Modeling Change

Assignment
GROUP 6

October 23, 2022

Institute of Technology of Cambodia Mathematical Modeling

1. With the price of gas continuing to rise, you wish to look at cars that get better gas
mileage. You narrow down your choices to the following 2012 models: Ford Fiesta, Ford
Focus, ChevyVolt, Chevy Cruz, Toyota Camry, Toyota Camry Hybrid, Toyota Prius and
Toyota CorollaEach company has offered you their “best deal” as listed in the following
table. You are able to allocate approximately $500 for a car payment each month for up
to 60 months, although less time would be preferable. Use dynamic systems to determine
which new car you can afford.

2012 Model Best Deal Price Cash Down Interest and Duration
Ford Fiesta $14, 200 $500 4.5% APR for 60 months
Ford Focus $20, 705 $750 4.38% APR for 60 months
Chevy Volt $39, 312 $1, 000 3.28% APR for 48 months
Chevy Cruz $16, 800 $500 4.4% APR for 60 months
Toyota Camry $22, 955 0 4.8%APR for 60 months
Toyota Camry Hybrid $26, 500 0 3% APR for 48 months
Toyota Corolla $16, 500 $900 4.25%for 60 months
Toyota Prius $19, 950 1, 000 44.3%for 60 months

Solution.
To find the best model of a new car that can be afforded, we consider
about less time would be preferable and we can pay each month. We have
8 models of cars and each model has the Best Price, Cash Down, Interest,
and Duration.

Let an be the amount after n months

⇒ a0 = Deal Price - Cash Down
r is the Interest per month
P represents the monthly payment
⇒ P ≤ $500

The dynamical system:

a1 = (1 + r)a0 − p
a2 = (1 + r)2 a0 − (1 + r)p − p
a3 = (1 + r)3 a0 − (1 + r)2 − (1 + r)p − p
..
.
!
n
1 · (1 + r) − 1
an = (1 + r)n a0 − p
(1 + r) − 1

Therefore we get:
r [(1 + r)n a0 − an ]
P =
(1 + r)n − 1

Responsible: Group 6 Page 2 of 7 20(22-23)

Institute of Technology of Cambodia Mathematical Modeling

For the Ford Fiesta model:

ˆ The initial price

a0 = 14, 200 − 500 = $13, 700

ˆ The amount after 60th month should be 0

ˆ The Interest per month

0.045
I= = 0.00375%
12
 
0.00375 (1 + 0.00375)60 13, 700 − 0
⇒P = = $255.41
(1 + 0.00375)60 − 1
This model may we can afford by the price of this car. After applying the
Dynamical System to another model, then

Model Monthly payment(P) Affordable

Ford Fiesta $255.41 affordablle
Ford Focus $370.93 affordablle
Chevy Volt $852.76 unaffordablle
Chevy Cruz $303.14 affordablle
Toyota Camry $431.09 affordablle
Toyota Camry Hybrid $586.56 unaffordablle
Toyota Corolla $289.06 affordablle
Toyota Pruis $370.12 affordablle

Based on the data above the Ford Fiesta is the best choice because we can
pay less than other models in the least amount of time.
2. You are considering a 30-year mortgage that charges 0.4% interest each
month to pay off a $250, 000 mortgage.
a. Determine the monthly payment p that allows the loan to be paid
off at 360 months.
b. Now assume that you have been paying the mortgage for 8 years and
now have an opportunity to refinance the loan. You have a choice
between a 20-year loan at 4% per year with interest charged monthly
and a 15-year loan at 3.8% per year with interest charged monthly.
Each of the loans charges a closing cost of $2500. Determine the
monthly payment p for both the 20-year and 15-year loans. Do you
think refinancing is the right thing to do? If so, do you prefer the
20-year or the 15-year option?

Responsible: Group 6 Page 3 of 7 20(22-23)

Institute of Technology of Cambodia Mathematical Modeling

Solution.

