Friday, 17 February 2012

Lesson Sketch: Compound Interest


I'm not entirely sure whether my pupils will have the same perplexity as I do with this. This is from the film 'Swordfish', but I seem to remember this happening in quite a few other films too (contact me if you can name any). The natural question I get is: "What, really? That interest that in my bank account amounts to such a piddling amount can take you from $400 million to $9.5 billion in just 15 years?"

The problem with this might be of course that a lot of my pupils may not have a bank account yet and they aren't maths nerds (yet).

What I'm going to do:

Introduce the session:
  • Show the video.
  • Ask what question comes to mind. Do we think their answer is too high/too low? How could we show their answer is too high (upper bound)?
  • What information would we need to answer this question (Interest rates since 1986)? Where can we find this information (can lead them here if they can't find one themselves)?
Main section:

Pupils should be ok from here if they know how to find the multiplier. Pupils finding 5% first then adding it on will get frustrated at the number of repeated calculations they need to do and will be gagging for an easier way.


No way I can see of verifying your answers unfortunately, so we will have to compare our answers with each other then share our disappointment with the accuracy of the movie.

Extension questions:
  • What interest would we need in order to get $9.5 billion from $400 million in 15 years?
  • (Super-extension) How many years would it take if we had a fixed rate of 7% interest?