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This experience helps students make progress towards attaining the standards in a practical way. The experience provides a "real world" context in which to learn the mathematics and crystallize knowledge previously acquired. Throughout the experience, there is much teacher/student and student/student interaction to provide ongoing informal assessment and direction for students to attain success. The following is a general action plan to describe the learning experience. A more detailed plan is included in an appendix.
Day One: Students will work with calculators and spreadsheets to calculate simple interest. After calculating simple interest (using the scientific calculator) for specific examples, students then create a spreadsheet that will calculate the simple interest for a twelve month period when given a specified principal amount and rate. The students then make a minor modification to the new table so it will calculate interest on the previous month's balance and the interest earned that month. Next, as a class activity, the compound interest formula will be determined (with teacher guidance).
Day Two: Students will work with scientific calculators to calculate the value of an investment at various points in time. They will calculate these using both simple interest and compound interest and compare the values at each interval specified. Next, students will work at the computer with Analyzer* software to produce graphs of both simple and compound interest, given a specified principal amount and interest rate. Students will then compare the graphs and state what they believe the effects of compounding interest are. As an added activity, students can estimate the cost of smoking a half a pack of cigarettes per day for one year and use this information to graph the results of investing that amount of money for 30 years at 7% (or some other rate). An offshoot of that idea is for them to calculate the value of a one time $2000 investment made at 7% compound interest at age 18 and graph the associated curve to project potential earnings and the value of the investment upon early retirement at age 55. Lastly, on day two, students can begin to design a spreadsheet that will calculate the compound interest for a credit card and update the account each month for a year (assuming no payments or a constant payment amount.)
Day Three: Students will use their last spreadsheet from "Day 2" and modify a copy of it to allow it to calculate interest at each monthly interval based on payments made. Students will also design their spreadsheets to total the amount of interest accrued in one year. Students will then produce 4 spreadsheet printouts for 4 different accounts (created by students as they edit copies of their original working spreadsheet). When creating the accounts, students will change the interest rates, principal, charges, and payments for each account. (This may be adapted to meet the needs of any class as follows: For more challenges, students can program interest rates that start at 5.9% and, after 6 months, revert to the 15.9% standard rate. To reach students at the root level of the concept, students can program a fixed rate, omit a "new charges" column, and even program a fixed rate of payment.)
You have learned many concepts dealing with percents, interest, and graphing. For this project, we will be combining those ideas to see how that knowledge can help us to make wiser financial decisions. We will also be using the computer applications Microsoft Works and Analyzer* to assist us in this endeavor.
General Project Guidelines:
The project will consist of a title page, table of contents, a minimum of four spreadsheets, a graph, and a brief report.
Spreadsheet Guidelines:
You will design a spreadsheet to simulate a credit card account. The spreadsheet will contain columns for starting balances, payment information, new charges, a subtotal (prior to interest), interest (calculated on the subtotal), and closing balances for each month of the year. The spreadsheet should be designed to allow the user to enter the percentage rate for automatic recalculation.
There is a minimum of four spreadsheets to submit. It is suggested that you produce ones as follow:
$3,000 initial balance @ 15.9% $5,000 initial balance @ 12.5%
$3,000 initial balance @ 5.9% $7,000 initial balance @ 12.9%
You are welcome to use your own values and you may print out additional sheets if you wish. Remember that you must submit your disk with the spreadsheets on it. I will be using your computer file to check for accuracy. (All computer disks will be returned.)
Graphing Guidelines:
Here you have some options. You will be graphing compound interest values to project the value of investments. You may wish to use the credit card interest paid in one year and simulate investing it at 7% compound interest. You may also wish to use the example done in class that dealt with the amount of money saved in one year if a person decides not to smoke half of a pack of cigarettes per day. You may just wish to make up your own values to produce the graphs. No matter what you decide, you must state the principle invested, the percentage rate, and the type (simple or compound) of interest.
Report Guidelines:
In your written report, you must write about a minimum of three of the following topics:
- "the difference between simple and compound interest"
- "Problems with credit cards"
- "How computers make our lives easier"
- "My plans for handling money in the future"
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