Gerver R.K., Sgroi R.J. Financial Algebra

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Inside the Student Edition

In the future, you will incur many expenses,

such as a home, automobile, insurance, food, clothing, and

health care. Some are major expenses and some are minor, but each

costs money. To have money for major expenses, it helps to have your

savings grow in value. Investing can help money grow in value.

You need to ﬁ nd a personal balance between risk and reward when

you make choices about investments. Investments are never without

questions. Did you miss the chance to make more money because you

were being overly cautious? Was the investment too risky? Did you risk

losing too much money by investing in something that may not have

had a sound foundation?

Investors struggle with these questions every day. The stock mar-

ket is a forum in which the investment risk/reward balance is put to

the test. Will the market advance? Will the market decline? No one

can be certain. With a strong knowledge of the stock market, you as

an investor can make decisions that are based on experience, data,

trends, and mathematics.

CHAPTER

The safe way

to double your

money is to fold

it over once and

put it in your

pocket.

Frank Hubbard, Journalist

The Stock Market

1-1 Business Organization

1-2 Stock Market Data

1-3 Stock Market Data Charts

1-4 Simple Moving Averages

1-5 Stock Market Ticker

1-6 Stock Transactions

1-7 Stock Transaction Fees

1-8 Stock Splits

1-9 Dividend Income

What do you think

Frank Hubbard meant in this quote?

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ses,

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ave

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ta,

115

©GUENTERMANAUS, 2009

LICENSE FROM SHUTTERSTOCK.COM

Really!

Really?

Most people are familiar with the United States Secret

Service as the group that guards the President. Its of cers

are frequently seen on television surrounding the President

as he tends to the affairs of the country.

What most people do not realize is that the Secret

Service, established in 1865, was created to help the United

States government combat the widespread counterfeiting of

U.S. currency at the time. Counterfeiting, one of the oldest

crimes in history, had become a national problem. It is esti-

mated that approximately

of the nation’s currency in

circulation at that time was counterfeit.

The problem, although not as severe, still exists today.

Modern printing and scanning equipment makes counter-

feiting easier, and the government has instituted changes

in currency to make it harder to counterfeit. Although most

citizens have no intentions of counterfeiting U.S. currency,

Americans have a responsibility to learn about counterfeit-

ing, because they may receive a counterfeit bill one day.

If a counterfeit bill is received, try to recall where it was

acquired. Contact the nearest Secret Service of ce. The bill

will be taken and no compensation will be returned to you.

If a counterfeit bill is deposited in a bank account, you will

lose the bill and the credit for the value of the deposit. Go

to the Federal Reserve Bank website and read tips for spot-

ting counterfeit currency. The penalty for trying to pass a

counterfeit bill is a  ne or imprisonment.

49657_03_ch03_p114-171.indd 115 12/16/09 11:46:27 PM

“This information

is interesting and

relevant!

Showing real-world

relevance is always

a good lead into

the lesson.”

A relevant quote and chapter

introduction

set the stage for the

topics covered in the chapter.

Really? Really! captures students’

attention by discussing a fascinating

real-life topic that relates to the

chapter’s content.

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Structure Puts Math into Context

What jobs base their pay according

to the amount produced?

Some employees are not paid by the number of hours they work. Their

pay is based on the amount of sales they make. Stockbrokers, travel

agents, authors, musicians, and salespersons may all be paid based upon

money from sales. These people are paid a

commission, or a royalty.

The commission or royalty rate is usually expressed as a percent. People

who get paid commissions or royalties earn more money as more sales

are made. Even if they work many hours, they can earn very little money

if they make very few sales. Some employees get a commission in addi-

tion to a regular salary. Can you think of any advantages or disadvan-

tages of getting paid only by commission?

A real estate salesperson receives a commission on the sale of each

home. Money is not made until there is a sale. When an author writes

a book, the author’s job is basically done. Royalties depend on sales,

but the author does not have to do any more writing to make more

money. However, an author can do promotional events and book sign-

ings to increase awareness of the book, which may increase sales of the

book.

Compare commission workers to people who are paid according to

the amount of items they produce. They are paid by production, rather

than the length of time that it takes them to do the job. These employ-

ees are called

pieceworkers. Pieceworkers are paid a certain amount

of money, called a

piecework rate, for each item they complete.

