Education Technology

Compound Interest: Show Me the Money

Published on 10/22/2005

Activity Overview

This is an activity at the conclusion of the exponential relationship unit where students have experience with equations in the form y=a*b^x. Students use the random integer function on the TI-83 Plus to generate a rate of return for the investment profile they choose.

Before the Activity

Students choose from four different investment profiles: conservative, growth, growth/income, or aggressive.

During the Activity

Students use the random integer function on the TI-84 Plus to generate a rate of return for the investment profile they choose. For an aggressive investor the range is from -35% to 35%; a conservative portfolio ranges from 2%-5%.

After a 10 year investment total is determined, students submit an equation in "Activity Center." Each equation is color-coated based on portfolio type.

After the Activity

A follow-up activity could allow the students to use the random integer function for each year and do a 25 year analysis the investor profile they chose.