Money Matters Problems (Section 4.1)
The Bank Account Problem
At the beginning of the year, you deposit $5,000 into a savings
account. At the end of each month, the bank pays interest at
a rate of 0.5% (rate quoted as a monthly rate).
you deposit another $200 into the account at the end of each
Develop a mathematical model that describes the value of the
How much money is in the account at the end of September?
Which Car to Buy?
You wish to buy a car, and narrow your choices to a Saturn,
Cavalier, and Hyundai. Each company offers you its best deal:
• Saturn: $13,990, $1,000 downpayment, and 3.5% interest for
up to 60 months.
• Cavalier: $13,550, $1,500 downpayment, and 4.5% interest
for up to 60 months.
• Hyundai: $12,400, $500 downpayment, and 6.5% interest for
up to 48 months.
In each case, the interest rates quoted are annual interest rates.
You can afford up to a $1,500 downpayment, plus $475 per
month on a car payment. Use a mathematical model to deter-
mine which car to buy.