Honors Algebra 2
Logs & Exponential Functions
Project on Compound Interest
Name _______________________
The Exponential Growth of Your Future Life (Part 1 of 4)
Objective:
You will apply your knowledge and skills about compound interest to real-life situations
you may face in the future.
Task:
You will work individually to complete parts of this project. Read and complete each
part thoroughly. Questions will be graded on the quality of your answers and if you
follow the directions. Round all answers to the nearest hundredth (two decimal places).
Part 1: Your Future Job
1) Think about what career you would like to pursue after you finish your studies. Write
this career here:
Chosen Career:
2) Describe this career in complete sentences. Include the following information: why you
chose this career, what classes you are taking in high school to prepare you for this
career, and what you will have to do after high school to be qualified for this career.
YOU MUST USE A MINIMUM OF FOUR COMPLETE SENTENCES.
3) a) Look up this job on http://www.salary.com using the ZIP code 29020.
1) Put the job title in.
2) Put in “29020” for your
location and select “Camden,
SC.”
3) Click “Search.”
McGee
Camden High School
7/29/2017
b) You may find several jobs for just one search. Select the one that fits your career best.
If there are different levels of experience available, try to select one in the middle
(intermediate level). Avoid terms like “highly experienced” or “senior” since this is for people
with many years of experience:
Find a job that matches your career
the most closely and click “View Job
Details.”
c) Choose “Free Salary Data” followed by “View My Results.” Be sure to skip any
advertisements.
McGee
Camden High School
7/29/2017
d) Find the Median Salary + Bonus for your job and record it below.
Your search will give you the
median salary for your job.
You will record it below.
Median Yearly Salary:
Monthly Salary (divide the previous answer by 12):
**BEFORE CONTINUING, YOU MUST HAVE MRS.MCGEE’S APPROVAL FOR YOUR CAREER
AND SALARY. THE LINE BELOW MUST BE SIGNED BEFORE YOU PROCEED.
_________________________________________________________________________
4)
Nothing is certain in life except death and taxes! We will now subtract out federal
taxes that will be withheld from your salary. We will not calculate state taxes since
they vary from state to state. You should be aware that SC DOES charge income
tax (anywhere from 0% up to 7% depending on how much you make according to
http://www.sctax.org/NR/rdonlyres/123AAB17-B2EF-493D-AC35E619004DD511/0/TAXFORMSANDRATES.pdf )
a) Go to the following website (http://apps.irs.gov/app/withholdingcalculator) and
enter your information (choose single and “no” for the options on the first screen)
McGee
Camden High School
7/29/2017
b)
Leave all options unchecked since
you will not have children or be
over 65. Also assume that this
is your only job. Choose
“Continue.”
c)
Enter information
1.
2.
3.
4.
5.
6.
McGee
Camden High School
Input yearly
salary for
gross wages.
Enter “0” for
any tax
withheld
Enter “0” for
tax withheld
from last
salary payment
Choose
“Monthly” for
the frequency
paid
Ensure start
date is
January 1 and
end date is
December 31
“Continue”
7/29/2017
d) Do not include any deductions. Choose “Continue.”
e)
Record yearly Federal Tax withheld.
Monthly Federal Withholding (divide withholding by 12):
Monthly Salary (Subtract Federal withholdings from original monthly salary):
McGee
Camden High School
7/29/2017
The Exponential Growth of Your Future Life (Part 2 of 4)
Part 2: Your Future Automobile
Next we will find a car and a house that you will be able to afford on this salary!
5)
Your car loan should not be more than 10% of your monthly salary (AFTER taxes).
We will calculate this number to find out what cars you can afford:
Maximum Monthly Car Payment:
6)
Go to the Auto Loan Calculator shown below to find out how much you can spend on a
car. We will assume that you finance the car over 5 years (60 months) at 5% interest.
In real life, some buyers will pay less interest for their car, and some will pay more.
You want to find a dollar amount to spend on a car that gives you a monthly payment that is
AT or BELOW your answer from number 4. Just keep trying numbers until you can make this
work (hint: start at about 20,000 and then guess/check from there):
http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx
Keep trying different numbers until
you get your monthly payment AT or
BELOW your maximum monthly car
payment.
This number should be AT or
BELOW your maximum monthly car
payment.
Maximum Car Price:
7)
Find a car. Go to http://www.carmax.com and find a car that is at or below your
Maximum Car Price.
PRICE_______________________________
Plug PRICE back into auto calculator above to find monthly car payment
PAYMENT___________________________________
Search www.carmax.com by Model &
Price.
When you find your car, print the
page that has a picture, price, and
other details.
McGee
Camden High School
7/29/2017
Describe this car in complete sentences. Include the following information: price, why you
chose the car, and the fuel efficiency of this car (miles per gallon). YOU MUST USE A
MINIMUM OF FOUR COMPLETE SENTENCES.
8)
Find the total amount of interest you are paying for this car after five years:
http://www.bankrate.com/calculators/mortgages/loan-interest-calculator.aspx
Price of car
Maximum monthly car payment from maximum
monthly car payment
Total Interest Paid:
9) Find the amount you are paying for your car after the end of five years. For this
part, all you have to do is add Total Interest Paid to the Price of the Car:
Total Price of Car:
(List price + interest)
10) Using your knowledge of exponential growth functions, use a formula to calculate the
total amount paid for the car including interest.
Total Price of Car
(Using exponential formula:
McGee
Camden High School
7/29/2017
11)
How do the answers between numbers 9 and 10 differ? Why do you think they are
the same/different? YOU MUST USE A MINIMUM OF TWO COMPLETE
SENTENCES.
