1. Applications of Exponential Equations The Good, The Bad, and The Ugly
Let’s say we put $260 per month in a “safer” mutual fund. To make things simple, we’ll “hold” our investment and just compound yearly
Using the compound interest formula:
A = P(1 + r/n)nt and assuming an 8% return,
How much money would we have after 1 year?
2 years?
10 years?
30 years?
40 years?

2. Applications of Exponential Equations The Good, The Bad, and The Ugly
The Consumer Price Index (CPI) is the cost of a bundle of goods needed for basic everyday living. The formula is as follows:
CPI = 29 (2.71).04t
CPI is the price of a bundle of goods in any year. The original CPI was $29 in the year 1960, and the average rate of inflation in a given year is around 4%. t will represent the number of years since 1960.
What was the price of a necessary week’s goods in 1960?
1970?
1980?
2000?
2013?
2020?

3. Applications of Exponential Equations The Good, The Bad, and The Ugly
Most credit cards have an interest rate between 18 and 26%. The interest is compounded monthly on any unpaid portion of your balance. Assume a purchase of a flat-screen TV for $1500. Assuming the customer only pays the minimum monthly payment of $25:
What happens to the balance owed over the course of the 1st year at a 21% interest rate?
2 years?
When do you think this purchase will be paid off only using the minimum monthly payment?