**Microsoft
Excel can be used to do many different problems in Mathematics.
First we will use Excel to calculate interest over time.**

**Exploration
1: John opens a savings account with $1,000.00 as the principal
amount with 3% interest rate. If the bank calculates simple interest,
how much money will John have after 5 years, 10 years, and 20
years.**

**Review:
Simple Interest= (Principal Amount)(Interest Rate)(Time)**

**Money
in the Bank after each year=Original Principal+interest earned
since day one.**

**John will earn $30
in interest each year and he will have:**

**$1,150 after 5 years**

**$1,300 after 10 years**

**$1,600 after 20 years**

**Exploration
2: John opens a savings account with $1,000.00 as the principal
amount with 3% interest rate. If the bank calculates compound
interest once a year, how much money will John have after 5 years,
10 years, and 20 years. Use excel to make a spreadsheet with the
following formulas**

**Formulas:
P=C(1+r/n)^nt**

**where:**

**P=future
amount**

**C=initial
deposit**

**r=interest
rate**

**n=number
of times per year interest is compounded**

**t=number
of years invested**

**For
exploration 2, n=1 because interest is compounded once a year.
**

**As
you can see from comparing the two differest spreadsheets, with
$1000.00 invested in a savings account with 3% interest. The difference
after 20 years, is John would have $1600.00 with simple interest
and $1806.11 with compounded interest once a year. **

**Now
use the same formula and calculate interest quarterly. **

**Excel
can also be used to create graphs using the data sheets that you
create. Below are the two graphs of the money John would have
in his savings account after 50 years comparing simple interest
to compound interest. As you can see the compound interest starts
to climb much faster than the simple interest after about 20 years.
**