Assignment 2: Compound Interest

Compound interest is an important financial concept that motivates saving early and often in your lifetime. Assuming no withdrawls from a savings account, the interest earned on your savings in one time period becomes part of the account balance and earns interest in future time periods. Therefore, even without any additional principal, an account earning compound interest will earn more and more interest in each subsequent year.

For a specific investment, we can calculate the amount of money in the account as:

where:

P is the initial amount of the investment (the original principal)
r is the interest rate
n is the number of compoundings per year (e.g., 12 for monthly compounding, 4 for quarterly, 1 for annual)
t is the number of years of interest
P' is the new balance of the account after earning interest for t years

For this assignment, you'll be asked to write a program that gathers some of these variables from the user, calculates some figures using the above equation, and displays the results.

Basic Requirements

Satisfying all basic requirements perfectly, with no points deducted for any reason, would earn a maximum score of 8 out of 10 for this assignment.

You need to write a program that acts as a savings calculator. It should:

Prompt the user to enter P, r, n, and t. Your prompts should be "user friendly" and should NOT require a user to know what, for example, n represents. The prompts should make it obvious what the user should enter and what units are expected.
Display original principal (P), the amount of interest earned (P'-P), and the total value of the account at the end of the term (P').
All monetary values should be displayed with units (i.e. dollar signs), commas, and two decimal places. For example: $20,023.23.

Advanced Requirements

Satisfying both the basic and advanced requirements perfectly, with no points deducted for any reason, will result in a full 10 out of 10 score for this assignment.

You need to write a program that acts as a savings calculator and comparison tool. In addition to performing the basic requirements outlined above, your program should provide the user with an option to enter an additional set of savings parameters (P, r, n, and t). For each, you should display the results outlined in the basic requirements. In addition, your program should say which of the options would result in the largest final value (P'). More specifically, your program should:

Perform the basic requirements.
Provide the user with an option to compare the first set of savings parameters they have entered with a second set of parameters.
If the user declines, the program should end. If the user chooses to make a comparison, ask the user to enter a second set of parameters (P, r, n, and t) and display the same information as in the basic requirements (with the same formatting requirements: units, commas, and two decimal places).
Finally, if the user has entered more than one set of parameters, tell the user which set of parameters produces the largest final account balance P'

Sample Output

An example of the output produced by my solution to this assignment can be found here.

Grading Criteria

This assignment will be graded on a 10 point scale. Your grade for this assignment will be based on a combination of factors including:

Correct functionality (e.g., Does your Python code do what it is supposed to do as outlined in the basic and/or advanced requirements?)
Clarity of your solution (e.g., Did you solve the problem directly and efficiently? Or is your answer excessively complex and/or inefficient?)
Coding style (e.g., Is your code readable with comments, meaningful variable names, and good whitespace/indentation?)
Meets submission requirements (see below)

Seeking Help

For general questions about Python, please use the class forum on Piazza to seek assistance. For questions that are personal in nature or that would reveal a solution to the assignment, you ask for help by email or during office hours. However, please note that emailed questions will not receive an immediate response. It is likely that it will take 24-48 hours for me to respond.

Submitting Your Solution

Please Note: You must name the main python file for your assignment "assignment<number>_<onyen>.py". For example, for assignment 3 I would name my file assignment3_gotz.py because my onyen is gotz.

Using the wrong name for your file will be cost you points on your assignment grade. Please follow this requirement carefully!

Please submit your assignment via Sakai. You should submit a zip file containing your entire project folder. To create the zip file, follow the submission instructions that have been posted at the bottom of the "Other Information" page on our course website.

The due date for this assignment can be found on the course schedule.