Title – Relating Interest to Percentages

By – Mark

Primary Subject – Math

Grade Level – 9

Lesson Time – 1 hour

Introduction:

By identifying what percentages are, we can use this information to relate it to
real life situations. A good way to show that percentages are of use in everyday life would be simple interest.
Simple interest is used by most people everyday whether they know it or not.
Using simple interest, the students will learn how to calculate monthly
payment on a credit card, because most if not all will eventually purchase an
item on credit.

Preparation:

Get the values of certain items the student might want to buy but don’t have money
for. Get different interest rates from a
couple of credit card companies. Create
an excel table of the items, multiple interest rates for each item, and
different time periods they might have to pay for the items. Get
different interest rates from a couple of credit card companies.

Materials:

• created table,
• calculator,
• pen/pencil

Exercise:

• Start by informing the students
  that percents relate to interest.

• Tell them how they are going to calculate different interests for different
  items they might purchase on a credit card.

• Show how to compute interest using the simple
  interest formula I=PRT using the principal amount of $1200 at 8% interest for 2
  years (=$192).

• Use the same principal amount and interest rate changing
  the time to 4 years ($384). Discuss with students the amount of interest they
  will save if they purchase the items for two years instead of four.

• Using the examples given to them, calculate what the
  monthly interest would be for each one. Explain that even though the 2-year is more each month, they are paying
  more in the end for the 4-year.

• Have examples at board for them to calculate, select
  students to do them on the board.

• Have students get into groups and hand out the created
  table. Have them calculate each of the items that are empty in the table using
  the equation for interest.

Discussion:

• How are percentages and interests related?
• Where is interest found?
  • Where have they seen it or heard
    about it?

• How is interest affected for multiple years?
  • Longer shorter periods, which is
    better/worse

• How could this affect their
  credit if they can not pay this amount per month?
• What if they go over their limit
  on a credit card?
  • Penalty fee? More interest?

• What items do they want that they
  don’t have the money for?

Extension:

1. Have the students complete the handout for homework.

2. Have them get five different prices on items they want to buy and give
   them three different interest rates and two different periods for each interest rate
   for homework.

3. Have them ask their parents what they think simple interest is and what
   compound interest is, and bring it to class for discussion for the next lesson.

4. Have them ask their parents what typical interest rates are for some
   one who doesn’t have a credit card.

E-Mail

Mark

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