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Simple Compound Interest Activity

The document provides instructions and questions for an activity on simple compound interest. Students are asked to calculate interest earned on investments of $1,000,000 and $8,500 over 15 and 10 years respectively at given interest rates. They are also asked to determine the amount that must be invested now to reach $20,000 in 18 years at a 7% interest rate compounded monthly.

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Dr. Gopalakrishnan G
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86 views2 pages

Simple Compound Interest Activity

The document provides instructions and questions for an activity on simple compound interest. Students are asked to calculate interest earned on investments of $1,000,000 and $8,500 over 15 and 10 years respectively at given interest rates. They are also asked to determine the amount that must be invested now to reach $20,000 in 18 years at a 7% interest rate compounded monthly.

Uploaded by

Dr. Gopalakrishnan G
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Simple Compound Interest Activity


You may choose to complete your mathematical calculations by hand
and scan or take images to upload to the dropbox. To help your teacher
review your work, submit your calculations as a single file document
(preferably as a pdf). If you aren’t sure how to do this, e-mail your
teacher for assistance. 

Important
When answering questions in a mathematics course, always use the
following guidelines to help you do your best:

 Provide full solution, showing all of your steps.


 Make sure that there is one step or idea per line.
 Use one equal sign per line.
 Make sure that equal signs line up vertically.
 Don't use self-developed short form notations.

Your generous Uncle Zephaniah gives you $1 000 000. You decide to
invest all of it into Canada Savings Bonds (CSBs) which pay simple
interest at a rate of 3.78% per year and mature after 15 years (that is,
you have to cash them out after 15 years).

Answer the following questions using the above scenario.


:
1. Create a chart that shows the value of the investment at the end of
each year of the 15-year investment period. The headings should be:

"End of Year", "Annual Interest ($) I = P rt" and "Total amount ($)


A = P + I ".

2. Determine the equation that best models the relationship between the
year and the total amount. Explain how you develop this question.

3. Use the equation to predict in how many years (if you were allowed to
leave the bond in for as long as you wanted), your investment would
be worth $1 982 800.

4. How much will $8 500 be worth if it is invested for 10 years at 6.5%/a,


compounded weekly?

5. Mary wishes to invest a single sum of money on the day her son is
born that will grow to $20 000 when her son turns 18. If she invests
the money at 7%/a, compounded monthly, how much must she invest
initially?

Submit this activity to the dropbox. This activity will not contribute to your overall final
grade in this course but may be taken into consideration by your teacher at the end of
the course.
:

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