LOTW 17/05/15 – Introducing compound interest

I chose this week’s LOTW because it worked really well as a complete lesson with minimal planning and preparation. I’m a big believer in varying what pupils do in lessons, and I love card sorts, discussion work and all that jazz, but sometimes (particularly on a windy Monday afternoon), that also needs to include more “traditional” style lessons. 

Last Sunday I asked for new ideas and resources for compound interest via #mathsTLP. I’d spent the previous week teaching basic percentages, increases and decreases to Year 10, both using a ratio table for non-calculator problems, and spending lots of time using percentage multipliers in preparation for teaching compound interest.

We started with this quick worksheet from Study Maths on percentage multipliers – I displayed it on the interactive board and they worked through with little difficulty. It took them about five minutes, which gave me chance to pick up the ones who’d missed the previous lesson due to external exams.

@MrMattock suggested using Nuffield FSMA resources; I’d not discovered these before, but there’s lots of great stuff for meaningful real-life mathematics. We had a quick discussion around the questions on the first slide from their presentation on compound interest, then I set the pupils off on the first worksheet, which had some nice examples of trickier percentages to work with.

Once they’d had a few minutes working through the first set of problems, we discussed how the calculation process could be simplified by using a percentage multiplier for the increase, rather than finding the percentage, then adding it on (i.e. using 1.031 for an increase of 3.1%, rather than finding 3.1% and adding it on). 

@rainment400 linked the Three Act Maths activity, “Fry’s Bank“, from Dan Meyer. I’d found this when investigating Three Act Maths a while back, but wasn’t teaching compound interest at the time so had completely forgotten about it. It’s based on one of the first episodes from Futurama, where the main character, Fry, wakes up after 1000 years in cryogenic sleep, then goes to check his bank account – it’s a really interesting illustration of how compound interest can really mount up!

After I’d explained to some of the pupils what Futurama is (honestly, they haven’t lived!), we watched Act 1 of the clip. I then got them to work out how much money Fry would have after one year.

We then went back to the Nuffield worksheets, and I got them to tackle the second set of problems. However, rather than do the calculations as they had done before (find the interest, then add it on), we changed the “Interest £” column to “Working out”, and I got them to do the problems as a single-step calculation (i.e. 400 x 1.05 for the first year, 420 x 1.05 for the second year, and so on).

Returning to Fry’s bank, I asked them to do the calculations for the first five years. We than discussed how impractical it would be to calculate for every single year until we reached 1000, and, with a little prompting, they spotted how they could calculate the answer using powers.

To finish off the lesson, they worked out the amount Fry would have after 10, 100 and then 1000 years, and I played the Act 3 video clip for them to check their answers. The little “reveal” at the end gave quite a nice sense of achievement to finish the lesson, although we did need to have a quick discussion about British vs American billions.

This lesson wasn’t massively different to the way I normally introduce compound interest, but the slightly slower build-up towards the “formula” method seemed to make the ideas stick a little better. Using “Fry’s Bank” also seemed to encourage them to use the formula rather than stick with repeated yearly calculation, as I’ve had some pupils do in previous years.