Explore BrainMass

Explore BrainMass

    Exponential Modeling: Simple and Compound Interest

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1) Create an Excel spreadsheet comparing simple and interest compounded yearly for an investment of $18,000 over 18 years with an APR of 3.75%.
    a. Create a column in Excel listing the years 0-18.
    b. Determine the equation that would model simple interest. Hints: How much simple interest would the account earn each year? What type of equation is appropriate for simple interest? Create a column of values that represents the accounts balance for each year if only simple interest is earned.
    c. Determine the equation that would model compound interest. Hints: What type of equation is appropriate for compound interest? Create a column of values that represents the accounts balance for each year if the interest is compounding each year.
    d. Use the data from the spreadsheet to create a single graphic (scatterplot) comparing the two types of interest.
    e. Write a paragraph which includes a compare and contrast of simple and compound interest, based upon your graphic.

    © BrainMass Inc. brainmass.com March 5, 2021, 1:53 am ad1c9bdddf
    https://brainmass.com/business/interest-rates/exponential-modeling-simple-compound-interest-645175

    Solution Preview

    A
    Please see the Excel file.

    B
    The equation is I=Prt
    I = 18000 * 0.0375 * 1 = 675
    The account would earn $675 simple interest per year.
    The ...

    Solution Summary

    The Excel file contains the computations and graph. The Word file contains the solutions to the questions.

    $2.49

    ADVERTISEMENT