HOW is compound interest different from simple interest? Ratios and Proportional Relationships Course 2, Inquiry Lab after Lesson 2-8.

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Presentation transcript:

HOW is compound interest different from simple interest? Ratios and Proportional Relationships Course 2, Inquiry Lab after Lesson 2-8

7.RP.3 Use proportional relationship to solve multistep ratio and percent problems. Mathematical Practices 1Make sense of problems and persevere in solving them. 3Construct viable arguments and critique the reasoning of others. 5 Use appropriate tools strategically. Ratios and Proportional Relationships Course 2, Inquiry Lab before Lesson 2-8Common Core State Standards © Copyright National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.

Ratios and Proportional Relationships Course 2, Inquiry Lab after Lesson 2-8 Activity Continued  Jin Li’s parents deposit $2,000 in a college savings account. The account pays an interest rate of 4% compounded annually. Complete the Activity to find how much money will be in the account after 9 years. Compound interest is interest earned on the original principal and on the interest earned in the past. At the end of each time period, the interest earned is added to the principal, which becomes the new principal for the next time period. A computer spreadsheet is a useful tool for quickly performing calculations involving compound interest. To perform a calculation in a spreadsheet cell, first enter the equal sign. For example, enter =A4+B4 to find the sum of Cells A4 and B4.

Ratios and Proportional Relationships Course 2, Inquiry Lab after Lesson 2-8 Jin Li’s parents deposit $2,000 in a college savings account. The account pays an interest rate of 4% compounded annually. Complete the Activity to find how much money will be in the account after 9 years. Create a spreadsheet like the one shown. What formula would the spreadsheet use to find the new principal at the end of year 9? ________________________________________ So, the account will have a balance of ______________after 9 years.

Ratios and Proportional Relationships Course 2, Inquiry Lab after Lesson 2-8 HOW is compound interest different from simple interest?