Module 2- Activity 4 - Regular Payments Savings Plan

Line Number 4 Givens: Principal 545.00 Payment 43.00 APR 3.70% Compounds 12 Month Principal Interest Payment Total 0 545.00 1 545.00 1.68 43.00 589.68 2 589.68 1.82 43.00 634.50 3 634.50 1.96 43.00 679.45 4 679.45 2.09 43.00 724.55 5 724.55 2.23 43.00 769.78 6 769.78 2.37 43.00 815.16 7 815.16 2.51 43.00 860.67 8 860.67 2.65 43.00 906.32 9 906.32 2.79 43.00 952.12 10 952.12 2.94 43.00 998.05 11 998.05 3.08 43.00 1044.13 12 1044.13 3.22 43.00 1090.35 13 1090.35 3.36 43.00 1136.71 14 1136.71 3.50 43.00 1183.22 15 1183.22 3.65 43.00 1229.87 16 1229.87 3.79 43.00 1276.66 Methods 17 1276.66 3.94 43.00 1323.60 18 1323.60 4.08 43.00 1370.68 Month #18 Iterations (Steps) 19 1370.68 4.23 43.00 1417.90 "=C27+D27+E27 20 1417.90 4.37 43.00 1465.27 21 1465.27 4.52 43.00 1512.79 Month #18 Formula (Regular Payments) 22 1512.79 4.66 43.00 1560.46 1370.68 23 1560.46 4.81 43.00 1608.27 "=(D3*(1+D5/D6)^18)+D4*((1+D5/D6)^(18)-1)/(D5/D6) 24 1608.27 4.96 43.00 1656.23 25 1656.23 5.11 43.00 1704.33 Month #18 Excel Function 26 1704.33 5.26 43.00 1752.59 1370.68 27 1752.59 5.40 43.00 1800.99 "=-FV(D5/D6,18,D4,D3) 28 1800.99 5.55 43.00 1849.55 29 1849.55 5.70 43.00 1898.25 30 1898.25 5.85 43.00 1947.10 31 1947.10 6.00 43.00 1996.10 32 1996.10 6.15 43.00 2045.26 33 2045.26 6.31 43.00 2094.57 34 2094.57 6.46 43.00 2144.02 35 2144.02 6.61 43.00 2193.63 36 2193.63 6.76 43.00 2243.40 Total: 150.40 1548.00 Reflection 1: What would be another way to calculate total interest rather than merely using ‘=sum(‘? Another way to calculate total interest in Excel is by using the SUMPRODUCT function. This function multiplies corresponding items in the arrays and then returns the sum of those products. Here's how you can use it to calculate total interest: Suppose you have a column for principal amounts (B2:B37) and another column for interest amounts (C2:C37). You can use the SUMPRODUCT function like this: =SUMPRODUCT(B2:B37, C2:C37) This formula will multiply each principal amount by its corresponding interest amount, and then sum up the products to give you the total interest. Alternatively, you can use array formulas with the SUM function to achieve the same result: =SUM(B2:B37 * C2:C37) Both of these formulas will calculate the total interest without using the SUM function directly. Reflection 2: When was the original principal invested and when was the payment invested (end or beginning of the period)? In the finance world, what type of investment is this called?