Minds On

Which one would you choose?

Let’s play a game called Which One Would You Choose?

A family won the lottery on January 1st. They offered a local charity the choice of two options as a gift:

Which option should the charity select?

Record your thinking digitally, orally, or in print, or using a method of your choice.

Try again

Now examine the following tables for Option 1 and Option 2 and cast your vote again. Has the table changed your original vote?

Press ‘Reveal tables’ to show the tables for Option 1 and Option 2.

Option 1

Option 2

Lastly, extend the tables to 12 months to figure out the total amount at the end of the year for each scenario. You can complete this using the following fillable and printable “Option 1 and Option 2” document or use another method of your choice.

Option 1

Option 2

Press the ‘Activity’ button to access Option 1 and Option 2. 

Activity(Open PDF in a new window)

Would you still recommend the same option to the charity?

What could be reasons for choosing the other option?

Action

Simple interest

Understanding simple interest is very important when it comes to managing finances. Some important things to know are:

  • Interest is the fee paid on an amount, whether it is loaned, borrowed, or invested.
  • Interest is calculated only on the original sum of money loaned, borrowed, or invested.
  • The original sum of money is called the principal.
  • The interest rate is expressed not as a percentage but as a decimal in calculations.
  • Time is expressed as months or years in these calculations. Rate (r) and time (t) should be in the same time units such as months or years.

The following formula can be used to calculate the return on an investment:

Task 1: Simple interest practise

Part 1

Consider the following word problem:

A school wants to invest the money raised at a fundraiser. Calculate how much money they will have if they invest $1,000.00 (principal) at a rate of 8%.

Calculate the return on their investment, assuming a simple interest, after one year.

Consider checking your math:

A = P(1 + rt)

Let’s do this calculation together (you can use a calculation tool to help you):

A = P(1 + rt)

A = 1,000(1 + 0.08 × 1)

A = 1,000(1 + 0.08)

A = 1,000(1.08)

A = $1,080.00

After one year, the return on investment would be $1,080.00.

Part 2

Calculate the return on investment after three years, ten years and 30 years. Remember, the principal is $1,000, and the rate is 8%.

Record your strategy and calculations in an audio clip, on paper, on a computer, or in an organizer of your choosing. You can also use the following fillable and printable Simple Interest Worksheet to record your responses.

  • 3 years
  • 10 years
  • 30 years
Simple Interest Worksheet
A school wants to invest the money raised at a fundraiser. They invest $1,000.00 (principal) at a rate of 8%.
What will be the return on investment after three years?
What will be the return on investment after ten years?
What will be the return on investment after 30 years?

Press the ‘Activity’ button to access Simple Interest Worksheet. 

Activity(Open PDF in a new window)

When you are ready, press the ‘Answers’ to reveal the solutions for these questions.

a)

A = P(1 + rt)

A = 1,000(1 + 0.08 × 3)

A = 1,000(1 + 0.24)

A = 1,000(1.24)

A = $1,240.00

b)

A = P(1 + rt)

A = 1,000(1 + 0.08 × 10)

A = 1,000(1 + 0.8)

A = 1,000(1.8)

A = $1,800.00

c)

A = P(1 + rt)

A = 1,000(1 + 0.08 × 30)

A = 1,000(1 + 1.24)

A = 1,000(3.4)

A = $3,400.00

Task 2: Word problem

Answer the following word problem:

A local library wants to buy new resources.

They are going to borrow $2,000 to finance, using simple interest, the purchase of audio, print, and e-books at an interest rate of 8.25% for one and a half years (1.5 years). What is the cost of borrowing the money? “Cost of borrowing” is another way to describe the amount of interest. How much will they have to pay back altogether? This will be the amount of interest plus the original amount of money that they borrowed.

Record your strategy and calculations digitally, orally, in print, or in an organizer of your choosing.

Hint: The simple interest formula is A = P(1 + rt)

  • P = Principal Amount
  • r = Rate of Interest per year in decimal
  • t = Time in years
  • A = Total amount (interest and principal)

Consolidation

Let’s practise

It is your turn to work with the formula that you practised in the Action section.

Let’s use the formula to answer the following word problem.

Community investment

A community organization wants to invest money for future projects. They will invest using simple interest.

One member said they should invest $500 for six months at a rate of 15% per year.

A second member said they should invest $500 for one year at an interest rate of 7.5% per year.

Each of the members believes their suggestion will earn the greatest return on the investment.

Who is right? How do you know? Use mathematical language and your calculations to justify which members’ investment you think would be best for the organization.

Record your strategy and calculations digitally, orally, or in print, or in an organizer of your choosing.

Hint: Here is the formula for simple interest A = P(1 + rt)

  • P = Principal Amount
  • r = Rate of Interest per year in decimal
  • t = Time in years
  • A = Total amount earned or total amount owing (interest and principal)

Bringing it all together

What observations can you make with the calculations in Action Task 1 when comparing them to Action Task 2?

Choose 2 of the following reflection questions to record your responses.

  • What might the pros and cons be for investing early (investing $1,000.00 at the age of 16 vs the age of 36)?
  • How does this learning activity relate to the other algebra work that you have done?

Reflection

As you read the following descriptions, select the one that best describes your current understanding of the learning in this activity. Press the corresponding button once you have made your choice.

I feel...

Now, expand on your ideas by recording your thoughts using a voice recorder, speech-to-text, or writing tool.

When you review your notes on this learning activity later, reflect on whether you would select a different description based on your further review of the material in this learning activity.