Content Partner

Grade 9-12
,
Lesson

Compound Interest and Your Financial Life Cycle

Time: 120-180 mins,
Updated: November 18 2020,
Author: FiCycle

Objective

Students will be able to:

  • Calculate the future and present value of loans and investments using the compound interest formula.
  • Understand the financial life cycle, and how this leads to the need to transfer wealth from some life stages to others.
  • Understand why it’s appropriate to borrow money to meet some financial needs and invest money to meet other financial needs.
  • Use positive and negative exponents appropriately in modeling financial scenarios.
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Description

This lesson introduces students to compound interest and situates it within the framework of the financial life cycle. This allows students understand why we borrow money for certain financial goals, such as college education, and invest it for others, such as retirement. Students can apply exponents in rich modelling activities, rather simply plugging in numbers into the compounding formula. The materials include a detailed lesson plan and slides, a complete set of worksheet and answer keys, along with a project-based final assessment which combines mathematical skill with financial reasoning. This provides a fresh approach to teaching both compound interest and exponents, one that allows students to critically analyze decisions regarding borrowing and investment and find an authentic application of mathematics.