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warm up 5 1 14

Warm-up: 5/1/14

Jess wants to buy a car but she cannot decide if she should buy a Honda or a Kia. The Honda costs $16,000 and depreciates at an annual rate of 8%. The Kia costs $12,000 and depreciates at an annual rate of 12%. What will each car be worth in 5 years? In 10 years? Which car should she buy and why?

2. Ariana has a choice of two investments. She can invest $10,000 at 5% for 6 years or she can invest $9,000 at 6.5% for 7 years. Both accounts are compounded annually. Which investment will result in a greater amount of interest earned?

slide2

Objective: To model exponential growth and decay using

The compound interest and ‘e’ as a base.

Standards:

5/1/14

Simple interest formula:

Example: warm-up

Problem #1

A = ending balance

P = Principal (or initial investment)

r = interest rate (in decimal form)

t = time (years)

slide3

Compound interest:

Compound Continuous:

slide4

What is ‘e’? Is Euler’s Number

Make an x-y table and

Input the following values

Using a calculator. What do you

Observe?

1

10

100

1000

1000000

slide5

Ray put $2,000 into a savings account. The interest on the account is 12% per year compounded quarterly. He wants to put the money away for 7 years. Using the compound interest method, how much will Ray have at the end of that time period?

In four years, Ben wants to have $5000 available to make a down payment on a new car. If the bank offers 4.25% interest compounded daily, how much should Ben invest in a savings account now so that he has the money for his car?

An amount of $2,340.00 is deposited in a bank paying an annual interest rate of 3.1%, compounded continuously. Find the balance after 3 years.

Examples: