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

# A Webquest on Compound Interest

by Paul Myers & Brendan Sullivan

## Compound Interest - Module II

Of all the variables used in calculating Compound Interest, which is the most important - Interest Rate,
Principal (amount invested), or Time?

You can use the Excel worksheet "Compound Interest" to run simulations to solve many of these
money problems. Click on the hyperlink below to access this worksheet.

Below are several questions about the relationship between different investment variables. Use
the Compound Interest worksheet and print off some graphs which
show how the variables relate to each other. You should also write a conclusion explaining what
you have found.

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1. Which would you rather for your investment?

a) A 2% increase in the inteest rate? or,

b) A $5000 increase in the initial investment?

What would your answer depend on?

Answer with graphs to illustrate your point.

2. Which is better?

a) Saving $1,000 now? or,

b) Saving $2,000 in 15 years time?

What would your answer depend on?

Answer with graphs to illustrate your point.

3. Explain the importance of the three variables, amount invested, interest rate and time and
how they are related.

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