Simple and compound interest
Lesson details
Learning outcome
I can appreciate the difference between simple interest and compound interest.
Key learning points
- Repeated percentage change occurs in real-life.
- Simple interest is calculated once and then added repeatedly.
- Compound interest is recalculated at each stage.
- By considering the calculations for compound interest, you can be more efficient.
- Calculators can simplify this process even further.
Keywords
Simple interest - Interest is money added to savings or loans. Simple interest is always calculated on the original amount
Compound interest - Compound interest is the interest calculated on the original amount and the interest accumulated over the previous period.
Common misconception
Pupils should pay careful attention to what the question asks. Working out the overall amount after a simple or compound increase is different to working out the total interest only.
Pupils can underline or highlight the key instruction to the question e.g. Total amount or total interest, to remind them of the need to subtract from the original amount or not.
Teacher tip
This lesson is focussed around knowing the differenced between simple and compound interest as opposed to calculating. Have a discussion where have they seen interest rates advertised, published, etc. Have they thought what it means? Do they have bank account and do they know their interest rates?
Licence
Lesson video
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Prior knowledge starter quiz
6 Questions
Q1.If a number increases by 0.2% and is now 1252.5, what was it originally?
Q2.If a number decreases by 64% and is now 54, what was it originally?
Q3.Write 90 as a percentage of 1800
Q4.Find 60% of 70
Q5.Which statement is the equivalent of "Decrease 90 by 20%"?
Q6.If a number decreases by 40% and is now 54, what was it originally?
Assessment exit quiz
6 Questions
Q1.If you invest £300 for three years and receive 2% simple interest each year, how much will you have at the end?
Q2.If you invest £500 for three years and receive 3% simple interest each year, how much will you have at the end?
Q3.If you invest £1200 for five years and receive 2.5% simple interest each year, how much will you have at the end?
Q4.If you invest £300 for three years and receive 2% compound interest each year, how much will you have at the end (to 2 d.p.)?
Q5.If you invest £500 for three years and receive 2.5% compound interest each year, how much will you have at the end (to 2 d.p.)?
Q6.If I started with £58 and have £61.48 after 3 years in savings with an interest rate of 2%, was the interest simple or compound?
To help you plan your 10 maths lesson on: Simple and compound interest, download all teaching resources for free and adapt to suit your pupils' needs...
To help you plan your 10 maths lesson on: Simple and compound interest, download all teaching resources for free and adapt to suit your pupils' needs.
The starter quiz will activate and check your pupils' prior knowledge, with versions available both with and without answers in PDF format.
We use learning cycles to break down learning into key concepts or ideas linked to the learning outcome. Each learning cycle features explanations with checks for understanding and practice tasks with feedback. All of this is found in our slide decks, ready for you to download and edit. The practice tasks are also available as printable worksheets and some lessons have additional materials with extra material you might need for teaching the lesson.
The assessment exit quiz will test your pupils' understanding of the key learning points.
Our video is a tool for planning, showing how other teachers might teach the lesson, offering helpful tips, modelled explanations and inspiration for your own delivery in the classroom. Plus, you can set it as homework or revision for pupils and keep their learning on track by sharing an online pupil version of this lesson.
Explore more key stage 4 maths lessons from the Percentages unit, dive into the full secondary maths curriculum, or learn more about lesson planning.