COMPOUND INTEREST Mini- Project



A&W Math 11

INTEREST Mini- Project

What is your top pick for a school after graduation? How do you plan to pay for your education? In the event that you may have to take out a student loan you will explore the potential cost of doing so. There are many different models and circumstances to student loans. They are generally personalized based on the school you attend and the current financial background of you or your parents. We will use a generic model just to raise awareness of how how expensive your education might be, initially and after interest.

Explore the website of your future school and find the cost of the following:

Time needed to complete your program of choice

Tuition cost (per semester, year or program cost)

*Room and Board (living on campus for all years)

*Meal Plan

Average cost of books (per semester, year or program)

PART A

Assuming the characteristics of your loan is a per annum of rate must be found on your financial institution’s website % determine the cost of a student loan to pay for your education

if the simple interest is over a period of 10 years.

What is the interest you will end up paying, and what is the total amount you will pay?

________________________________________________________________________

PART B

Take exactly the same information above and this time calculate the interest on the loan and the amount you will pay when your financial institution’s website % is compounded daily and payable monthly.

Determine what your first month’s interest payment would be and determine a reasonable amount that you would pay off the principal each month. Create a chart that shows what you would pay in interest each month and amount still owing at the end of one year. How long, at this same rate of interest and payment, would it take you to pay off your loan?

Then answer how much interest you paid over the course of repayment on top of the original loan.

Finally, write a reflection (paragraph or point form) that indicates what you have learned through

this assignment regarding loans.

Example:

Loan of $15,750 Interest rate of 7.6% compounded daily, paid monthly

Decision to pay $500 each month

|Month |Month Withdraw |Month Interest |Total Withdraw |Total Interest |Balance |

| | | | | | |

|1 |($500.00) |$96.88 |($500.00) |$96.88 |$15,346.88 |

|2 |($500.00) |$94.32 |($1,000.00) |$191.20 |$14,941.20 |

|3 |($500.00) |$91.74 |($1,500.00) |$282.94 |$14,532.94 |

|4 |($500.00) |$89.15 |($2,000.00) |$372.09 |$14,122.09 |

…

It would take 36 months to completely pay off the loan.

|35 |($500.00) |$0.03 |($17,500.00) |$1,754.92 |$4.92 |

|36 |($500.00) |$-3.15 |($18,000.00) |$1,751.78 |$-498.22 |

Finalize your information as a report:

1. Title page (Name, Date, Class, and Title)

2. Printouts of the following information you gathered:

a. Program tuition costs, duration, cost of textbooks

b. Room and Board (school plan or local advertisement you found)

c. Financial Institution: student loan interest rate

3. Page of clear calculations for PART A

a. Answer: how much interest would you pay

b. Answer: total amount that you would pay

4. Page of clear calculations for PART B

a. Answer: how much interest would be paid in the first month

b. Indicate how much principal you will pay off monthly

c. Create a chart that shows interest owed, principal paid and amount owing each month until the loan is paid off

5. Reflection

[pic] [pic]

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download