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Lesson 1: Comparing Simple and Compound Interest

Instruction:

1. Before moving the sliders, predict what will happen to the graph when you change:
  • x and y scale
  • time
2. Adjust the time slider. 3. Change the value of the principal amount (P) and rate (%):
  • Try different combinations of principal amount (P) and rate (%).
4. Click the box of Simple and Compound (see below time slider). 5. Record your observation and check if your predictions match the result.

Performance Task 1:

SIMPLE INTEREST (5 points each) 1.How do you determine the simple interest earned each year? 2. How much total simple interest will be earned after "n" years? (show your solution) 3. Derive the formula of Simple Interest? COMPOUND INTEREST (5 points each) 1. How is the compound interest earned in each year calculated? 2. Why does the interest amount increase each year under compound interest, unlike in simple interest? 3. Derive the formula for the total compound interest earned after "n" years. GENERAL QUESTION (10 points) 1. Compare simple and compound interest after "n" years. Which one grows faster, and why?