ENGINEERING 2304 Computer Programming for Engineers ENGR Summer 2015 Class 3

Class Outline Homework Questions Quiz Interest and Compounding Net Present Value Amortization Tables Excel Practice Exercises

Quiz Class 3 1. Define a kip. 2. What is the difference between an absolute and relative cell reference, and how do we designate each? 3. Using excel, (not a handheld calculator), calculate the sine, cosine, and tangent of 0, 20, 40, 60, 80, and 100 degrees. List these as a table on your sheet.

Quote of the Day: “Compound Interest is the most powerful force in the universe.” –Albert Einstein

Interest Simple Interest: a constant return or fee paid each time period Compound Interest: interest building interest Continuous Compounding: limit of compounding as n approaches ∞

Net Present Value Converts values paid or received in the future to an equivalent amount today. i=interest rate R=net cash flow in time period N=number of periods

Amortization Table A table which lists the full payback schedule of a loan such as a mortgage, car loan, student loan, etc. Shows what portion of each payment will go to principle and interest. Monthly Payment Formula: P: Original Principle M: Monthly payment n: number of payments r: interest per payment period (ie 6% interest/year, r=.06/12)

Excel Lab Example 1: Create a spreadsheet that will calculate the value in an account, with a certain interest rate, showing its balance over time, with simple, compounding, and continuous compounding.

Excel Lab Example 2: A company is considering two projects to invest in: Project A will cost $100,000 up front and bring in $6000 per year over 20 years. Project B will cost $150,000 up front and bring in $7000 per year over 23 years. Which should the company choose? Compare at different interest rates.

Excel Lab Example 3: Calculate the monthly payment and create a full amortization table for a thirty year mortgage.