The basic principles and equations are developed for elementary
finance, based on the concept of compound interest. The five
quantities of interest in such problems are present value,
future value, amount of periodic payment, number of periods and
the rate of interest per period. We consider three distinct
means of computing each of these five quantities in Excel 2007:
(i) use of algebraic equations, (ii) by recursive schedule and
the Goal Seek facility, and (iii) use of Excel's intrinsic
financial functions. The paper is intended to be used as the
basis for a lesson plan and contains many examples and solved
problems. Comment is made regarding the relative difficulty of
each approach, and a prominent theme is the systematic use of
more than one method to increase student understanding and build
confidence in the answer obtained. Full instructions to build
each type of model are given and a complete set of examples and
solutions may be downloaded (Examples.xlsx and Solutions.xlsx).
Sugden, Stephen and Miller,