Math help, my turn

[Ken Ibold]

My financial calculator is AWOL, and my daughter is working on a school project. Assume $1 million in cash. At a constant rate of return of, let's say, 8 percent, how much could she spend annually and have the principle down to 0 after 50 years?

And if you wonder if the school is teaching them to be spendthrifts, they have to fund a charity with the money and working the principle to 0 is one of the stipulations. (Seems misguided to me, but I didn't write the assignment.) Kaelyn's plan is to create a subsidized after-school program for elementary school kids, to help out single parents.

 

[wbarnhill]

My financial calculator is AWOL, and my daughter is working on a school project. Assume $1 million in cash. At a constant rate of return of, let's say, 8 percent, how much could she spend annually and have the principle down to 0 after 50 years?

And if you wonder if the school is teaching them to be spendthrifts, they have to fund a charity with the money and working the principle to 0 is one of the stipulations. (Seems misguided to me, but I didn't write the assignment.) Kaelyn's plan is to create a subsidized after-school program for elementary school kids, to help out single parents.

Forwarded to accountant girlfriend... I hardly know how to handle the 30$ in my bank account, let alone 1 million.

 

[SkyHog]

My financial calculator is AWOL, and my daughter is working on a school project. Assume $1 million in cash. At a constant rate of return of, let's say, 8 percent, how much could she spend annually and have the principle down to 0 after 50 years?

And if you wonder if the school is teaching them to be spendthrifts, they have to fund a charity with the money and working the principle to 0 is one of the stipulations. (Seems misguided to me, but I didn't write the assignment.) Kaelyn's plan is to create a subsidized after-school program for elementary school kids, to help out single parents.

Since I don't understand this stuff, I can only tell you this. You are looking at an A=Pert problem, much like I was asking about last week.

 

[NC Pilot]

My financial calculator is AWOL, and my daughter is working on a school project. Assume $1 million in cash. At a constant rate of return of, let's say, 8 percent, how much could she spend annually and have the principle down to 0 after 50 years?

And if you wonder if the school is teaching them to be spendthrifts, they have to fund a charity with the money and working the principle to 0 is one of the stipulations. (Seems misguided to me, but I didn't write the assignment.) Kaelyn's plan is to create a subsidized after-school program for elementary school kids, to help out single parents.

Wouldn't this essentially be a mortage with a $1,000,000 loan and a 50 year payback? I get $6792.74 per month or $81,512.88 per year. There may be differences whether you make monthly payments or annual payments though.

 

[infotango]

Put it in an annuity and let somebody else take care of it. Plus you enjoy the tax advantages.

 

[Len Lanetti]

My financial calculator is AWOL, and my daughter is working on a school project. Assume $1 million in cash. At a constant rate of return of, let's say, 8 percent, how much could she spend annually and have the principle down to 0 after 50 years?

Ken,

Does the project specify the following:
- Annual or monthly disbursement of interest and principal to the charity?
- Monthly or quarterly payment of earnings on the investment?

Len

 

[Ken Ibold]

Ken,

Does the project specify the following:
- Annual or monthly disbursement of interest and principal to the charity?
- Monthly or quarterly payment of earnings on the investment?

Len

Len,

Neither. This is 5th grade. I don't think they care.

 

[SkyHog]

Len,

Neither. This is 5th grade. I don't think they care.

This is 5th grade!!!!!!

OMG.

 

[Ed Guthrie]

Len,

Neither. This is 5th grade. I don't think they care.

I doubt seriously that a 5th grader is expected to solve the exponential, do the algebra, etc. As someone else mentioned, it is a 50 year mortgage at 8% interest. Use any published mortgage table, spreadsheet, website, etc.

 

[Skip Miller]

Wouldn't this essentially be a mortage with a $1,000,000 loan and a 50 year payback?

Yep, it would

I get $6792.74 per month or $81,512.88 per year. There may be differences whether you make monthly payments or annual payments though.

These numbers are correct for monthly payments and monthly compounding.

-Skip

 

[ScottM]

Wouldn't this essentially be a mortage with a $1,000,000 loan and a 50 year payback? I get $6792.74 per month or $81,512.88 per year. There may be differences whether you make monthly payments or annual payments though.

[FONT=Arial, Helvetica]The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].

P = L[c(1 + c)n]/[(1 + c)n - 1]

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If she needs to show her work​

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[Len Lanetti]

Len,

Neither. This is 5th grade. I don't think they care.

I doubt seriously that a 5th grader is expected to solve the exponential, do the algebra, etc. As someone else mentioned, it is a 50 year mortgage at 8% interest. Use any published mortgage table, spreadsheet, website, etc.

