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Henry Jones a college professor, realizes that it is time to set aside something to help 

his son go to college. He received a bonus at work and decides to go to the bank and 

invest in a CD for his sons college. In his sacrifice, he must make a choice to give up 

his weekly golfing for 6 months. Mr. Jones realizing the government funding has 

decreased for college kids and he must do something to ensure his son can afford to go 

to college. 

Mr. Jones purchases a one thousand dollar CD in his sons name, he tells the bank, he 

wants it to sit for 5 years until his son enters college.    The CD will earn   22% interest 

over the 5 year period. If Mr. Jones cashes in the CD, he will forfeit all 

interest and pay a penalty of 10% on his   one thousand deposited funds. If Mr. Jones 

allows the CD to sit the five years, his son will earn an eleven hundred dollars in 

interest on the CD.  

Betty Smith an employee at Wal-Mart   who wants to make sure she is able to retire in 

20 years. s. Smith decides to invest in a savings bond.   She purchases a one thousand 

dollar savings bond for at half the cost.   She pays five hundred for her bond that has a 

mature date of 20 years. She will receive 2% compound interest on her bond monthly 

through her maturity date of 20 years. Her return her first year was $268.00 on her 

initial investment. She will have to hold on to her savings bond longer than Mr. Jones 

but her compound interest will continue to add each month.   She also take a paperless 

savings bond that will double her investment in 2 years.  

Both Mr. Jones and Ms. Smith both made smart investments. 

Mr. Jones son will get a chance at college and Ms. Smith will be 

able to retire on time.  

Ms. Smiths fear was that she started late saving for retirement 

and did not have 401 k through her previous employers. She 

was not eligible for 401 k with Wal-Mart because she hasn't 

been employed with the company long enough. 

Mr. Henry couldn't catch a break, all his money went to paying 

his house hold bills but realized he had to give up something. 

His opportunity cost was giving up 2 years of golf to send his 

child to college. Mr. Jones realizes that the government funding 

is not as good as it use to be to help fund students education so 

he had to act quickly, with limited funds. 

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