Question

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\cdot\frac{(1 + r/N)^{nt} - 1}{(r/N)} = PMT \cdot \frac{(1 + r/N)^{(N \cdot 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 year's time? 2. How much will be interest? 3. Why wouldn't a linear model work here? A Microsoft Excel spreadsheet is required for this DQ.

          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\cdot\frac{(1 + r/N)^{nt} - 1}{(r/N)}
= PMT \cdot \frac{(1 + r/N)^{(N \cdot 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 year's time?
2. How much will be interest?
3. Why wouldn't a linear model work here?
A Microsoft Excel spreadsheet is required for this DQ.

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 ntimes 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 year's time?
2. How much will be interest?
3. Why wouldn't a linear model work here?
A Microsoft Excel spreadsheet is required for this DQ.

Added by Carolina B.

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