Although piecework is not as common as in years past, there are still

jobs in farming, manufacturing, and journalism where this method of

payment is used.

Piecework pay is sometimes used in combination with an hourly

wage. The employee gets paid by the hour and receives a certain amount

of money for each piece of work completed. The greater the number of

pieces of work completed, the more money the employee makes. What

are the beneﬁ ts to both the employer and the worker?

pieceworker•

piecework rate•

Key Terms

commission•

royalty•

Objectives

Compute pay •

based on percent

commission.

Compute

•

piecework pay.

Understand

•

advantages and

disadvantages

of pay based on

production.

Commissions, Royalties,

and Piecework Pay

6-3

He that is of the opinion money will do everything may well be

suspected of doing everything for money.

Benjamin Franklin, American Statesman

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A list of objectives provides the

main learning outcomes for the

lesson.

“An interesting

introduction and

a great metaphor

for the lesson!”

The best way to deal with credit card debt is to educate

yourself.

Mark Rosen, Author

Although it’s easy to forget sometimes, a share is not a

lottery ticket . . . it’s part-ownership of a business.

Peter Lynch, American businessman, Investment strategist,

and Philanthropist

Nobody ever lost money taking a proﬁ t.

Bernard Baruch, Businessman

An intriguing quote at the beginning of

each lesson motivates learning.

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xii

helps focus attention on the big idea

The Essential Question

4-4 Credit Cards 193

Fair Debt Collection •

Practices Act

debit card•

Electronic Funds Transfer Act•

average daily balance•

mean•

Key Terms

credit card•

impulse buying•

revolving charge account•

charge card•

Truth-in-Lending Act•

Fair Credit Billing Act•

Objectives

Become familiar •

with the basic

vocabulary of

credit cards.

Compute an

•

average daily

balance.

Credit Cards

4-4

Life was a lot simpler when what we honored was father and

mother rather than all major credit cards.

Robert Orben, American Comedy Writer

What do i need to know to use

credit cards?

Plastic credit cards were introduced in the 1950s. A credit card is a

plastic card that entitles its holder to make purchases and pay for them

later. The issuer of the card has given the person whose name is on the

account a line of credit The account holder of a credit card has signed an

agreement to pay for any purchase made using the card.

Credit cards are so prevalent today that they seem more popular

than cash. Businesses that honor credit cards think that consumers

spend more money when they just have to sign their names. It is men-

tally different than removing cash from your wallet when paying for

something. The use of credit cards probably increases impulse buying.

Impulse buying is when a consumer purchases something to which

they suddenly were attracted to and had no intention of buying. The

convenience of using credit cards also can attract new customers to stores

that accept them. Consumers enjoy many advantages when using a

credit card.

There is no need to carry large sums of cash.

•

Responsible use of a card helps a credit rating (FICO score).•

Customers receive or have access to a written record of all purchases.•

Some cards have rewards programs such as frequent ﬂ yer miles.•

There are two types of credit card accounts. The most commonly

used is the

revolving charge account. This means that the entire

bill does not have to be paid in full each month. There is a minimum

monthly payment, and there is a ﬁ nance charge the month follow-

ing any month the bill is not paid in full. Customers have the conve-

nience of stretching out payments over as many months as they choose.

However, the interest costs for doing this are relatively high. Popular

revolving charge accounts include Visa, MasterCard, American Express,

and Discover Card.

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“This book contains

relevant and current

information high school

students need. The

educational focus of

today is on standards.

This book allows both to

be addressed.”

The Essential Question helps focus attention

on the big idea of each lesson. You will be

able to answer the question by the end of

the lesson.

Each lesson begins with a

discussion of

terms and

concepts

related to the

lesson topic.

What are social security

and medicare?

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How do people gain access to

money they keep in the bank?

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What is compound interest?

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What information do you need to

know before taking out a loan?

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What information does a credit

card statement give you?

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How do revenue and expenses

contribute to profit calculation?

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xiii

When am I ever going to

use this in real life?

EXAMPLE 5

Glassman Chevrolet pays commission to its car salespeople. They are

paid a percent of the proﬁ t the dealership makes on the car, not on the

selling price of the car. If the proﬁ t is under $750, the commission rate

is 20%. If the proﬁ t is at least $750 and less than or equal to $1,000,

the commission rate is 22% of the proﬁ t. If the proﬁ t is above $1,000,

the rate is 25% of the proﬁ t. If x represents the proﬁ t, express the com-

mission c(x) as a piecewise function.

