Finding Compound Interest Using Three Methods Preparation/Setup 1. Open the Sign-Up Sheet below in the Module and follow the directions to get the specific inputs for your activity. Copy the Line Number, Principal, and APR. 2. Review the Compound Interest Formula from PowerPoint 4B in the Week Six (or Seven) Module. It can also be found in section 4B of the eText on MyMathLab. 3. Download the Compound Interest Activity Student Template from below in the Module. Create Your Spreadsheet Using the template and the information you copied from the Sign-Up, follow the example. You will do this using recursion(also called iteration-repeating steps.) the formula, and an Excel function. You should get the same answer each time! Recursion Method: Notes - Formulas in Excel always begin with "=". To link to a cell, click on it or type in the reference. 1. In the "Givens" block, enter the information you got in Step 2 above. Use 4 for "Compounds." (Quarterly Compounding, i.e. 4 times per year.) 2. In Cell E8, use a simple formula with cell reference to link the Principal amount in "Givens." No entry is needed in C8 and DS. 3. Now you're setting up your recursion. Once you have properly set up the row for Quarter One you can fill down. 4. In Cell C9, use a simple formula with cell reference to link to the Total in Row 8. 5. In Cell D9, create the formula for one quarter's interest. Divide the APR by the number of compounding periods and multiply the result by the Principal. You will need to use relative and mixed cell references so that Excel continues to refer to the rows correctly. 6. In Cell E9, create a formula to add the Principal and the Interest. (This is what is called "Compounding the Interest.") 7. Now finish up by filling Row 9 down to Row 33. Formula Method: 1. In Cell G30, enter the Compound Interest formula for compounding n times per year. For y use 4.5 (18 Quarters is 4.5 years.) Use cell references for the other values. (Link to the cells that contain the values you need.) For multiplication in Excel, use Use grouping symbols. For division in Excel, use / For exponents in Excel, use the up caret. 2. You will see the result, not the formula, if you entered correctly. It should be the same as the result in E26. (Quarter 18 result from Recursion Method.) Function Method: 1. For this method you will use Excel's built-in future value (FV) function. 2. With Cell G34 highlighted, click on fx above to search for the FV function 3. Enter the inputs for the function by clicking in the cells where the values are found. 4. For Rate you will need the periodic (quarterly rate. Divide the APR by the Compounding Periods. 5. You will need to change the sign of your result so that it is positive. Do this by entering a negative after the OR by multiplying the whole function by -1. 6. For Pmt (payment) use 0. 7. You will see the result. It should be the same as your other two results. Completing the Spreadsheet: 1. Be sure the Interest column is totaled after Quarter 36. Use the Sum function entering the range of cells you are summing (First cell in range: Last cell in range.) 2. Answer the given reflection questions in the text boxes on the spreadsheet. 3. Be sure to save your work with a name you can recognize. Submit Your Spreadsheet in Canvas. Previous Next 0!! 11 a Dashboard Calendar To Do Notifications Inbox Total Line Number Givens Principal Compounds APR Quartet Principal Interest 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Total: Qtr. #18 Formula Qtr. #18 Excel Function -FV Reflection 1: What would be another way to calculate total interest rather than just adding up the individual interest amounts? Reflection 1. What would be another way to calculate total interest rather than just adding up the Individual interest amounts? Reflection 2: What percentage of the balance (end of Quarter 836) is the interest and what percentage is the principal? Do these percentages change if you modify the principal or APR? How? Reflection 3: What are some of the pros and cons to each of the three methods you have used? Reflection 4: Which of the three methods is your favorite way to calculate the balance and why? Reflection 5: What impressions or insights have you gained from this exercise? 8:55 LTE Compound Interest Sign Up Sheet (Summer 2021) MTH 154 (090W) - Quantitative Reasoning Directions: 1. Click "Edit". 2. Type your name on ONE line to reserve the APR. Each problem can ONLY BE CHOSEN ONCE, and each student should ONLY SELECT ONE. 3. Click to complete the assignment. # 1 Line Principal APR Student Name 11 500 6.9% 2 Kenyata 1800 5.7% Clark 3 810 6.4% Raghdah 4 620 4.1% Abdellatif Renee 830 14.3% Corona Quanesha 16 660 5.0% Rush 7 560 4.6% 8 90 Daniel 5 6 4.3% Torres 9 590 6.3% 10 810 11 190 4.9% Christine 4.3% Benitoe 4.2% 12 200 Previous Next IE 11 D Dashboard Calendar To Do Notifications Inbox 8:56 LTE Compound Interest Sign Up Sheet (Summer 2021) MTH 154 (090W) - Quantitative Reasoning 13 180 6.7% Gina 14 410 16.4% Clark 15 390 4.8% 16 430 6.6% 17 720 5.9% Bryan 18 450 7.4% Bechara 19 870 14.6% 20 710 4.2% 21 320 5.2% 22 1620 16.7% Olivia 23 (100 6.9% simpson 24 440 5.8% 25 920 6.9% 26 400 5.8% 27 250 Marie 5.2% Monise Lete 28 800 4.1% 29 190 5.1% 30 880 6.8% 6.9% 31 640 32 860 4.7% Previous Next 11 Dashboard Calendar To Do Notitications Inbox 33 310 4.4%. Jessica Flagler 4.8% 34 500 35 160 4.5% Layton Haren 5.7% 36 900 37 470 6.5% 38 750 5.9% 39 280 5.6% 7.6% 40 180 41 730 4.5% 16.2% 42 880 43 150 ellie 4.0% kachmar 44 800 5.5% 6.5% 45 130 46 90 5.5% 6.4% 47 490 48 870 7.3% 49 1630 5.3% 50 490 5.8% Previous Next OA 11 . Dashboard Calendar To Do Notifications Inbox Finding Compound Interest Using Three Methods Preparation/Setup 1. Open the Sign-Up Sheet below in the Module and follow the directions to get the specific inputs for your activity. Copy the Line Number, Principal, and APR. 2. Review the Compound Interest Formula from PowerPoint 4B in the Week Six (or Seven) Module. It can also be found in section 4B of the eText on MyMathLab. 