Savings and Interest
A spreadsheet program can be used to explore many types of problems.
I chose to explore savings and interest compounded. First I created a spreadsheet
that will compute interest compounded continuously. When studying continuous
compound interest, we need to utilize the formula 
where A is the
amount an investment is worth when the principal P is invested in an account
paying an annual interest rate r with interest compounded n times per year
for t years. The spreadsheet below shows the amount if the interest is compounded
annually(once per year), semi-annually(twice per year), quarterly(4 times
per year), monthly(12 times per year), and daily(365 times) for years 1-15.
Click here to change the values of r and P.
We can see from the spreadsheet that as the number of compounding periods
within the year increases, the amount earned also increases. This should
be kept in mind when looking for the best interest rates on a savings account.
Next I considered the problem: If a person saved $100.00 per month from
the time their child was born and deposited $1200.00 on each birthday with
no money taken out, how much money would the child have after 18 years?
The spreadsheet created shows that at 5 percent Annual yeild, after
18 years the child will have more than enough college tuition.
Click here to view the amount when
the annual yield and the amount invested is changed.
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