Lesson Plan: Compound Interest
Overview
In this lesson, students will explore the importance of compound interest as it applies to long-term savings. Students will examine factors that influence compound interest and use them to formulate their own savings strategies. They will also learn how to use the Rule of 72 to quickly estimate how long it takes for an investment to double in value.
Goals
• Understand the relationship between compound interest and its influencing factors
• Recognize the effects of compound interest in savings and in debt
• Develop long-term savings strategies • Estimate investment earnings with the Rule of 72
Objectives
• Define principal, interest, simple interest and compound interest
• Isolate the factors that influence compound interest (compounding period, interest rate, investment duration) and use those factors to generate practical savings strategies
• Recognize effects of compound interest in savings and in debt
• Estimate how long takes for an investment to double using the Rule of 72
Assessment
An optional quiz has been provided with this lesson plan (the quiz is not factored into the lesson’s 45-minute runtime).
Lesson plan activity a activity b quiz