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717richboy's avatar

What common core standards can I use for a lesson plan teaching about compound interest?

Asked by 717richboy (234points) December 12th, 2013

Any ideas would be appreciated.

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11 Answers

gailcalled's avatar

The classic one about investing $1000 at various points in your life and seeing how much it grows over various intervals.

JLeslie's avatar

I am not sure I am answering your question correctly, but what I would be sure to hit on my first day teaching coumpound interest is:

1. The famous quote from Albert Einstein, “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” (Check the quote, because I thought it included something about it being powerful?? This is what I came up with in a google search).

2. At 5% interest in just under 15 years you double your money. It speaks to the importance of saving and how money gets money. Save $500,000 by the time you are 50 and you will have $1million when you retire at 65 even if you never save another penny if your money has been earning 5% after taxes.

3. Show how home mich people actually pay by the time they pay off a home mortgage. A mortgage might be taken out for $150k, but by the end you wind up paying $400k (depending on the interest).

DWW25921's avatar

I looked up “Common Core” and read the first article I cam across. Um… Any thoughts?

Anyway, I believe this one is exactly what you’re looking for.

ragingloli's avatar

Imagine if Jesus’ mum made a bank account when he was born, and put 1€ in it.
How much money would Jesus get when he returned 2000 years later, at a 3% interest rate?
It is this:

also works great as a basis to criticise the very basis of the current global economic system

LostInParadise's avatar

I am unsure of what you are asking. If you want to know which specific standard compound interest falls under, it would be High School Functions, Linear, Quadratic and Exponential Models.

717richboy's avatar

I am trying to compose a lesson plan for seventh graders teaching compound interest. I want to simplify it as much as possible. I have two common core standards by which I will formulate the lesson plan around: 1) Define or clarify the meaning of unknown and multiple-meaning words and phrases 2) Use proportional relationships to solve multistep ratio and percent problems. The first is an English common core standard that I will use to explore terms such as bank, principal, interest, etc. (Concepts they must grasp in order to be successful in this particular lesson plan. The second will be coming up with equations to help solidify their understanding. I struggle in simplifying the lesson plan.

JLeslie's avatar

They have to come up with the equations? Do you mean they are given a word problem and they have to solve it? I know I am getting old, your number one and two were confusing and unclear to me and I have a business degree. LOL.

I’m think with the terms I would explain all the terms, they can also have them listed as vocabulary to memorize. I would do a worksheet where they label or match up what is a premium what is the interest in and also multiple choice. Doesn’t the text book have a workbook with it? Or, problems at the end of the chapter?

Have them read a credit card statement, so it is like real life, and answer questions regarding the statement. I think a law passed where it says on the statement what it costs over time if you don’t pay in full? I never look over that part of the statement so I don’t know off the top of my head if it really is on there.

They can also figure out mortgage payments.

They can look at a savings account statement and interpret that too.

717richboy's avatar

“They have to come up with the equations? Do you mean they are given a word problem and they have to solve it?” I will introduce to them the formula for compound interest, and based upon that formula, create word problems we will solve as a class.

I’m glad I am not the only one who doesn’t click with common core.

LostInParadise's avatar

I would start with a numerical example and I would use easy numbers to work with. 50% interest is not realistic as an interest rate, but it makes the calculations easy. If you invest $100, after a year you have $150. The following year you have $150 + .5 x $150 = 1.5 x $150 = 1.5×1.5 x $100. At this point I would pause and ask the students to see if the pattern continues for the third year.

gorillapaws's avatar

I would incorporate a snowball as a metaphor in your lesson to help kids grasp how the growth is exponential, and builds on the growth of previous layers.

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