I can calculate compound interest.
I can calculate compound interest.
Simple interest - Interest is money added to savings or loans. Simple interest is always calculated on the original amount.
Compound interest - Compound interest is calculated on the original amount and the interest accumulated over the previous period.
Pupils get confused between simple interest and compound interest. When presented with a compound interest problem the common error is for pupils to add the same constant amount.
Visual representations are helpful here. The bar models in the first part of the lesson show how compound interest grows year on year. The graphical representation also demonstrates the fundamental difference between the two forms of interest.
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