1. Warm-up: THE RULE OF 72
There is a quick way to estimate the time it takes for an 
investment compounded annually to double in value. This 
method is called the Rule of 72.
To calculate the approximate length of time in years it takes for 
an investment to double, divide 72 by the annual interest rate 
expressed as a percentage.
If you wanted to know approximately how long it would take an 
investment with an interest rate of 3.00% per annum to double 
in value, you would divide 72 by 3.
72 ÷ 3  24 years
Using the Rule of 72, you can estimate that it would take about 
24 years for the investment to double in value.

2. 1. Using the information above, write a formula that describes 
 the Rule of 72.
Use the formula to answer question 2.
2. If you wanted to double your money in 10 years, at what 
 rate of interest would you need to invest your money?

3. Simple vs Compound Interest
 Let's compare what happens if your invested money is  accruing 
 interest using simple interest vs compound interest.
 Both investments will be an original principal amount of $500, 
 collecting 5% interest per annum for 5 years.
Simple Interest
Compound Interest

4. a) Complete the calculations table showing simple interest over
Gordon wants to invest $ His bank offers an investment 
option that earns simple interest at a rate of 1.75% per year.
a) Complete the calculations table showing simple interest over
 5 years.
Total value at end of 5 years: ___________________
b) Is there a shortcut or formula?????

5. Simple Interest
 I = PRT
I = interest earned
P = principal amount
R = interest rate
T = term (time invested)
Gordon wants to invest $ His bank offers an investment 
option that earns simple interest at a rate of 1.75% per year.

6. Compound Interest
Allison wants to invest $ Her bank offers an investment 
option that earns compound interest at a rate of 1.75% per year.
a) Complete the calculations table showing simple interest over
 5 years.
Total value at end of 5 years: ___________________
b) Is there a shortcut or formula?????

7. Compound Interest
A = future value
P = principal amount
r = interest rate
n = number of compounding periods per year.
t = time in years
Allison wants to invest $ Her bank offers an investment 
option that earns compound interest at a rate of 1.75% per year.

8. You Try
Murray deposits $6700 into an investment which earns 3.2% per 
annum, compounded semi-annually over 2 years. Complete both 
the table and the formula to find the value of the investment after 
2 years.

9. Simple Interest Review: I = PRT
a) Calculate the interest earned on a $3000 investment that 
 earns 7% over 10 years.
b) What interest rate would you need, to earn $900 over 5   years if the principal amount was $2000.

10. Compound Interest Review:
A = P( 1 + r/n)nt
Calculate the future value if $4000 is invested at 3% per annum 
over 2 years.
Compounded: annually, semi-annually, quarterly, monthly, daily

11. To Do:
Complete Simple and Compound Interest   Worksheet.
Exit Slip on Simple / Compound Interest