Compound Interest Teacher Resources
Find Compound Interest educational ideas and activities
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Sal continues to look at changing the length of compounding time, from daily to hourly compounding interest. Now he is able to show that compounding 100% annual interest converges on the number 2.71É or e as the number of compounding periods becomes a bigger and bigger number.
Continuing with the lesson on compound interest, in this video, Sal derives the general formula for any amount of principle, interest rate, and compounding periods over one year.
Finally arriving at the general formula for continuously compounded interest as A = Pert, Sal shows a few examples. In the first example, the interest rate, rate of compounding, term of the loan, and principal are all given, and one needs to find the amount owned at the end of the period. In the second example, we need to find the interest rate by taking the natural log of each side of the equation.
Money, money, money. Love it! You want to earn interest on what you put into your bank account. So you make an investment to earn compound interest and you want to know how much money you will have in 60 months. Well, there's a formula you can use. So, just plug in all you know into that formula and solve it.
Students apply the formula to solve problems with compound interest. In this algebra lesson, students define continous growth rate, decay and growth as it relates to exponential functions and Principal, Interest and Rate as it applies to money problems.
Provide a real world context in which exponential functions are used to determine a eal world phenomena such as compound interest and exponential growth. This activity should be taught after students have mastered the laws of exponents and are able to explain what an exponential graph looks like.
View this tutorial for more than just a description of the formula for compound interest! An instructor goes through a problem, showing how to find simple interest and compound interest. After she completes each version, she explains the difference and provides the formula for compound interest. A great tool for strengthening understanding of interest.
Students investigate simple and compound interest. In this Consumer Mathematics lesson, students use the TI-nspire handheld to compare simple and compound interest. The lesson includes problem solving and graphing of results.
Here is a simple tutorial on the difference between simple and compound interest. In it, Sal describes what interest is, defines the vocabulary of principle and interest rate. He also models year-by-year the amount of money owed under the different compounding scenarios.
Another example of simple interest and compound interest (compounded yearly) is explored in this video.
Many math concepts are covered through this resource: percentages, decimals, ratios, exponential functions, graphing, rounding, order of operations, estimation, and solving equations. Colorful worksheets and a link to a Google search for fractals images are included. Note that the lesson plan states it is the second of five lessons in an investing unit, but the other pieces were not located on the publisher's website. The instructional activity does, however, hold plenty of value on its own.
View this tutorial for more than just a description of the formula for compound interest! An instructor goes through a problem, showing how to find simple interest and compound interest. After she completes each version, she explains the difference and provides the formula for compound interest. A great tool for strengthening understanding of interest.
Students examine the concepts of trade-offs and opportunity cost to decide between savings accounts with simple interest and those with compound interest. They calculate interest earned on account balances while working in groups and make a decision on which is the best option.
Students compute and collect interest payments in the form of M&M candies. In this mathematics lesson, students work in small groups to compute either simple or compound interest. They compare the growth of their accounts after six cycles. A recommendation to "pay" the students in M&M candies is made to make the lesson more interesting for the students.
Students explore the concept of compound interest. In this compound interest instructional activity, students are given a scenario where they must create a recursive function to represent the scenario. Students calculate the interest after given intervals of time.
Students explore different methods of saving. In this Economics/Consumer Math lesson, students use follow-along worksheets to calculate simple and compound interest and explore and compare different methods of saving.
Young scholars explore saving and investing money. In this middle school personal finance lesson, students define and use investment vocabulary, explore compound interest and its effect of savings, and compute simple and compound interest. Young scholars compare and contrast annual percentage rate and annual percentage yield.
High schoolers explore the concept of compound interest. In this compound interest lesson, students determine compound interest on 100 dollars at 3% over time. High schoolers construct a formula for their table of values from the 100 dollars. Students discuss the risk involved with a credit card.
Students follow teacher demonstration to compute and graph given interest problems on their TI-nspire calculator. In this compound interest activity, students follow teacher lecture and demonstration to illustrate the effects that principal, interest rate and type of interest have on a loan.
In this compound interest worksheet, students solve 3 problems after reading about compound interest. They determine the cost of the Apollo missions, they calculate inflation and the cost it would be to send man to the moon today and they calculate the inflation and cost of delayed mission. They determine a scientists salary rate gain over 20 years compared to what it should be with a 3% yearly inflation rate.