Ms. Eisenmann is currently in her second year of teaching mathematics at Stoughton High School. She teaches Topics in Advanced Mathematics as well as Algebra I.
Introduction
Hello Algebrainiacs! We have just finished our Growth and Decay section with exponential functions. Now it is time for us to examine compound interest which is a growth model. In this section, you will learn the compound interest formula and apply it to a real world problem. Ms. Eisenmann expects you to bring in your work from the "evaluation" piece of this WebQuest into class on Friday!
Task
You are officially a licensed driver! You have places to go and people to see, but you do not have a car. You have been looking around different dealerships to find the place with the best price and financing terms. Purchasing a car can be confusing - every dealership has different interest rates and loan agreements. It is YOUR job to determine what dealership is offering the best deal.
Your goals are:
1. To solve application problems utilizing compound interest.
2. To complete a series of compound interest problems, to determine the what dealership is offering the best deal.
Process
Watch Khan Academy's video on compound interest BEFORE moving on to the evaluation section. Several examples are shown of how to utilize the compound interest formula and complete the calculations. Be sure to refer back to this video and examples when completing the compound interest evaluation on the next tab.
Evaluation
Below is a list of prices and financing terms for the purchase of a new Toyota Camry. Using what you know about compounding interest, which is the best buy? Show any necessary calculations. *You will be handing in your work during class the next time we meet.*
| Dealer | Price | Interest Rate | Payment Frequency | Term of Loan |
| Boch Toyota | $24,000 | 5% | Monthly | 5 Years |
| Herb Chambers | $23,000 | 5.5% | Monthly | 5 Years |
| Ira Toyota | $25,000 | 5% | Monthly | 3 Years |
| Clair Toyota | $23,000 | 5% | Semi Annual | 5 Years |