SOLUTION There is a different rule for each of the different domains.

The 20% commission rate is for proﬁ ts less than $750.

The 22% commission rate is for proﬁ ts from $750 to $1,000, inclusive.

The 25% commission rate is for proﬁ ts greater than $1,000.

Translate the words into

algebraic symbols.

CHECK

■

YOUR UNDERSTANDING

Find the difference between the commission paid if a Glassman

Chevrolet salesman, from Example 5, sells a car for a $750 proﬁ t

compared to selling a car for a $749 proﬁ t.

EXAMPLE 6

Joyce works at Fortunato’s Furniture. She is paid on commission. She

receives 10% of her ﬁ rst $900 in sales and 15% of the balance of her

sales. Last week she earned $750. What was the total value of the fur-

niture she sold?

SOLUTION Let x represent the total value of the furniture.

Commission for the ﬁ rst $900. 0.10(900)

Balance of sales after the ﬁ rst $900. x – 900

Commission for the balance. 0.15(x – 900)

Add the two commissions. 0.10(900) + 0.15(x – 900) = 750

Simplify. 90 + 0.15x – 135 = 750

Combine like terms. 0.15x – 45 = 750

Add 45 to each side. 0.15x = 795

Divide each side by 0.15. x = 5,300

Joyce sold $5,300 worth of furniture last week.

CHECK

■

YOUR UNDERSTANDING

Lauren is a salesperson at Koslow’s Tires. She is paid a monthly

commission. She receives 6% of her ﬁ rst $1,000 in sales and 11% of

the balance of her sales. Today she earned $203. What was the total

value of the tires she sold?

c(x) =

0.20x when 0 ≤ x < 750

0.22x when 750 ≤ x ≤ 1,000

0.25x when x > 1,000

49657_06_ch06_p288-325.indd Sec1:306 12/19/09 5:21:16 PM

STANDIN

Koslow’s

Tire

sSh

s. Sh

e is

paid

a mon

thl

thly

her

ﬁ

y sh

s. S espa d a o t y

ﬁ

Skills and Strategies

Here you will learn about a variety of employee beneﬁ ts and the math-

ematics that is needed to get the most out of them.

EXAMPLE 1

Alan works for a printing company. It has been a little over four years

since he was hired. He now makes $54,080 per year. When he was hired,

he was told that he had ﬁ ve days of paid vacation time. For each year

that he worked at the company, he would gain another two days of paid

vacation time to a maximum of 20 days. How many paid vacation days

does he now get at the end of four years of employment and how much

will he make during the time he is on vacation?

SOLUTION Examine the table. Alan has com-

pleted four full years of work for his company. He

is in his ﬁ fth year of employment and is entitled

to 13 paid vacation days. Because he is making

$54,080 per year, you can determine his weekly

salary by dividing this amount by 52 weeks.

54,080 ÷ 52 = 1,040

Alan makes $1,040 per week. A typical workweek

consists of ﬁ ve business days. Therefore, Alan has

two work weeks plus three days of paid vacation coming to him this

year. The remaining three vacation days can be expressed as a frac-

tional part of a work week. The fraction

can be written as 0.6. Alan

gets 2.6 work weeks of paid vacation time.

Weekly salary × 2.6 1,040 × 2.6 = 2,704

Alan will make $2,704 while on vacation this year.

CHECK

■

YOUR UNDERSTANDING

Let x represent the number of the working year and y represent the

number of paid vacation days. Based on the table above, write an

algebraic equation that models the relationship between these two

variables.

Number of

Years Worked

Number of Paid

Vacation Days

1 5 + 2 = 7

2 5 + 2 + 2 = 9

3 5 + 2 + 2 + 2 = 11

4 5 + 2 + 2 + 2 + 2 = 13

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“I love the emphasis

on applications with

relevance to the

world we live in, not on

symbolic manipulation.”

In Skills and Strategies, the heart of the

lesson, math concepts are taught through

worked-out examples

. Examples present

each math concept step-by-step.

All math concepts are

taught within

real-life

context

. When am I

ever going to use this

in real life? is answered

here!

