Champion Investor Packet ​Answer Key

Make sure to initial/stamp/check off student answers before they color in the corresponding
level on the pyramid. Students turn in their packet (with initials/stamp) with the colored in
pyramid for completion points.

1. Suppose you deposit $100 in a savings account that pays 4% interest, compounded
annually.
Step size: ​1 year
Interest rate: ​4% or 1.04 or 0.04
Principal: ​100

a. Write a ​NOW-NEXT​ formula, a recursive formula and a function formula that show how
the amount of money in your account changes from year to year.
NEXT = NOW*1.04 or NEXT = NOW + NOW*0.04
P​n+1​ = P​n​*1.04 or P​n+1​ = P​n​ + P​n​*0.04
P(n) = 1.04* P(n-1) or P(n+1) = 1.04 * P(n)
b. Find the amount of money in the account after 10 years ​(supposing you do not add anything
extra)​ using any of the formulas you came up with from part (a).
*all of the formulas should give the students the same answer if they are the correct
formulas
n = 10
$148.02

c. How long will it take you to get past $500?

It will take at least 42 years

2. Suppose you deposit $3,050 in a savings account that pays 2% interest, compounded
annually. In addition to this, you also deposit a total of $120 each year into the savings
account.
Step size: ​1 year
Interest rate: ​2% or 1.02 or 0.02
Principal: ​3,050

a. Write a ​NOW-NEXT​ formula, a recursive formula and a function formula that show how
the amount of money in your account changes from year to year.
NEXT = NOW*1.02 + 120 or NEXT = NOW + NOW*0.02 + 120
P​n+1​ = P​n​*1.02 + 120 or P​n+1​ = P​n​ + P​n​*0.02 + 120
P(n) = 1.02* P(n-1) + 120 or P(n+1) = 1.02 * P(n) + 120
b. Find the amount of money in the account after 5 years using any of the formulas you
came up with from part (a).
*all of the formulas should give the students the same answer if they are the correct
formulas
After 5 years → $3,991.93

c. How long will it take you to get past $10,000?

It will take 29 years. After the 29th year you will have $10,071.40

3. Suppose you deposit $500 in a savings account that pays 3% interest, compounded
annually. However you also have to pay a banking fee each year that is $5.
Step size: ​1 year
Interest rate: ​3% or 1.03 or 0.03
Principal: ​500

a. Write a ​NOW-NEXT​ formula, a recursive formula and a function formula that show how
the amount of money in your account changes from year to year.
NEXT = NOW*1.03 - 5 or NEXT = NOW + NOW*0.03 - 5
P​n+1​ = P​n​*1.03 - 5 or P​n+1​ = P​n​ + P​n​*0.03 - 5
P(n) = 1.03* P(n-1) - 5 or P(n+1) = 1.03 * P(n) - 5

b. Find the amount of money in the account after 5 years using any of the formulas you
came up with from part (a).
*all of the formulas should give the students the same answer if they are the correct
formulas
After 5 years → $553.09

c. How long will it take you to get past $1,000?

31 years and that will get you to $1,000.03