A Resource for Free-standing Mathematics Units
Interest Rates
Suggestions for teachers
This can be used as a skills activity or an assignment. I suggest that
you demonstrate each part first before the students do the actual
assignment. My worked examples are on the Excel Spreadsheet.
For part 1, I have demonstrated with the Scottish Widows Bank
offering 4.10% gross compared with Simple Interest at 4.15%.
Clearly, the simple Interest would offer a very slighter better return
after just one year, but thereafter, the compound interest account
becomes an increasingly better option even though the interest rate is
lower.
For part 2, I have demonstrated with the Chelsea Building Society,
offering 4.25% yearly compared with 4.15% monthly. Clearly here the
monthly interest account would offer a better return if you wished to
take your money out at any time before the end of the year, but if you
waited exactly 12 months, the yearly account gives a marginally better
return.
(The information about these accounts was taken on 4/11/02 from the
website www.about-savings-accounts.co.uk )
Photo-copiable
 Joan Ridgway
Exeter College Maths Department