Compound Interest Lab

Dolly  Beeler's picture
Content Area(s):  
Grade Level(s):  
Oregon Common Core State Standards: 
6.3.2
6.3.3
7.1.4
7.2.2
Lesson Plan Details
Duration: 
2 class periods
Objective: 

 

The students will learn to use Excel Spreadsheet to calculate compound interest.

The students  will  use prior knowledge of formulas to write the necessary equations to compute compound interests and insert these equations into the appropriate cells on the Excel Spreadsheet.

The students will interpret the information presented on the spreadsheet and answer specific questions.

The answers to the questions will be answered on a Microsoft Word document.

The students will be able to submit their final work to the teacher electronically.

The students will be able to explain what happens to the principle balance over a given amount of time at a given rate.

The students will make a conjecture as to what happens to the interest at a given rate as the frequency of compounding changes. (annually, semi-annually and quarterly). The students will compare and contrast what happens to a $1000 principle is compounded at at a rate of 6% in three ways; simple interest, compounded annually, compounded quarterly.

The students will display the simple interest calculations on a word document.

Overall the students will gain a better idea of what occurs in the real-world when loans, and/or  deposits of money incur compounded interest.

They students will understand that money is either gained  if invested or owed if borrowed.

They students will be able to choose a given year on the spreadsheet and interpret the calculation of compounded interest over time.

This exercise will help the student better understand use of credit and investments.

Resources: 

Computer

Microsoft Excel

Microsoft Word

H drive or Moodle or something similar where the students can turn in their work.

I used a SMARTBoard to demonstrate how to use the Excel and how to input the equations necessary for computation of compound interest.

Math Connects Course 3, Glenco, page 294.

Preparation: 

Learn how to use Excel

Premake a demonstration Spreadsheet with the formulas already input,

Set up a Moodle or place on the H drive where students can turn in their competed projects.

Understand the lesson found in Math Connects Course 3, Glencoe, page 294.

Set up the with the demonstration Spreadsheet is working and easily accessable.

Instruction: 

The students will have had prior lessons to teach them to read , write and compare fractions, decimals and percents.

The students have skill the enable them to convert fractions, to decimals and use in estimations, computations and applications.

The students will  have previous opportunities to solve real world problems that involve discounts and mark-ups.

The students will previously computed percent increase and percent decrease.

The students will have a prior knowledge of: simple interest,and conversion of percents to decimals. They will have been involved in real-world discussions about banking(investments), borrowing (car loans), and home mortgages.

:It is important to review Simple Interest before teaching compound interest. I like to use a discovery education video to help introduce a concept. The link can be found below.

Teach the parts of the formula I=PRT

Explain I is the interest, the money earned or owed

P is the principle, the money you start with invest or borrow

R is the rate in decimal form example 5.4%  5.4/100 = 0.054

T is the time in years. Therefore, if 6 months is written, this needs to be converted to 0.5 years.

Then, explain to the students how to use the formula to find simple interest.

Introduce compound interest discuss the definition.

Take the students through the steps of setting up the spreadsheet to calculate compound interest. Take them step-by-step through the process of writing the formulas in the cells.Use the SmartBoard the demonstrate to the students how to find use the spreadsheet. Have them compare their answers with what the teacher has calculated on the demonstration spreadsheet. Introducing the spreadsheet and compound interest will take one class period.

Day 2

Allow the students to work in small groups to complete the exercises on page 294, in the Math Connects Course 3 book.

After the students finish the lab. They need to answer the questions on a Word document and submit it electronically to the moodle account or what the teacher has prepared for student submission. The word document includes Q1- where the students show all the steps to solving a simple interest problem. Then, they need to answer Q2 and Q3. Their supporting work will be turned in from the Excel Spreadsheet documents. The students  need to submit 3 different Spreadsheet documents. Q1- is the document competed during the demonstration, Q2B-is the interest compounded semi-annually, Q2C - the interest is compounded quarterly.

