). Then you will write her a short recommendation.
What you will produce
- The value of $6,000 after two years in each account, and the effective annual rate of the savings account.
- The real (after-inflation) return of each account and of Ana’s current account, and what the certificate’s balance is worth in today’s dollars.
- What Ana would get from each account if she needed all the money after one year.
- A recommendation to Ana of about 200–300 words that names the choice, gives the numbers that matter and says what would change your answer.
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