Calculating Interest

Teachers' Notes

The programme could be used as an introduction to the topic where students already have a good understanding of calculating with percentages. It would also be useful as a revision tool or as additional content to enrich other work within the topic. Some students may benefit from viewing short sections as they progress through stages of the work and then view the entire programme to summarise the main points. Some initial discussion work on finance and relevant vocabulary (eg interest and principal) may be a useful preparatory activity, prior to viewing. The answers to Worksheet 1 could form the basis for discussion after viewing the programme.

Efficient use of a calculator is demonstrated through specific examples. Calculation techniques include the use of a repeated multiplier for compound interest, and we see how to express and calculate this using index notation.

The following ideas could be used to extend the work after viewing the programme:

• How long would it take for an investment of £1000 to reach over £1 million at a compound interest rate of 10% per annum? What if the interest rate is only 3%?
• Investigate car depreciation. Use genuine car prices (available in booklets) to calculate the depreciation per annum of different makes. What would you estimate a particular car would be worth in two years time? Often the greatest depreciation is in the first year from new. What about classic cars?