Engaging students: Compound interest

In my capstone class for future secondary math teachers, I ask my students to come up with ideas for engaging their students with different topics in the secondary mathematics curriculum. In other words, the point of the assignment was not to devise a full-blown lesson plan on this topic. Instead, I asked my students to think about three different ways of getting their students interested in the topic in the first place.

I plan to share some of the best of these ideas on this blog (after asking my students’ permission, of course).

This student submission comes from my former student Lydia Rios. Her topic, from Precalculus: compound interest.

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How did people’s conception of this topic change over time?

While this concept is tied with business which is something that started rapidly changing in the early nineteen hundreds, we have understand that there is an accrued interest on loans long before then. People would loan out seeds or cattle and the interest would be paid after a harvest or with the young of the cattle. Of course now we use this concept mathematically but the concept still holds. We understand that there is a base fee and you must return that fee along with a little more. We then started using this with loose change and then as our currency changed from the gold standard we adapted to a new understanding of compound interest. Today we use the equation A = P \left(1 + \frac{r}{n} \right)^{nt} , where A is the amount accumulated, P is the principal, r is interest rate, n is the compound period and t is the number of periods.

Compound Interest Is Responsible for Modern Civilization (businessinsider.com)

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What are the contributions of various cultures to this topic?

We have all experienced trade over the years. Native Americans would trade corn for other goods and offered payment plus interest with their corn harvest. The Silks Roads was a network of trading routes where China and other countries would trade textiles and other materials. They established the concept of payment and interest for purchases. Banks in America and other countries also have a set principal and a interest, whether this be in reference to your savings account or the billed interest on your credit card purchases. Even the invention of cars played a part on this and how our interest can decrease with the deterioration of the car. Over the years your interest payment can go down as the worth of the car goes down.

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How have different cultures throughout time used this topic in their society?

Native Americans used compound interest to create trade deals a maintain some status of peace. China had their silk roads where they turned a profit and tried to maintain a sense of livelihood. For some cultures this was their only source of income, if they didn’t’ make some sort of trade then they had nothing to bring home. For others, such as the Native Americans, the trade itself was to protect their lives and the interest was something they owed. We can even see reference to this with the trade markets in Disney’s Aladdin, Aladdin cannot make a trade as he is a peasant but we see other village people making trades and we grasp the concept of worth from each object.

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