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Financial Literacy: How to Calculate Interest

With this lesson, students will learn how to calculate simple interest. This is a foundational skill that is essential for understanding personal finance and making sound financial decisions in the real world. We’ll walk through some examples so that students can see how this concept applies in everyday life.

Included with this lesson are some adjustments or additions that you can make if you’d like, found in the “Options for Lesson” section of the Classroom Procedure page. One of the optional additions to this lesson is to invite someone who works at a bank to speak to your class about home, car, vacation, and college loans.

Description

Additional information, what our financial literacy: how to calculate interest lesson plan includes.

Lesson Objectives and Overview: Financial Literacy: How to Calculate Interest teaches students about simple interest. At the end of the lesson, students will be able to calculate simple interest rates, have a basic understanding of interest rates, and will be able to relate understanding interest rates to real-world applications. This lesson is for students in 5th grade and 6th grade.

Classroom Procedure

Every lesson plan provides you with a classroom procedure page that outlines a step-by-step guide to follow. You do not have to follow the guide exactly. The guide helps you organize the lesson and details when to hand out worksheets. It also lists information in the blue box that you might find useful. You will find the lesson objectives, state standards, and number of class sessions the lesson should take to complete in this area. In addition, it describes the supplies you will need as well as what and how you need to prepare beforehand. The supplies you will need for this lesson are calculators and Internet access.

Options for Lesson

Included with this lesson is an “Options for Lesson” section that lists a number of suggestions for activities to add to the lesson or substitutions for the ones already in the lesson. One optional addition to this lesson is to have your students find a second car with an unlimited budget and calculate what the interest would be for both good and bad credit. You can invite someone who works at a bank to speak to your class about different loans. They can also talk about why people borrow money and how to calculate interest. You can also speak to your class about saving money and earning interest with a savings account, CDs, or bonds. Finally, you can bring in some actual bank or credit card statements.  Your students could see how interest applies to an account.

Teacher Notes

The teacher notes page includes a paragraph with additional guidelines and things to think about as you begin to plan your lesson. This page also includes lines that you can use to add your own notes as you’re preparing for this lesson.

FINANCIAL LITERACY: HOW TO CALCULATE INTEREST LESSON PLAN CONTENT PAGES

Interest rates.

The Financial Literacy: How to Calculate Interest lesson plan includes three pages of content. The lesson begins by explaining that people borrow money for cars, mortgages, vacations, college, starting businesses, and more. If you want to buy something but can’t pay full price immediately, you might be able to borrow money to purchase it. For example, if you want to buy a $700 phone but only have $200, you might ask your bank for a $500 loan. They might agree but might also charge you 10% interest on the loan.

Interest is the amount of money you either earn or pay. When you borrow money, you might have to pay interest. If you save money, you can earn interest.

The principal is the amount of money borrowed or saved. In this example, the $500 you borrow from the bank for the phone is the principal.

The rate is the percentage that a company or bank charges you for borrowing money or pays you for keeping your money in their bank.

If you want to calculate the simple interest on a loan, you can use the following formula: Interest = Principal x Rate x Time (years).

If you decide to pay the bank back within a year, you can use the formula to determine what you will owe: Interest = $500 x 0.10 x 1. Interest = $50. This means that after a year, you will have to pay the bank the full amount that you borrowed ($500) plus interest ($50). The full amount that you will owe is $550. If you borrow the money for two years, the formula would be: Interest = $500 x 0.10 x 2 = $100. After two years, you will have to pay the bank the amount borrowed plus interest ($500 + $100). The full amount that you will owe is $600.

It’s important to understand that interest can be a good thing for you, too. If you save $200 and put it into a savings account at 15% interest for a year, we can use the same formula to see how much money the bank will pay you in interest: Interest = $200 x 0.15 x 1. Interest = $30. After a year, you would have $230 total ($200 principal plus $30 in interest).

What if you kept it in that account for five years instead of one? Interest = $200 x 0.15 x 5. Interest = $150. After five years, you’ll have $350 ($200 + $150).

A good way to calculate interest is by using the rule of 72, which is when you take the number 72 and divide it by the interest rate. This gives you the approximate number of years that it would take to double your money. If you invest money at an 8% rate of return, it would take roughly nine years to double that money, according to the formula: 72 / 8 = 9.

FINANCIAL LITERACY: HOW TO CALCULATE INTEREST LESSON PLAN WORKSHEETS

The Financial Literacy: How to Calculate Interest lesson plan includes three worksheets: an activity worksheet, a practice worksheet, and a homework assignment. You can refer to the guide on the classroom procedure page to determine when to hand out each worksheet.

CAR PURCHASE ACTIVITY WORKSHEET

The activity worksheet asks students to find a car online that costs under $15,000. They will describe the car, write down the price, calculate the interest they would have to pay on the car, calculate the total cost of the loan, and more. They will do this for two interest rates. 4% if they have good credit, and 13% if they have bad credit.

CALCULATE INTEREST PRACTICE WORKSHEET

For the practice worksheet, students will calculate the interest on four items.

FINANCIAL LITERACY: HOW TO CALCULATE INTEREST HOMEWORK ASSIGNMENT

The homework assignment asks students to answer various questions about loans, interest rates, and more. They will also contact their local financial institution and ask them questions about loans, credit, and savings accounts.

Worksheet Answer Keys

This lesson plan includes answer keys for the activity worksheet, the practice worksheet, and the homework assignment.  If you choose to administer the lesson pages to your students via PDF, you will need to save a new file that omits these pages. Otherwise, you can simply print out the applicable pages and keep these as reference for yourself when grading assignments.

grade-level

5th Grade, 6th Grade

subject

Math, Social Studies

State Educational Standards

LB.MATH.CONTENT.6.RP.A.3.C, LB.MATH. CONTENT.6.EE.B.6, & LB., & LB. MATH. CONTENT.6.EE.A.2

Lessons are aligned to meet the education objectives and goals of most states. For more information on your state objectives, contact your local Board of Education or Department of Education in your state.

