1.  Open the envelope on your desk  Is anyone a millionaire? Are you a millionaire?

2. Starter: Investing your Money  Four banks have accounts for ‘would be millionaires’  For a specific investment amount, they have interest rates that guarantee you will be a millionaire in just one year C New Savings Accounts BankInvestmentInterest Rate pa Natwest£995 020.000.25% Barclays£990 090.000.50% HSBC£985 200.000.75% Co-operative£980 300.001.00% What amount would you have to have started with for this to have worked? % increase over 1 year  How much money would you have after a year? Note: You must only round to the nearest pence

3. Eeekkk! Seems the banks got it wrong  A review by the Year 10 Maths Authority has highlighted an error with the ‘would be millionaire’ accounts – they don’t make you a millionaire Z BankInvestmentInterest Rate paAfter 1 Year Natwest£995 020.000.25%£997 507.55 Barclays£990 090.000.50%£995 040.45 HSBC£985 200.000.75%£992 589.00 Co-operative£980 300.001.00%£990 103.00  The banks’ money men say it was a typo in the offer, they actually guarantee you will be a millionaire after 2 years  Work out how much interest you made in the first year, then add this to your 1 year total  Are you a millionaire yet? What about after 3 years? Note: You must only round to the nearest pence

4. Hmmm it’s still not working!!  The Year 10 Maths Authority are up in arms, these accounts are still not making them actual millionaires Z BankInvestmentInterest Rate paAfter 2 Years Natwest£995 020.000.25%£999 995.10 Barclays£990 090.000.50%£999 990.90 HSBC£985 200.000.75%£999 978.00 Co-operative£980 300.001.00%£999 906.00  Now the bank’s money men are saying your calculations are wrong, its based on compound interest, not simple interest  In pairs, discuss what compound interest could be and how it might be calculated? http://www.youtube.com/watch?v=NXuDDm-DnLE

5. Compound Interest Jack puts £500 into a savings account with an annual interest rate of 5% - how much will he have after 4 years if he doesn’t add or withdraw any money? At the end of year 1 Jack has £500 × 1.05 = £525 At the end of year 2 Jack has £525 × 1.05 = £551.25 At the end of year 3 Jack has £551.25 × 1.05 = £578.81 At the end of year 4 Jack has £578.81 × 1.05 = £607.75 We can write this in a single calculation as: £500 × 1.05 × 1.05 × 1.05 × 1.05 = £607.75 Or using index notation as: £500 × 1.05 4 = £607.75

6. Compound Interest – making you a millionaire!  Calculate the compound interest on your investment over two years  Hopefully you are now a millionaire!