3. Download the Compound Interest Activity Student Template from below in the Module. Create Your Spreadsheet Using the template and the information you copied from the Sign-Up, follow the example. You will do this using recursion(also called iteration-repeating steps.) the formula, and an Excel function. You should get the same answer each time! Recursion Method: Notes - Formulas in Excel always begin with "=". To link to a cell, click on it or type in the reference. 1. In the "Givens" block, enter the information you got in Step 2 above. Use 4 for "Compounds." (Quarterly Compounding, i.e. 4 times per year.) 2. In Cell E8, use a simple formula with cell reference to link the Principal amount in "Givens." No entry is needed in C8 and DS. 3. Now you're setting up your recursion. Once you have properly set up the row for Quarter One you can fill down. 4. In Cell C9, use a simple formula with cell reference to link to the Total in Row 8. 5. In Cell D9, create the formula for one quarter's interest. Divide the APR by the number of compounding periods and multiply the result by the Principal. You will need to use relative and mixed cell references so that Excel continues to refer to the rows correctly. 6. In Cell E9, create a formula to add the Principal and the Interest. (This is what is called "Compounding the Interest.") 7. Now finish up by filling Row 9 down to Row 33. Formula Method: 1. In Cell G30, enter the Compound Interest formula for compounding n times per year. For y use 4.5 (18 Quarters is 4.5 years.) Use cell references for the other values. (Link to the cells that contain the values you need.) For multiplication in Excel, use Use grouping symbols. For division in Excel, use / For exponents in Excel, use the up caret. 2. You will see the result, not the formula, if you entered correctly. It should be the same as the result in E26. (Quarter 18 result from Recursion Method.) Function Method: 1. For this method you will use Excel's built-in future value (FV) function. 2. With Cell G34 highlighted, click on fx above to search for the FV function 3. Enter the inputs for the function by clicking in the cells where the values are found. 4. For Rate you will need the periodic (quarterly rate. Divide the APR by the Compounding Periods. 5. You will need to change the sign of your result so that it is positive. Do this by entering a negative after the OR by multiplying the whole function by -1. 6. For Pmt (payment) use 0. 7. You will see the result. It should be the same as your other two results. Completing the Spreadsheet: 1. Be sure the Interest column is totaled after Quarter 36. Use the Sum function entering the range of cells you are summing (First cell in range: Last cell in range.) 2. Answer the given reflection questions in the text boxes on the spreadsheet. 3. Be sure to save your work with a name you can recognize. Submit Your Spreadsheet in Canvas. Previous Next 0!! 11 a Dashboard Calendar To Do Notifications Inbox Total Line Number Givens Principal Compounds APR Quartet Principal Interest 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Total: Qtr. #18 Formula Qtr. #18 Excel Function -FV Reflection 1: What would be another way to calculate total interest rather than just adding up the individual interest amounts? Reflection 1. What would be another way to calculate total interest rather than just adding up the Individual interest amounts? Reflection 2: What percentage of the balance (end of Quarter 836) is the interest and what percentage is the principal? Do these percentages change if you modify the principal or APR? How? Reflection 3: What are some of the pros and cons to each of the three methods you have used? Reflection 4: Which of the three methods is your favorite way to calculate the balance and why? Reflection 5: What impressions or insights have you gained from this exercise? 8:55 LTE Compound Interest Sign Up Sheet (Summer 2021) MTH 154 (090W) - Quantitative Reasoning Directions: 1. Click "Edit". 2. Type your name on ONE line to reserve the APR. Each problem can ONLY BE CHOSEN ONCE, and each student should ONLY SELECT ONE. 3. Click to complete the assignment. # 1 Line Principal APR Student Name 11 500 6.9% 2 Kenyata 1800 5.7% Clark 3 810 6.4% Raghdah 4 620 4.1% Abdellatif Renee 830 14.3% Corona Quanesha 16 660 5.0% Rush 7 560 4.6% 8 90 Daniel 5 6 4.3% Torres 9 590 6.3% 10 810 11 190 4.9% Christine 4.3% Benitoe 4.2% 12 200 Previous Next IE 11 D Dashboard Calendar To Do Notifications Inbox 8:56 LTE Compound Interest Sign Up Sheet (Summer 2021) MTH 154 (090W) - Quantitative Reasoning 13 180 6.7% Gina 14 410 16.4% Clark 15 390 4.8% 16 430 6.6% 17 720 5.9% Bryan 18 450 7.4% Bechara 19 870 14.6% 20 710 4.2% 21 320 5.2% 22 1620 16.7% Olivia 23 (100 6.9% simpson 24 440 5.8% 25 920 6.9% 26 400 5.8% 27 250 Marie 5.2% Monise Lete 28 800 4.1% 29 190 5.1% 30 880 6.8% 6.9% 31 640 32 860 4.7% Previous Next 11 Dashboard Calendar To Do Notitications Inbox 33 310 4.4%. Jessica Flagler 4.8% 34 500 35 160 4.5% Layton Haren 5.7% 36 900 37 470 6.5% 38 750 5.9% 39 280 5.6% 7.6% 40 180 41 730 4.5% 16.2% 42 880 43 150 ellie 4.0% kachmar 44 800 5.5% 6.5% 45 130 46 90 5.5% 6.4% 47 490 48 870 7.3% 49 1630 5.3% 50 490 5.8% Previous Next OA 11 . Dashboard Calendar To Do Notifications Inbox