Section 1

Section 1 Project: Capturing Your Interest!

 

You have probably read that Canadians don’t save enough money for retirement. But saving for retirement isn’t the only reason to set some money aside. You may wish to buy a car or house in the future. Also, having a nest egg protects you in emergencies. Savings give you the freedom to make choices such as training for a new job, moving to a different city, travelling, or helping your family.

 

But saving is only one part of the equation. Once you have saved some money, how will you invest these funds? Banks and credit unions offer a variety of investment choices. In this project you will explore two of those choices—simple interest and compound interest.

 

For this project you will assume you have $10 000 to invest. What will you do?

 

Goal

 

Your goal for this project is to explore simple and compound-interest options for a $10 000 investment.

 

Time

 

The aim is to complete this project in less than hours. Each lesson in the section will direct you to complete at least one of the steps.

 

Steps

1. Contact a local bank or credit union (in person, online, or use the guided search information in bank links from the Module 1: Section 2 Project: Banking 101).
   
   
   • What is the best rate of interest you might receive on an investment of $10 000? These choices might include bonds, savings accounts, and Guaranteed Investment Certificates.
     
     
   • Report your findings by filling out the following information.
   
   Type of Investment:______________________
   
   Best Interest Rate:___________________________
   
   Interest Period: __________________________
   
   Term of Investment: _________________________
   
   
2. Assume you are able to invest at the best rate of simple interest for five years. Use the simple interest formula, I = Prt, and A = P + I to determine the sum (interest and principal) you would have at the end of five years. Show all your steps.
   
   
3. Assume you are able to invest at the best rate of compound interest for five years. Use the compound-interest formula, , to determine the sum (interest and principal) you would have at the end of five years. Show all your steps.
   
   
4. Apply the Rule of 72 to estimate how long it will take to double your money.
   
   
5. Based upon the rates you used, which investment option (simple or compound) is the better choice? Explain your answer.
   
   
6. Use the Simple Interest - Compound Interest Calculator to create graphs showing the growth of each investment (simple and compound) over the five-year term. The interest rates are set at 5% per annum. Change these amounts to the rates you used in your calculations. Attach a copy of each graph, and include them in your project summary.
   
   
   
   

How You Will Be Evaluated

 

Your teacher will use this rubric to evaluate your report.

 

FOLLOWING YOUR INTEREST RUBRIC
Score	Required Concepts	Connections	Mathematical Calculations	Communication for  Final Presentation
3 Exceeds Acceptable Standard	All of the project requirements have been addressed.	Explanations show a detailed understanding of connections between the mathematics of simple and compound interest and their use in this project.	All required mathematical representations are completed, correct, and support the explanations.	The work is presented in a neat, clear, and organized fashion that is easy to read and/or see.
2 Meets Acceptable Standard	Most of the project requirements have been addressed.	Explanations show an adequate understanding of connections between the mathematics of simple and compound interest and their use in this project.	There may be some minor math/calculation errors or flaws in reasoning.	The work is presented in an organized fashion but may be hard to read at times.
1 Below the Acceptable Standard	Few of the project requirements have been addressed.	The response shows only a little understanding of connections between the mathematics of simple and compound interest and their use in this project.	There are major math/calculation errors or serious flaws in reasoning.	The work appears sloppy and/or unorganized. It is hard to know what information goes together.
0 Does Not Meet the Minimum Standard	A minimal number of the project requirements have been addressed.	The response shows a lack of understanding of the connections between the mathematics of simple and compound interest and their use in this project.	There is no understandable attempt at using mathematical representations.	There is no understandable presentation of project work.
Total Score /18	/3	/3 × 2 =   /6	/3 × 2 =   /6	/3