## Sunday, September 16, 2012

### Simple and Compound interest: a sorting activity

This is very basic, and does several good things:

• Connect to student understanding of sequences and series (which we had studied the previous weeks), percent, and functions (mine haven't studied exponential growth yet).
• Get students discussing concepts such as interest rates, loans and repayments
• Somewhat self-checking, especially once I told the kiddos that the two columns should be of equal length

What to do:
1. Cut out each rectangle and give small groups of students a set of all the rectangles.
2. Tell them to sort them into two categories. Or don't tell them the number of categories.
3. Eventually hint that the categories should have equal number of rectangles.
4. When groups are almost done, walk around and check on their categories, giving hints and pointing out conflicts without giving the solution to the conflict.

When groups are done, I lead a whole class discussion in which the main ideas of simple and compound interest were introduced and defined, and students got a few minutes to derive the general formulas for these types of interests.

I ended the lesson by asking how much Jesus would have had in the bank today, if his parents had invested 1kr at 1% annual interest when he was born. This helped students get the idea that given enough time, compound interest far outgrows simple interest.

#### 1 comment:

1. Nice. I never go as far back as Jesus, but I play what I call my "morbid game" with them. I get them to take out all the money they have on them and we add up the class total. Then I say we are going to take all that money and invest it in an index fund tracking the market that normally averages bewteen 6 and 10%. The last one of us still alive gets all the money and the interest. (I add some amusing rules about not killing classmates to get the money, etc...) We have to talk about some assumptions like how long the second last one of us will live, and so on. Then they run the numbers. They are shocked. Even \$50 at 8% for 80 years is huge. They are excited about how rich the 95 year old last one of them alive will be. Then we talk about inflation...