The next few sections show how to perform computations for the following situation. Suppose you buy a $10,000 certificate of deposit that pays 12% interest a year for five years. Your earnings are taxed at a rate of 30% federally and 7% locally. Also, you want to transfer all the money to an account in England. British pounds convert to American dollars at an exchange rate of $1.00 to £0.60. The inflation rate in England is 3%. The instructions in this example assume familiarity with the following: