Education Technology

Precalculus: Compound Interest
by Texas Instruments

Published on December 01, 2011

Objectives

  • Students will interpret the variables in the formula for compound interest.
  • Students will use the formula for compound interest and understand the effects of changes in the interest rate and the number of compounding periods.
  • Students will understand the relationship between compound interest and continuous compounding.

Vocabulary

  • compound interest
  • interest rate
  • pay periods
  • initial deposit
  • continuous compounding

About the Lesson

This lesson involves exploring the formula for compound interest as a function of the initial deposit, interest rate, and the number of pay periods per year.
As a result, students will:

  • Learn the relationship between the interest rate and the total amount in the account.
  • Learn the relationship between the number of pay periods and the total amount in the account.
  • Discover the limiting condition as the number of pay periods increases without bound.