Activity Overview
In this activity, students will calculate compound interest. They understand that in compound interest computations, the interest from the previous period is added to the current principal and the new total is used as the basis for calculating the interest.
About the Lesson
Students will explore how interest from a previous period is added to the current principal and how the new total is used as the basis for calculating the interest. They will:
Calculate the future value of investments that earn interest compounded annually, quarterly, and monthly
Enter the values for the total number of payments (N), annual interest rate ( I%), present value (PV), number of payments per year (P/Y) and number of compounding periods per year (C/Y)
Calculate the final value of the investments
Calculate the amount to be invested that will have a specified future value when invested under defined conditions