Ken,

Fifth grade, too funny...I'll stop work on the annuity mini-system I was building for ya...the timing is good as I had a question on when during the month (or quarter) the charity was getting the revenue. :<)

A "quickie" kind of calc looks something like this:
Principal - $1,000,000.00
Rate - 8.00000%
Length in Years - 50
Monthly Payment -$6,792.74

The result is based on the PMT function in Excel.

Len

 

[EdFred]

Is that interest compounded monthly, daily, yearly?

 

[Areeda]

My question Ken is she expected to do this with a financial calculator or 5th grade math?

Joe

 

[jesse]

My guess is..the teacher has no idea how complicated this really is..and is thinking that you simply Do something silly like
(1,000,000*1.08)/(50*12)

But ...as we all know. It's not *that* simple.

 

[judypilot]

My guess is..the teacher has no idea how complicated this really is..and is thinking that you simply Do something silly like
(1,000,000*1.08)/(50*12)

But ...as we all know. It's not *that* simple.

Which is the problem with how math is being taught nowadays. I'd be interested to hear what the teacher was looking for.

Judy

 

[Steve]

Use the financial formulae built into Excel.....

 

[silver-eagle]

My guess is..the teacher has no idea how complicated this really is..and is thinking that you simply Do something silly like
(1,000,000*1.08)/(50*12)

But ...as we all know. It's not *that* simple.

Reminds me of programming class. I believe the answer can be as simple as above or as complicated as you can make it. Being 5th grade and simple math, my money is on the above.
Good luck.

 

[ScottM]

Which is the problem with how math is being taught nowadays. I'd be interested to hear what the teacher was looking for.

Judy

Don't even get me started on math teachers. I hated math in HS and did not have a math teacher worht their weight in chalk. A few years back I considered becoming a HS math teacher and leave the corporate life. I have several degrees in engineering with a math minor and actual experience using the stuff to explain the world. I thought I could offer the kids a good perspective and knowledge. I did expect to have to go back to school to take a few classes. The reality was basically I had to aquire a new degree in education, I was ok with that.

What I found frustrating was with the classes that math teachers actually take. The only 'math' class is a finite math class that is pretty basic. The rest is all theory of teaching type classes. No wonder the teachers really do not understand math, they don't know it, nor how to use it, they are just folowing an outline that someone else developed for them. I feel really sorry for the teachers and the kids.

 

[infotango]

I agree that math is terribly taught in basic schools. Problems like this serve to only dissuade people from going into math. I think that there are two problems, over simplification and a failure to explain the interrelated nature of math adequately.

By simplifying the problem in a way that makes the problem far out of line with what really would happen, the teacher ends up confusing students who do put real thought into the problems. Like Jesse said, I find it very very hard to believe that the teacher expects students to figure out the complexities of an interest bearing account where the balance is reduced every year. This type of problem really hurts smart kids like Ken's who see that this stuff is complicated, and rewards the people who mindlessly crank through the problems.

I think that most students who do well in later math classes do so because they make the connections which aren't explained to them when they are at the elementary level. Basically all types of math are related. So the students that go on to major in math and physics at fancy colleges (like me) do so only because they are able to draw these connections which are never explained on their own. If these connections were drawn at the elementary level, many many more people would be successful in math, and enjoy it more.

 

[flyingcheesehead]

I agree that math is terribly taught in basic schools.

Math is terribly taught at many levels. I had a terrible time understanding Calculus at first. Took it, dropped it. Took it, dropped it. Had a TA teaching it once who, when one of the engineering students in the class finally asked what we'd all been thinking: "What are we going to actually use this for?" The math guy looked VERY offended and had no answer. Dropped that one too.

Finally, I signed up once again and lucked out. Sitting in the classroom on the first day, Dr. Robert Moore walked in the door with a crazy contraption which he clamped to the desk at the front of the room. It basically consisted of a meter stick with a bolt coming out near the top, and from that was a spring suspending several large washers (basically just being used as a weight). The first thing he said was "If I pull these washers down, they will bob up and down on the spring. If I graph their position over time, it will be a sine wave. If I take the first derivative, I will get the instantaneous velocity, and if I take the second derivative I will get the instantaneous acceleration."

"Ding!" The light bulb went on over my head. I actually enjoyed his calc class, and luckily I got him for second-semester calc too. I got another good math guy for third-semester calc, and linear was taught by an engineer from Motorola who was an excellent instructor as well. (I lucked out and got him for five classes!)