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Ongoing Assessment and Review

xiv

CHECK

■

YOUR UNDERSTANDING

Jillian owns 60% of the stock in a private catering corporation. There

are 1,200 shares in the entire corporation. How many shares does

Jillian own?

EXAMPLE 3

Three partners are investing a total of $900,000 to open a garden

and landscaping store. Their investments are in the ratio 2:3:5.

How much does the partner that invested the least contribute?

SOLUTION Use the ratio 2:3:5 to write an

expression for the amount each partner

invested.

Let 2x represent the amount invested by the

ﬁ rst partner.

Let 3x represent the amount invested by the

second partner.

Let 5x represent the amount invested by the

third partner.

Write an equation showing the three invest-

ments total $900,000.

2x + 3x + 5x = 900,000

Combine like terms. 10x = 900,000

Divide each side of the equation by 10. x = 90,000

The partner that invested the least is represented by the expression 2x.

Substitute $90,000 into the expression. 2(90,000) = 180,000

The partner who invested the least amount contributed $180,000.

CHECK

■

YOUR UNDERSTANDING

Two partners are starting a wedding planning business. The total

investment is $45,000. Their investments are in the ratio 4:5. How

much does each investor contribute?

EXTEND

■

YOUR UNDERSTANDING

Two partners each invest 35% in a startup business. They need to

ﬁ nd another investor for the rest of the money. What percent of

the business will that person own? Write a ratio to represent the

investments in the business.

ﬁ

Divide each side of the equat

FROM SHUTTERSTOCK.COM

49657_01_ch01_p002-061.indd 6 12/17/09 2:12:18 AM

1. Is it always true that someone sells a stock because they think it

is going to go down in price? How do those words apply to what

you’ve learned in this lesson?

2. Zach bought 200 shares of Goshen stock years ago for $21.35 per

share. He sold all 200 shares today for $43 per share. What was his

gross capital gain?

3. Mitchell bought 600 shares of Centerco two years ago for $34.50 per

share. He sold them yesterday for $38.64 per share.

a. What was the percent increase in the price per share?

b. What was the total purchase price for the 600 shares?

c. What was the total selling price for the 600 shares?

d. What was the percent capital gain for the 600 shares?

e. How does the percent increase in the price of one share compare to

the percent capital gain for all 600 shares?

4. Tori bought x shares of Mattel stock for m dollars per share. She sold

all of the shares months later for y dollars per share. Express her cap-

ital gain or loss algebraically.

5. Ramon bought x shares of Xerox stock for a total of $40,000. Express

the price he paid per share algebraically.

6. In 2004, Joe bought 200 shares in the Nikon corporation for $12.25

per share. In 2007 he sold the shares for $31.27 each.

a. What was Joe’s capital gain?

b. Express Joe’s capital gain as a percent, rounded to the nearest

percent.

7. General Motors stock fell from $32 per share in 2006 to $20 per

share during 2008.

a. If you bought and then sold 300 shares at these prices, what was

your loss?

b. Express your loss as a percent of the purchase price. Round to the

nearest tenth of a percent.

8. Elliott purchased shares of Microsoft in 2008 for $28 per share. He

plans to sell them as soon as the price rises 20%. At what price will

he sell his shares?

9. Maria purchased 1,000 shares of stock for $35.50 per share in 2003.

She sold them in 2007 for $55.10 per share. Express her capital gain

as a percent, rounded to the nearest tenth of a percent.

Applications

When somebody buys a stock it’s because they think it’s going to

go up and the person who sold it to them thinks it’s going to go

down. Somebody’s wrong.

George Ross, Television actor

49657_01_ch01_p002-061.indd 38 12/17/09 2:13:00 AM

Carefully

developed,

proven

applications

at the end of

each lesson

require you to

apply the

concepts to

a speciﬁ c

question or

scenario.

“I like the

immediate check

of understanding

instead of waiting

until the end of the

chapter.”

Check Your Understanding

allows you to immediately

practice the concept on your

own. The questions are similar

to the example and help you

gauge your understanding of

the skills being taught.

Extend Your Understanding

provides an opportunity to

solve a more challenging

problem.

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Go to www.cengage.com/school/math/ﬁ nancialalgebra where you will ﬁ nd a link to

a website containing current issues about banking. Try one of the activities.

