Yes, Word can do this (the Equation Editor is built in; the computation and graphing stuff is part of a free add-in from Microsoft). While Tom's suggestion of Wolfram Alpha is nice, it's not really usable without an internet connection. This will work offline, and can be almost as capable (graphing included!).
Note that these directions are for Word 2010, but the add-in mentioned supports Word 2007. Some tabs and buttons might be in slightly different locations or have slightly different names.
Install the Microsoft Mathematics Add-In for Word and OneNote.
Insert an equation using the Equation Editor. This can be done with Alt + = or by clicking the
Equation button in the
Symbols section on the
You should now have this box.
Enter your equation. Make sure the box is selected in some way, clicking inside it is enough. Note that for addition use
+, for subtraction use
-, for division use
/ and for multiplication use
*. If you want a nice division symbol, use
\div. If you want a nice multiplication symbol (x), use
\times (with a space after it). Just
x inserts the pronumeral x, as used in algebra. This can also do much more advanced things, such as display (but not calculate)
\infty (infinity). It can also display and calculate things like
sin(45). It also supports order of operations, and can actually rearrange algebraic formulae quite nicely. There are many neat little tricks you can learn over time, or ask even on SuperUser about.
Again, make sure the equation box is selected in some way. Go to the
Mathematics tab (after installing the add-in), click
The free Microsoft Mathematics 4.0 program can also do the same thing, and is even more powerful. It also supports copying equations directly from Word's built in Equation Editor (again, the add-in only adds computation and graphing capabilities), and you can copy its output directly back into Word. I'm reasonably sure the underlying engine for the program and add-in is the same, actually. They both rely on .NET 3.5 SP1.