Originally created for a University of Canberra "Information Technology & Education" Project in October 2004

by Paul Myers & Brendan Sullivan

- General Overview
- Teacher's Introductory Notes
- Compound Interest - Module I
- Compound Interest - Module II
- Compound Interest - Module III
- General Conclusion
- Some Useful Links

To use the "Smart Folding Menu Tree" used above, click on the "closed folder" to open the list
and click on the "open folder" to close the list.

(Refer to Acknowledgement below.)

This webquest examines effects of compound interest. Compound interest is the mathematical concept that underlies much of the modern economy. You come across it every time you open a savings account, take out a mortgage or start a job (through the superannuation made for you by your employer).

Nevertheless, many people don't really understand how compound interest effects them. So with this webquest you get to look at some compound interest situations and find out some of the more important thing about this important (and lucrative) area of mathematics.

In this Webquest you will undertake several different but related tasks in each of the three modules. Each of the modules will develop your understanding of Compound Interest in three different ways. The modules cover the following areas:

- How do people make decisions about investments?
- Should I save more money or just spend it now?
- How do investment fees affect the money I earn?

This module will look at all the variables used in calculating Compound Interest. It will get you to consider which one, if any, is the most important - Interest Rate, Principal (amount invested), or Time. Is each as important as another or does one stand out as being more important?

In this module you will consider the following questions:

- Say you are saving $10,000 over a period of 20 years at 6% interest rate. Should you add to your investment?
- How much will what you add be worth at the end?
- When should you add money?

Note that completion of this Webquest, in full, is an assessable component for your final mark. Refer to your subject outline for further details.

It is suggested that teachers commence this unit with a classroom session on the difference between simple and compound interest which will introduce students to the concept. It would also be useful to discuss situations in class where compound interest might come up in everyday life. This initial lesson could easily be supplemented by traditional classroom exercises in compound interest.

To understand this unit students will need to have basic familiarity with the following concepts and skills:

- Interest Rates
- Principal (or Initial Investment)
- Return
- Reading graphs

On completing this series of modules on Compound Interest you should now have a better understanding of how Compound Interest works in various situations. You will have used the provided Excel spreadsheets to arrive at some of your conclusions. Also, you should now know some of the formulae that are used to calculate Compound Interest from your access to the links provided and your own searches using the Anzwers and/or Google search engines.

Finally, as requested with each task, you should collate all of your results and submit them to your teacher for marking.

- Check out the following websites. Use the calculator pages to check that they all give the same results.
- BT Online - Knowledge
- Investing Basics
- The Power of Compounding
- Finance: Compound Interest Calculator
- FinanciallyFree.com.au - The Power of Compound Interest
- Compound Interest - 1
- "The formula for compound intererst"
- JAW's Compound Interest Calculator
- Compound Intererst Calculator
- FinSuper > Make the most of compound interest to build your savings
- Brammall Financial: Investment Calculator
- CalculatorWeb - Compound Interest Calculator
- AFSD Financial Calculators: Compound Interest - Growth Caomparison
- Compound interest and why it is so important for investors and borrowers...
- Click here to see a list of links to webpages on Compound Interest (created using the Copernic multiple search engine program).
- You should also try the following search engines using the keywords "Compound Interest" or "Compound Interest Formula"

Note that when using a search engine you have to check that the content of each link contains information which is both relevant and useful to the task at hand and/or the topic in general.

Your should also make use of the recommended class textbook whenever you get the opportunity to do so.

Modifications to this page © 2004, Paul Myers & Brendan Sullivan

**Acknowledgement**: This page uses "Smart Folding Menu Tree" by Dynamic Drive (rewritten 03/03/2002).

For full source code and more DHTML scripts, visit the Dynamic Drive website.