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Compound Interest Lesson Plan

The document outlines a 46-minute lesson plan on compound interest for 8th grade algebra students. The objectives are for students to calculate repeated percent increases for different compounding intervals and to compare interest rates and intervals to choose the best investment. Activities include warm-up problems, contemplating credit cards by calculating balances with different interest rates and intervals, developing a compound interest formula, and choosing the better of two investment options based on rates and intervals. The lesson aims to have students understand how balances change over time under compound interest.

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954 views5 pages

Compound Interest Lesson Plan

The document outlines a 46-minute lesson plan on compound interest for 8th grade algebra students. The objectives are for students to calculate repeated percent increases for different compounding intervals and to compare interest rates and intervals to choose the best investment. Activities include warm-up problems, contemplating credit cards by calculating balances with different interest rates and intervals, developing a compound interest formula, and choosing the better of two investment options based on rates and intervals. The lesson aims to have students understand how balances change over time under compound interest.

Uploaded by

api-721775478
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 5

Unit 5: Introduction to Exponential Functions

Lesson Plan 17: Compound Interest Lesson

Class: Algebra

Grade Level: 8th Grade

Teacher: Ms. Hanson

Time Required: 46 minutes (per class schedule)

Objectives
 Students will be able to calculate the result of repeated percent increase for the same initial balance and
interest rate but compounded at different intervals.
 Students will be able to compare interest rates and compounding intervals to choose the best investment
option.
o Student facing: Let’s find out what happens when we repeatedly apply the same percent increase at
different intervals of time.

Anticipatory Set
 Warm Up – Students will attempt the 17.1 Warm Up from their Unit 5 packet on their own (5 minutes)
o The following slide displays the problem that they will be working on. There are questions
displayed below this introduction in their packets. After a few minutes of working independently,
begin a whole group discussion sharing their work.
o Note: Highlight that the effective interest for one year is 12.68%.
Teaching: Activities (30 minutes)
 17.2 – Contemplating Credit Cards (15 minutes)
o Launch: Introduce what credit cards are and how they work. The big idea is that they work as a
“small loan” that one pays interest on the balance they put on the card. Previously, students have
looked at interest rates of savings accounts and we discussed that banks would advertise the
effective rate vs. the nominal rate. But when looking at credit cards, we would see that credit card
companies advertise the nominal rate as it “appears lower”. For the sake of this lesson, we are
looking at compounded interest on credit cards that did not have payments made on them.

o Have students work with the people at their tables through problems 1-4 before bringing the class
together to discuss their findings. (5 minutes)
 If needed to get the students started, assist them in setting up expressions in 1.

o Discuss the strategies that we could use to compare the balance over time. Now, let’s build our
formula with the following Are you ready for more?
 Students should be able to try this on their own, but for sure review and break down what
the final expression means.

( )
nt
r
 Final Expression: P 1+
n
 P = initial value

2
 1 – ensures we are including that initial value in our calculations
 r = annual percentage rate (make sure it is in decimal form)
 n = number of times compounded in the year
 t = time passed

 17.3 – Which Would You Choose (5 minutes)


o Present the following to the students, give them about 1-2 minutes to think and find reasoning
and then briefly discuss which would be better.

 17.4 – Changes Over the Years (10 minutes)


o Optional: Have the students work through the following with their groups, then come together
and share.

3
Closure (10 minutes/ End of Class)
 Cool Down – Lesson Synthesis (3 minutes)
o For each question, facilitate a group discussion with polling and think-pair-share.

 Big Idea: Students will be able to find the balance of an account and interest rates over a variety of
compounding intervals and determine the better options.

4
5

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