ZIP
Compound Interest
Activity Overview
This activity involves exploring the formula for compound interest as a function of the initial deposit, interest rate, and the number of pay periods per year.
Objectives
- Students will interpret the variables in the formula for compound interest.
- Students will use the formula for compound interest and understand the effects of changes in the interest rate and the number of compounding periods.
- Students will understand the relationship between compound interest and continuous compounding
Vocabulary
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About the Lesson
This lesson involves exploring the formula for compound interest as a function of the initial deposit, interest rate, and the number of pay periods per year. As a result, students will:
- Learn the relationship between the interest rate and the total amount in the account.
- Learn the relationship between the number of pay periods and the total amount in the account.
- Discover the limiting condition as the number of pay periods increases without bound