CASE STUDY #1 Tony wants to put his graduation money into a savings account. He received $75 for graduation.

If he put his money into an account that earns 4.25% interest per year, he wants to know how much he will have at the end of 20 years. His friend Pete helped him out and presented Tony with the following explanation. All you are really doing is adding 4.25% of your money each year. Look this is what your first 5 years look like Year Money in account 1 75.19 2 81.51 3 84.98 4 88. 59 5 96.28 Since your interest stays constant each year then you can predict how much money you will have each year using this equation: = 75 + 1.0425 where x is the number of years and y is your total money for that year. Look I even graphed the table and it shows that the increase is constant.

1. Describe Petes argument/logic in your own words. 2. To what extent do you agree with Pete? Explain why. 3. Using a table, graph and equation, write John a thorough explanation of how Tony can predict how much money will be in his account after 20 years.

Case Study #2 Amy and John have each decided to start a new bank account. Amy started her bank account with $30 while John started his bank account with $20. Amy placed her $30 into an account that earns 3% interest at the end of each year. John placed his $20 into an account that earns 6% interest at the end of each year. Amy and John opened up their accounts on the same day and they both dont deposit and take out any more money into their account as time passes. Amy tells John that she will always have more money in the bank since she started with more money in the bank than him. Amy used the following table and graph to explain it to John and told him that the numbers dont lie. Both her table and her graph show her that she will always have more money: Year 1 2 3 4 5 Amy Account Total 30.90 31.83 32.78 33.77 33.78 Johns Account Total 21.20 22.47 23.82 26.77 26.77

1.Describe Amys argument/logic in your own words. 2. To what extent do you agree with Amy? Why or Why not? 3. After 20 years who will have more money in their account? By how much? 4. Write Amy and John a thorough explanation (using a table, graph, and equation) of how they can determine who will have more money in the long run?