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Grade:
SeniorSubject:
Mathematics |

Posted Sun Apr 24 19:41:29 PDT 2011 by AMathTeacher (AMathTeacher).

Beatrice, NE, USA

Materials Required: Computers with Spreadsheet Software

Activity Time: Two Class Periods

Concepts Taught: Compound Interest Loan Calculations

Houses and Cars and LoansSubject Area: Algebra II

Grade Level: 10 or 11Lesson Summary

Students will use loan formulas they have learned in class to create a loan calculation spreadsheet. Given a monthly budget amount, they will determine how much they could afford for the purchase price of a house and a car.Learning Objectives

Objective 1: Students working in pairs will create a loan calculation spreadsheet using the compound interest formula that includes a loan amortization schedule.

Objective 2: Students will use their loan calculator to determine how much they can afford when purchasing a house and a car given a monthly budget amount.Computer Functions

1. Students will use spreadsheet software to create a loan calculation spreadsheet for compound interest with a loan amortization schedule.Specific Problem

You have recently graduated from college and found a good job in the field you studied. You would like to buy a better car to have more reliable transportation to and from work. Currently, you are renting and would like to purchase a house to build up equity. Your monthly salary is $2,500.00 per month and you think you could afford to pay a total of $1,250.00 per month for house and car payments. What purchase price could you afford to pay for a house and a car?Research and Analysis

1. Students will use spreadsheet software to create a loan calculation spreadsheet for compound interest. It will include input for the principal amount of the loan, interest rate, and term of the loan. They will create their own formulas.

2. Students will do a brief internet search to determine approximate current interest rates for home loans and car loans.

3. Students will use their loan calculator to analyze how much they could afford for purchasing a house and a car using the approximate current interest rates they found in their internet search. Students will justify their final figures.Results Presentation

Students will hand in two spreadsheets, one for the house loan and one for the car loan. The spreadsheets will include the principal loan amounts, interest rates, loan term, and loan amortization schedule.Student Activities During Computer Use

1. Students will create a loan calculation spreadsheet using spreadsheet software. It will have input for the principal loan amount, interest rate, and loan term. It will calculate the monthly payment based on these terms and should be color coded to see easy input.

2. Students will include a loan amortization schedule as part of their loan calculator spreadsheet. The amortization schedule will include the payment number, principal amount of payment, interest portion of payment, and balance left on the loan. It should be color coded as well for easy reading.

3. Students will research the internet to determine the current national average interest rate for a mortgage and for a loan.

4. Students will use their loan calculation spreadsheet to determine how much they could afford to pay for a house and a car using current national average interest rates determined in their internet search.Student Activities Before Computer Use

1. Students will look up the formulas in their textbooks for compound interest.

2. Students will sketch a rough layout of their spreadsheet including row and column headings.Student Activities After Computer Use

1. Students will justify their reasoning for why they chose the purchase price amounts they did for their house and car.

2. Students will verify their spreadsheets have correct calculations.Supporting Activities

1. Students can research property taxes and home and car insurance to determine how much these might be for their situation.

2. Students can look up other loan calculators on the internet (http://www.mlcalc.com/) that include calculations with property taxes, mortgage insurance, and property insurance to see how all of these added expenses would fit into their budget.Assessment

The spreadsheets will be evaluated using a rubric.