In Chapter 1 of the text we looked at calculating a monthly payment for a loan. A related formula is to calculate the amount accruing when regular payments are made into an interest bearing account - often called the Savings Plan formula.

(A is the accrued amount after t years of making regular payments, PMT, into an account at interest rate, r%, compounded n times each year.)

A(t) = PMT((1 + r/N)^Nt - 1)/(r/N)

= PMT*((1 + r/N)^(N*t) - 1)/(r/N)

The second version is essentially in the form used in Excel

Suppose you want to buy a car and have decided that you can save $100 a month. Using information from an internet source, determine the current interest rate on savings accounts and use the information to answer the following:

1. How much money will you have saved in two years time?
2. How much will be interest?
3. Why wouldnt a linear model work here?

Here is one option to research accounts that does not require personal information: NerdWallet

A Microsoft Excel spreadsheet is required.