Dollars and Sense

Your Financial News Update

49657_03_ch03_p114-171.indd 168 12/17/09 2:29:38 AM

282 Chapter 5 Automobile Ownership

CHAPTER

Real Numbers

You Write the Story!!

The graph below is a scatterplot and its regression curve. It gives actual

hybrid car sales for the years 2000–2005 and then predictions for hybrid

sales up until 2015. Write a short newspaper-type article centered on

this graph. You can ﬁ nd an electronic copy at www.cengage.com/school/

math/ﬁ nancialalgebra. Copy it and paste it into your article.

Assessment

2001 2003 2005 2007 2009 2011

200,000

1999 2013 2015

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

Forecasts of Hybrid Sales

20,287

9,350

35,000

47,525

88,000

215,000

Sales ($)

Ye a r

Source: hybridcars.com

1. Go to a new car dealership. Pick out a car and make a list of the options

you would order. Find the price of the car, the price of each option, and

the total cost. Compute the sales tax and make a complete list of any

extra charges for new car delivery. Report your ﬁ ndings to the class.

2. Pick any new or used car you would like to own. Make a list of the

options you would like the car to have. Search for used car price on

the Internet and ﬁ nd out what the car is worth. Print pages that sum-

marize the car and its value. Visit a local insurance agent, and ﬁ nd

out the cost of insurance for the car. Display your ﬁ ndings on a poster.

3. Visit your local motor vehicle department or their website. Make a

list of the forms needed to register a car and get license plates. If pos-

sible, get sample copies of each form. Show and explain each form

to the class.

Reality Check

Write a short newspaper-type article centered on this graph. You can ﬁ nd

an electronic copy at www.cengage.com/school/math/ﬁ nancialalgebra.

Copy it and paste it into your article.

49657_05_ch05_p216-287.indd Sec11:282 12/17/09 2:15:51 AM

CHAPTER

Assessment

around this graph. You can ﬁ nd an electronic copy at www.cengage .com/

Reality Check

Real Numbers

You Write the Story!!

FICO scores are measures of your credit risk to a potential creditor. The

graph gives the weighted contribution of several factors that affect your

credit rating. The Fair Isaac Corporation, the creators of the FICO score,

keeps their formulas for computing the scores a secret. Write a short

newspaper-type article centered on the circle graph. You can ﬁ nd a copy

of this graph at www.cengage.com/school/math/ﬁ nancialalgebra. Copy

and paste it into your article.

1. There are six laws that regulate consumer credit in the United States.

Find when each act was signed into law. What problem was the act

trying to help solve? What are the major provisions of each act?

Prepare a poster displaying your ﬁ ndings. The laws are listed below.

Equal Credit Opportunity Act•

Electronic Funds Transfer Act•

Fair Credit Reporting Act•

Fair Credit Billing Act•

Fair Debt Collection Practices Act•

Truth-in-Lending Act•

2. Visit two lending institutions in your area. Find the APR, monthly

payment, and ﬁ nance charge for a $15,000, three-year loan at the

two lenders. Prepare a poster that includes a business card from each

lender and the following mathematical information for the loan.

APR•

monthly payment•

total of all monthly payments•

ﬁ nance charge•

es o

edi

t and

redit

ors

sed

The Le

ngt

h o

our

edi

t H

istor

Amo

ctu

alit

How Much

Rec

entl

btain

redi

10%

15%

Assessment 211

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“Excellent

activities that

help connect

math to the

real world.”

Chapter Assessment provides

an opportunity to check your

knowledge of the chapter content.

Reality Check provides speciﬁ c

suggestions for research

opportunities, projects, and

guest speakers to extend your

learning experience.

Real Numbers: You Write the Story!

asks you to examine a graph and write

a story focused around the graph’s

information, giving you an opportunity

to be creative while at the same time

sharpening your graph interpretation skills.

Dollars and Sense guides you to the

companion site where you will ﬁ nd a link to

a website containing up-to-date information

and activities related to the chapter content.

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xvi

REVISITED

Really!

Really?

Go to www.cengage.com/school/math/ﬁ nancialalgebra where you will ﬁ nd a link to

a website containing current issues about banking. Try one of the activities.

Dollars and Sense

Your Financial News Update

The Secret Service drastically reduced the occurrences of counterfeit

money since the Civil War. Nevertheless, the problem still exists. Look at

the following table.

