Students calculate compound interest to identify benefits of saving in interest-bearing accounts. They learn the “rule of 72” and that it applies to both investments and debt. They apply the rule of 72 to several savings scenarios. They learn that there is a relationship between the level of risk for an investment and the potential reward or return on that investment.

Objectives

Students will

• explain the difference between a non-interest-bearing account and an interest bearing account,
• calculate interest compounded semiannually,
• explain and demonstrate the rule of 72, and describe the risk-reward relationship.

Grade Level

Middle School – High School

Concepts

• Compound interest
• Interest
• Non-interest-bearing account
• Principal
• Risk-reward relationship
• Rule of 72
• Saving

Time Required

45 minutes

 
Whiteboard (SMART/notebook)
Whiteboard (ActivInspire/flipchart)
PowerPoint (pptx)