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Interest
Rates and the Growth of Money


 
Brief Description: This threepart activity asks students to: (1) derive a general interest rate formula, and (2) simulate and examine the growth of money at several different interest rates and compounding periods. Extension activities look at extreme compounding periods. Mathematics
Topics: This
activity involves applying exponential functions and parametric
equations and graphing to problems involving simple
and compound interest.
Sample Screen
Shots: Figure 1. A simulation of the growth of a $1,000 investment at 5% (money market), 8% (bonds) and 16% (stocks) monthly for 20 years, compounded monthly Figure 2. A graph of the relationship between accumulation and compounding period for a very special case. 

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