1. Create a line graph for each column of data. Let the horizontal axis

represent the year, and let the vertical axis represent dollars. Put both

graphs on the same set of axes, in different colors.

2. Look at the graphs you created in Exercise 1. Do you think the pattern

of catching counterfeit bills before and after circulation follows the

same pattern of increases and decreases?

U.S. Counterfeiting 1999–2005

Year

Dollar value of currency

that was found after

being in circulation, in

millions

Dollar value of currency

that was found before

getting into circulation,

in millions

1999 39.2 13.7

2000 39.7 20.9

2001 47.5 12.6

2002 42.9 9.7

2003 36.6 10.7

2004 43.6 10.3

2005 56.2 12.7

Source: U.S. Secret Service; Board of Governors of the Federal Reserve

System; U.S. Department of the Treasury

The patterns are not identical.

Changes in one category are not the same in direction or magnitude. See

additional answers for graph.

REALLY? REALLY!

REVISITED

The Publications

Department of the Federal

Reserve Bank offers

materials on counterfeiting

that can be accessed on-

line. You can have students

request some of the

materials.

See additional answers.

49657_03_ch03_p114-171.indd 168 12/17/09 2:29:38 AM

Applications

1. Go to www.cengage.com/school/math/ﬁ nancialalgebra and down-

load a blank check register. Complete all of the necessary informa-

tion in the check register.

a. The balance on December 10 is $3,900.50.

b. On December 11 check #1223 is written for $84 to North Shore

High School Drama Club.

c. On December 12 a paycheck in the amount of $240.80 is deposited.

d. On December 13 a birthday check for $100 is received from

grandparents. The check is deposited that afternoon.

e. On December 17 three checks are written while holiday shop-

ping. One is to Best Buy in the amount of $480.21, one is to

Target in the amount of $140.58, and one is to Aeropostale in the

amount of $215.60.

f. Staples sells computers. On December 20 a laptop is purchased

for $1,250. A mistake is made on the ﬁ rst check, and the check

must be voided. A correct check for the right amount is then

written with the next available check.

g. On December 22 a gift is returned to Barnes and Noble. The

$120 amount is deposited into the checking account.

h. On December 24, $300 is withdrawn from an ATM for food at a hol-

iday party. The company that owns the ATM charges $1.50 fee for

the transaction, and the customer’s bank charges a $2.50 fee for the

transaction. The fees are taken directly out of the checking account.

i. On December 28 a check for $521 is written to Len’s Auto Body

Shop to repair a dent in the fender of a car.

j. On December 29 a check is written to AMTRAK for $150.80 to

visit a cousin in Washington, D.C. for New Year’s Eve.

2. Use the check register from Exercise 1. It is now one month later, and

the checking account statement has arrived. Does the account balance?

Ending balance from statement ________________

Deposits outstanding ________________

Checks outstanding ________________

Revised statement balance ________________

Balance from checkbook ________________

Checking Account Statement

Date Description Check # Amount Balance

12/12 Deposit $240.80 $4,141.30

12/13 Deposit $100.00 $4,241.30

12/19 W/D 1223 $ 84.00 $4,157.30

12/22 ATM Withdrawal $300.00 $3,857.30

12/22 ATM Fee $ 1.50 $3,855.80

12/22 ATM Fee $ 2.50 $3,853.30

01/08 W/D 1225 $140.58 $3,712.72

01/12 W/D 1226 $215.60 $3,497.12

01/15 W/D 1229 $521.00 $2,976.12

01/17 W/D 1224 $480.21 $2,495.91

Ending Balance: $2,495.91

Assessment 169

49657_03_ch03_p114-171.indd 169 12/17/09 2:44:54 AM

170 Chapter 3 Banking Services

3. Find the simple interest on a $2,219 principal, deposited for six years

at a rate of 5.11%.

4. Ruth has a savings account at a bank that charges a $3.50 fee for

every month her balance falls below $1,500. Her account has $1,722

and then she withdraws $400. What is her balance in ﬁ ve months if

her account balance never reaches $1,500?

5. Nine months ago Alexa deposited $7,000 in a three-year CD. She has

received $224.16 in interest. She withdraws $1,000. This is before the

CD matures, so she pays a $250 penalty. What is her balance after

the withdrawal?

