Write exponential growth functions to model financial applications, including compound interest.
a. Watch the video of Act 1 of “Fry’s Bank.”
b. How much money do you think Fry has in his bank account now? Make a guess that is too low. Make a guess that is too high.
c. What information do you need to know about Fry’s account to determine exactly how much he has in his account now?
d. Watch the video of Act 3.
e. Are you surprised?
f. Do you think Fry’s account earned interest in a linear growth model or an exponential growth model?
g. What equation do you think models this?
Consider the three situations below.
Situation A: You invest $1,000 for 5 years at a simple annual interest rate of 4.8%.
Situation B: You invest $1,000 for 5 years at an interest rate of 4.8% compounded annually.
Situation C: You invest $1,000 for 5 years at an interest rate of 4.8% compounded monthly.
a. Determine how much money you would have in your account in each situation. Assume you make neither deposits nor withdrawals.
b. Determine how much you would have in your account in each situation if you invested for 25 years instead of 5 years.
c. Under what circumstances will your investment earn the most interest?
The following resources include problems and activities aligned to the objective of the lesson that can be used to create your own problem set.
1. A youth group has a yard sale to raise money for a charity. The group earns $800 but decides to put its money in the bank for a while. The group considers two different banks:
Write a function to represent the amount of money earned at each bank. Then determine how much money the youth group would earn in each situation.
2. If the youth group needs the money quickly, which is the better choice? Explain your reasoning.
Algebra I > Module 3 > Topic A > Lesson 4 of the New York State Common Core Mathematics Curriculum from EngageNY and Great Minds. © 2015 Great Minds. Licensed by EngageNY of the New York State Education Department under the CC BY-NC-SA 3.0 US license. Accessed Dec. 2, 2016, 5:15 p.m..Modified by The Match Foundation, Inc.