12) Most automobiles depreciate in value each year, and your car is one of them. When
assets, such as cars, computers, or other items, decay in value over time, the value of
the object at any time can be modeled by the equation
y  a(1  r)t
y
t
a
r
—
—
—
—
amount of the object after t years
the number of years
the initial amount of the object
the rate of depreciation (as a decimal)
Find the value you can sell your car at after 10 years if it depreciates at 5% each year. The
initial value of the car is the value in Number 7.
Setup:
Answer: ________________________
McGee
Camden High School
7/29/2017
The Exponential Growth of Your Future Life (Part 3 of 4)
Part 3: Your Future House
13) Summarize your answers from Parts 1 and 2 of the activity:
Career Chosen:
Annual Salary (no
taxes):
Monthly Salary (no
taxes):
Car Chosen:
Total Price of Car
(list price):
Monthly Car
Payment:
14) Now you will need to find a home that you can afford on the salary of the job you’ve
chosen. Typically, financial planners recommend that homeowners do not spend more
than 1/3 of their monthly income on their mortgage and other loans. This next
calculator will help you work out how much you can spend on a house based on this
advice:
http://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx
Put in your monthly
salary from above.
30
5
We are assuming you have $30,000 for a
down payment and you will pay your mortgage
off over 30 years at 5% interest. Insurance
is $1000 and taxes are $5000 a year.
Put in your monthly car
payment from above.
Your home price and monthly
mortgage payment will be printed
here.
Maximum Home
Price:
Maximum Monthly
Mortgage Payment:
McGee
Camden High School
7/29/2017
15) Go to the following real estate website to find a house that is AT or BELOW the
price-limit set above. PRINT OUT A PICTURE/PRICE OF THE HOUSE AND TURN IT
IN WITH THIS PROJECT (NO foreclosures since those are generally cash sales only):
http://www.homes.com/
16) The maximum home price and monthly payment from above is not what you will actually
pay. Rather, it is just the most you can afford. After you pick out your house, find
your ACTUAL monthly payment based on the house you picked (again, assume a 5%
interest rate- which is actually low for right now. These rates fluctuate over time):
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx
ACTUAL Home Price
(list price):
ACTUAL Monthly
Mortgage Payment:
McGee
Camden High School
7/29/2017
17) Describe this house in complete sentences. Include the following information: actual
price, actual monthly payment, why you chose the house, and the location of the
house. YOU MUST USE A MINIMUM OF FOUR COMPLETE SENTENCES.
18) Find the total amount of interest you are paying for this house after thirty years:
http://www.bankrate.com/calculators/mortgages/loan-interest-calculator.aspx
Actual price of house
Minimum = $1
Maximum = Actual monthly payment
Total Interest Paid:
19)
Find the amount you are paying for your house after the end of thirty years. For
this part, all you have to do is add Total Interest Paid to the Price of the House:
Total Price of House:
McGee
Camden High School
(list price + total interest)
7/29/2017
20) Find your monthly payments to finance the price of this house for only 15 years.
Since you are financing for 15 years, the bank will subtract 0.25% from the interest
rate (4.75%):
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx
Monthly Mortgage
Payment (15 year
mortgage):
21) Find the total amount of interest you are paying for this house after FIFTEEN years:
http://www.bankrate.com/calculators/mortgages/loan-interest-calculator.aspx
Actual price of house (list price)
Minimum = $1
Maximum = Actual monthly payment
4.75
Total Interest Paid:
22) Find the amount you are paying for your house after the end of fifteen years. For
this part, all you have to do is add Total Interest Paid to the Price of the House:
Total Price of House:
McGee
Camden High School
(list price + total interest paid)
7/29/2017
23) Fill in the following table and then answer the following questions:
15-Year Mortgage
Monthly Payment
30-Year Mortgage
Monthly Payment
Total Interest for a
30-Year Mortgage
Total Interest For a
15-Year Mortgage
a) Why might someone choose a fifteen-year mortgage over a thirty-year mortgage? YOU
MUST USE AT LEAST TWO COMPLETE SENTENCES.
b) Why might someone choose a thirty-year mortgage over a fifteen-year mortgage? YOU
MUST USE AT LEAST TWO COMPLETE SENTENCES.
c) Which would you pick? A fifteen-year mortgage or a 30-year mortgage? Why? YOU MUST
USE AT LEAST FOUR COMPLETE SENTENCES.
McGee
Camden High School
7/29/2017
The Exponential Growth of Your Future Life (Part 4 of 4)
Part 4: Turn in and display Results
You must turn in the following in order to receive credit for the project:
I. Written portion
1.
This packet completely filled out. All printed pictures/information should
be stapled to the packet.
a. Car
b. House
2. All paragraphs must be written in rough draft form in the packet. You
must also type your paragraphs and turn them in with the packet. There
should be a total of 6 paragraphs and each one should be headed by the
question that is being addressed.
II.
Visual Display
Your findings should be displayed on a poster with all of the following included:
1. Pictures/Displays of your chosen career, car and house.
2. All necessary numbers included under each picture including (but not limited
to): Salary, car payment (include car’s value when bought and its
depreciated value), house payment.
3. Any other information you feel is pertinent is telling “your story.” Please do
not simply print out another copy of your paragraphs here- this should be
concise descriptions, not lengthy paragraphs.
DUE DATE: Friday, October 21, 2016
***a 20 point deduction from your grade will be applied for each day the project is
late. If you are absent on the day the project is due, you must provide a doctor’s
excuse for your absence or you will receive the late deduction.
Projects are due at the beginning of class. At the time of the tardy bell, you and
your project are late. Therefore, the project will be subject to the late penalty.
McGee
Camden High School
7/29/2017