(a) Determine the monthly payment p that allows the loan to be paid off
at 360 months.
Let an denote the Standing Capital at the end of nth month. The
change (decrement) in the amount owed at the end of each period
(each month) increases by the amount of interest and decreases by the
amount of monthly payment.
∆an = an+1 − an = ran − p
Here, The monthly rate of interest is r = 0.4%
Initial amount a0 = $250, 000
p denotes the monthly payment that allows the loan to be paid off.
Rearrange the equation:
an+1 = an + ran − p
= (1 + r)an − p
The loan is to be paid off at 360 in months. So the Standing capital at
the end of 360th month or a360 should be 0
To obtain a formula for an to equate a360 to 0
Put n = 0, above expression gives
a1 = (1 + r)a0 − p
a2 = (1 + r)2 a0 − (1 + r)p − p
a3 = (1 + r)3 a0 − (1 + r)2 − (1 + r)p − p
..
.
!
n
1 · (1 + r) − 1
an = (1 + r)n a0 − p
(1 + r) − 1
Substitute the values of ao and r, above expression, is equivalent to
360
 
(1 + 0.004) − 1
(1 + 0.004)360 · 250000 − p =0
0.004
Solve this expression for the value of p
p = $1, 311.663386
(b) Determine the monthly payment p for both the 20-year and 15-year
loans.
The mortgage for 8 years has been paid, so the amount is
a96 = $213, 611.6374

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Institute of Technology of Cambodia Mathematical Modeling

We do the same as a question (a), and we get:

r [(1 + r)n a0 − an ]
p=
(1 + r)n − 1
ˆ Here, the monthly rate of interest is

r = 0.3333%

Total amount to refinance

a0 = 2500 + 213, 611.6374 = $216, 111.6374

The loan is to be paid off at 20 years or 240 months. So the standing

capital at the end of 240th month or a240 should be 0. Substitute
the values of a0 and r, the above expression, is equivalent to
 
0.003333 (1 + 0.003333)240 · 216, 111.6374 − 0
p= = $1, 309.594012
(1 + 0.0033)240 − 1
ˆ For the monthly payment p for the 15-year loan and charges closing
cost of $2500 ⇒ a0 = 2500 + 213, 611.6374 = $216, 111.6374 with
the monthly rate of interest is r = 0.003166%, the p given by:
 
0.003166 (1 + 0.003166)180 · 216, 111.6374 − 0
p= = $1, 576.978528
(1 + 0.003166)180 − 1
Based on the monthly payment between the 20-year and the 15-year
refinance, we can make a conclusion that the refinance is the right
thing and we prefer to refinance for 15 years with the rate interest of
3.8% because the total amount we have to pay less than the 20-year
refinance.
3. Consider the spreading of a highly communicable disease on an isolated
island with a population size of N. A portion of the population travels
abroad and returns to the island infected with the disease. Formulate a
dynamic system to approximate the change in the number of people in the
population who have the disease.
Solution.
Formulate a dynamic system to approximate the change in the number of
people.

Let in be the person who has been infected with the disease after n time
periods. The population size N, then (N − in ) represents those susceptible
but not yet infected. If those infected remain contagious, we can model

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Institute of Technology of Cambodia Mathematical Modeling

the change of those infected as a proportionality to the product of those

infected by those susceptible but not yet infected, or

∆in = in+1 − in = kin (N − in )

In this model the product in (N − in ) represents the number of possible

interactions between those infected and those not infected at time n. A
fraction k of these interactions would cause additional infection, represented
by ∆in

4. The data in the accompanying table show the speed n (in increments of
5mph) of an automobile and the associated distance in feet required to stop
it once the brakes are applied.For instance, n = 6 (representing 6 × 5 = 30
mph) requires a stopping distance of a6 = 47 ft.

a. Calculate and plot the change ∆an versus n. Does the graph reason-
ably approximate a linear relationship?
b. Based on your conclusions in part (a), find a different equation model
for the stopping distance data. Test your model by plotting the errors
in the predicted values against n. Discuss the appropriateness of the
model.
n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
an 3 6 11 21 32 47 65 87 112 140 171 204 241 282 325 376

Solution.

(a) Let an be the distance in the feed of an automobile. Let us plot the
change ∆an versus n
The given data is as follows:
n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
an 3 6 11 21 32 47 65 87 112 140 171 204 241 282 325 376
∆an 3 5 10 11 15 18 22 25 28 31 33 37 41 43 51

Responsible: Group 6 Page 6 of 7 20(22-23)

Institute of Technology of Cambodia Mathematical Modeling

Hence, observe that, from the above graph, the speed and change in
the distance are almost linear, to
(b) Plot the graph of the above table as follows:

to find the differential equation model for stopping distance data, note
that the differential equation is

∆an = kan

So, the slope

∆an
k=
an
Obtain the following:
∆an = an
Further, as
an+1 − an = an
Hence, the difference equation is

an+1 = 2an

Responsible: Group 6 Page 7 of 7 20(22-23)