6. Ralph deposited $910 in an account that pays 5.2% simple interest,

for 3

years.

a. How much interest did the account earn?

b. What is the ending balance?

c. How much interest did the account earn the ﬁ rst year?

d. How much interest did the account earn the third year?

7. Matt has two single accounts at Midtown Bank. One account has a

balance of $74,112.09 and the other has a balance of $77,239.01.

a. What is the sum of Matt’s balances?

b. Is all of Matt’s money insured by the FDIC? Explain.

8. Rhonda deposits $5,600 in a savings account that pays 4

% interest,

compounded semiannually.

a. How much interest does the account earn in the ﬁ rst six

months?

b. What is the ending balance after six months?

c. How much interest does the account earn in the second six

months?

d. What is the balance after one year?

e. How much interest does the account earn the ﬁ rst year?

9. Rebecca opened a savings account on March 20, with a $5,200

deposit. The account pays 3.99% interest, compounded daily. On

March 21 she made a $700 deposit, and on March 22 she made a

$500 withdrawal. Use this information to ﬁ nd the missing amounts.

10. Nick deposited $3,000 in a three-year CD account that pays 4.08%

interest, compounded weekly. What is the ending balance?

11. How much more would $10,000 earn in three years compounded

daily at 4.33%, than compounded semiannually at 4.33%?

Date March 20 March 21 March 22

Opening balance a. f. k.

Deposit b. g. -----

Withdrawal ----- ----- l.

Principal used to

compute interest

c. h. m.

Interest d. i. n.

Ending balance e. j. p.

49657_03_ch03_p114-171.indd 170 12/17/09 2:45:12 AM

12. Austin deposits $2,250 into a one-year CD at an interest rate of

5.3%, compounded daily.

a. What is the ending balance after the year?

b. How much interest did the account earn during the year?

c. What is the annual percentage yield? Round to the nearest hun-

dredth of a percent.

13. Find the interest earned on a $25,000 deposit for 2

years at 4.7%

interest, compounded continuously.

14. Examine each of the following situations, labeled I, II, and III. Identify

which of the three cases below applies. Do not solve the problems.

I. future value of a single deposit investment

II. future value of a periodic deposit investment

III. present value of a periodic deposit investment

a. You want to save for a new car that you will buy when you

graduate college in 4 years. How much will you be able to afford

if you deposit $1,000 per quarter in an account that compounds

interest at a rate of 4.1% quarterly?

b. You deposit $3,000 into an account that yields 3.22% interest

compounded semiannually. How much will you have in the

account in 5 years?

c. You want to put a $40,000 down payment on a store front for a

new business that you plan on opening in 5 years. How much

should you deposit monthly into an account with an APR of

3.75%, compounded monthly?

15. Santos deposited $1,800 in an account that yields 2.7% interest,

compounded semiannually. How much is in the account after

54 months?

16. Stephanie signed up for a direct deposit transfer into her savings

account from her checking account. Every month $150 is withdrawn

from her checking account. The interest in this account is at 2.6%

compounded monthly. How much will be in the account at the end

of 6

years?

17. Jazmine needs $30,000 to pay off a loan at the end of 5 years. How

much must she deposit monthly into a savings account that yields

3% interest, compounded monthly?

18. Use a table of increasing values of x to ﬁ nd each of the following

limits. If no limit exists, say the limit is undeﬁ ned.

a. lim

x→∞

f(x) if f(x) =

9x − 1

______

3x − 5

b. lim

x→∞

g(x) if g(x) =

+ 9x

________

4x + 1

c. lim

x→∞

h(x) if h(x) =

_______

− 41

19. Tom wants to have $50,000 saved sometime in the future. How

much must he deposit every month into an account that pays 2.8%

interest, compounded monthly. Use a graphing calculator to graph

the present value function.

Assessment 171

49657_03_ch03_p114-171.indd 171 12/17/09 2:45:28 AM

Each chapter concludes by revisiting the Really?

Really!

discussion for a cohesive presentation.

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“Great variety

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will prepare

students for life

outside of school!”

Meaningful applications at the end of each chapter require you to apply concepts

that were taught throughout the chapter.

49657_00_frontmatter_pi-xvii.indd xvi49657_00_frontmatter_pi-xvii.indd xvi 12/28/09 5:08:55 PM12/28/09 5:08:55 PM

xvii

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