Extended Activity

Allow the students to research the sale price of a car they would like to purchase. They need to download a picture of the car and write the purchase price of the car by the picture. Then, have them make a spreadsheet to show how much they would pay if they took out a loan to pay for the car. The loan would be 5% for 5 years compounded semi-annual. The students need to state clearly how much in total they would pay for the car they wish to purchase. .

Assessment: 

Teacher questioning

Student interaction

Correct responses to question

Correct answers on the spreadsheet for the compounded interest problems.

Students following directions.

Assignment turned in on time

 

http://www.udel.edu/sine/milford/ss_rubrics.html

Standard #1: Is able to accurately and effectively utilize information in an existing spreadsheet

4 Demonstrates mastery over the process of utilizing spreadsheet information.
3 Carries out the use of spreadsheet information without significant error
2 Makes significant errors when using spreadsheet information
1 Makes critical errors when using spreadsheet information

Standard #2: Is able to accurately create a new spreadsheet
 
4 Demonstrates mastery over the process of creating a spreadsheet
3 Carries out the creation of a new spreadsheet without significant error
2 Makes significant errors when creating a spreadsheet
1 Makes critical errors when creating a spreadsheet

Standard #3: Is able to create graphs from spreadsheet data
 
4 Demonstrates mastery over the process of creating graphs from a spreadsheet
3 Carries out the creation of graphs from a spreadsheet without significant error
2 Makes significant errors when creating graphs from a spreadsheet
1 Makes critical errors when creating graphs from a spreadsheet

Standard #4: Is able to effectively utilize appropriate storage devices to save and retrieve files
 
4 Demonstrates a high level of skill when utilizing storage devices
3 Carries out the use of storage devices without significant error
2 Makes significant errors when using storage devices
1 Makes critical errors when using storage devices

Standard #5: Is able to effectively perform routine troubleshooting and setup tasks

4 Demonstrates a high level of skill while performing routine troubleshooting and setup tasks
3 Carries out routine troubleshooting and setup tasks without significant error
2 Makes significant errors when performing routine troubleshooting and setup tasks
1 Makes critical errors when performing routine troubleshooting and setup tasks

What was the problem that needed to be addressed?
 
How did he/she solve the problem?
 
 

Other Comments:Did the student work well in the group?

Oregon Educational Technology Standards
Creativity and Innovation: 
1A. Apply existing knowledge to forecast possibilities and generate new ideas, products or processes.
Communication and Collaboration: 
2A. Interact and collaborate with peers, experts, or others employing a variety of digital environments and media.
2D. Contribute to project teams. Produce original works or solve problems in a team setting.
Research and Information Fluency: 
3A. Plan strategies to guide inquiry.
3D. Analyze, evaluate, and summarize information or data and report results.
Critical Thinking, Problem Solving and Decision Making: 
4A. Identify and define authentic problems and significant questions for investigation.
4B. Plan and manage activities to develop a solution or complete a project.
Digital Citizenship: 
5A. Advocate and practice safe, legal, and responsible use of information and digital technology.
5B. Model and practice a positive attitude toward using digital technology that supports collaboration, learning, and productivity.
5C. Demonstrate personal responsibility for lifelong learning.
Technology Operations and Concepts: 
6A. Select, use, and troubleshoot tools efficiently.
6B. Transfer current knowledge to learning of new technologies.
Career Related Learning Standards
Personal Management: 
CR2A. Plan, organize, and complete projects and assigned tasks on time, meeting agreed upon standards of quality.
Communication: 
CR3A. Locate, process, and convey information using traditional and technological tools.
CR3B. Listen attentively and summarize key elements of verbal and non-verbal communication.
Employment Foundations: 
CR5A. Apply academic knowledge and technical skills in a career context.
CR5B. Select, apply, and maintain tools and technologies appropriate for the workplace.
elizabethbroadbent's picture

How cool that 7th graders are able to use Excel to demonstrate compound interest!