FST
Simple Interest vs. Compound Interest
Name: _______________________________________
Situation: A high school senior has saved $10,000 from birthdays, summer jobs and graduation gifts throughout the past several
years. They decide to invest the money. They find a CD that has an annual rate of 8%.
INTEREST= Principal x Rate x Time
Principal = _____________________
Rate = _______________________
SIMPLE INTEREST
Time
(years)
Interest
COMPOUND INTEREST
Total
Time
(years)
Principal
Interest
1
2
3
4
5
6
7
8
9
10
1
2
3
4
5
6
7
8
9
10
A
M
O
U
N
T
A
Mt
O
U
N
T
TIME (years)
Use the above equation to predict the
amount after thirty years of investing
with simple interest:
Amount = ___________________
TIME(years)
Use the above equation to predict
the amount after thirty years of
investing with compound interest.
Amount = ___________________
Total