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lesson 8 homework practice financial literacy simple interest

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  • Grade 7 McGraw Hill Glencoe - Answer Keys

lesson 8 homework practice financial literacy simple interest

The Masters family financed a computer that cost $1,200. If the interest rate is 19%, how much will the family owe for the computer after one month if no  payments are made?

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lesson 8 homework practice financial literacy simple interest

Explanation:

lesson 8 homework practice financial literacy simple interest

Samantha received a loan from the bank for $4,500. She plans on paying off the loan in 4 years. At the end of 4 years, Samantha will have paid $900 in interest. What is the simple interest rate on the bank loan?

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Building on the Essential Question How can you use a formula to find simple interest?

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IMAGES

  1. Lesson 8 Homework Practice Financial Literacy Answer Key

    lesson 8 homework practice financial literacy simple interest

  2. Lesson 8 Homework Practice Financial Literacy Simple Interest Answers

    lesson 8 homework practice financial literacy simple interest

  3. Grade 7 McGraw Hill Glencoe

    lesson 8 homework practice financial literacy simple interest

  4. Lesson 8 Homework Practice Financial Literacy

    lesson 8 homework practice financial literacy simple interest

  5. Lesson #8 Financial Literacy Simple Interest

    lesson 8 homework practice financial literacy simple interest

  6. Unlocking the Secrets: A Comprehensive Guide to the Lesson 8 Homework

    lesson 8 homework practice financial literacy simple interest

VIDEO

  1. Eureka Math Module 5 Lesson 8 Homework

  2. Simple Interest and Compound Interest

  3. EP 05

  4. Financial Literacy with Kendra Cain of Cobalt Credit Union

  5. Class 8 mathematics chapter 8 simple interest odia medium || ସରଳ ସୁଧ ଅଷ୍ଟମ ଶ୍ରେଣୀ || Exercise-8(b)

  6. Unlocking Financial Freedom: The Art of Automated Investments #shorts #marktilbury #finance

COMMENTS

  1. Chapter 2 Lesson 8 Financial Literacy

    Find the simple interest paid to the nearest cent for each loan, interest rate, and time. $500, 12%, 18 months. $90.00. Find the simple interest paid to the nearest cent for each loan, interest rate, and time. $300, 9%, 3 years. $81.00. Find the simple interest paid to the nearest cent for each loan, interest rate, and time. $2,000, 20%, 1 year.

  2. PDF Temecula Valley Unified School District / Homepage

    Lesson 8 Homework Practice Financial Literacy DATE PERIOD Find the simple interest earned to the nearest cent for each principal, ... 2. $1,200, 3.5%, 2 years 5. $530, 6%, 1 year 3. $450, 5%, 4 months 6. $600, 8%, 1 month Find the simple interest paid to the nearest cent for each loan, interest rate, and time. 7. $668, 5%, 2 years

  3. Chapter 2 Lesson 8: Financial Literacy: Simple Interest ...

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  4. PDF NAME DATE PERIOD Lesson 8 Homework Practice

    Lesson 8 Homework Practice Financial Literacy Find the simple interest earned to the nearest cent for each principal, interest rate, and time. 1.$750, 7%, 3 years 2. $1,200, 3.5%, 2 years 3. $450, 5%, 4 months 4.$1,000, 2%, 9 months 5. $530, 6%, 1 year 6. $600, 8%, 1 month Find the simple interest paid to the nearest cent for each loan ...

  5. Chapter 2 Lesson 8 Financial Literacy

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  7. PDF NAME DATE PERIOD Lesson 8 Problem Solving Practice

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    Grade 7: Chapter 2, Lesson 8: pgs. 167 - 174 Financial Literacy: Simple Interest Part 1: Finding Simple Interest Complete the following problems. *Helpful Hint: Change the percents to decimals first!* ... What is the simple interest rate on the bank loan? Author: MaryTary Created Date: 9/1/2015 1:53:41 PM ...

  9. Grade 7 McGraw Hill Glencoe

    Email your homework to your parent or tutor for free; ... Lesson 8: Financial Literacy: Simple Interest. ... Independent Practice. Find the simple interest earned to the nearest cent for each principal, interest rate, and time. Question 1 (request help) $640, 3%, 2 years ...

  10. Financial Literacy: How to Calculate Interest

    If you want to calculate the simple interest on a loan, you can use the following formula: Interest = Principal x Rate x Time (years). If you decide to pay the bank back within a year, you can use the formula to determine what you will owe: Interest = $500 x 0.10 x 1. Interest = $50.

  11. PDF Lesson 8 Homework Practice

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  14. Math 7 -Lesson 8 Financial Literacy Flashcards

    Math 7 -Lesson 8 Financial Literacy. financial literacy. Click the card to flip 👆. the ability to understand how money works in the world including how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. Click the card to flip 👆. 1 / 12.

  15. PDF Lesson 8 Reteach

    7. $903, 8.75%, 18 months 8. $4,275, 19%, 3 months Lesson 8 Reteach Financial Literacy Simple interest is the amount of money paid or earned for the use of money. To fi nd simple interest I, use the formula I = prt. Principal p is the amount of money deposited or invested. Rate r is the annual interest rate written as a decimal.

  16. Grade 7 McGraw Hill Glencoe

    Email your homework to your parent or tutor for free; ... Chapter 2: Percents; Lesson 8: Financial Literacy: Simple Interest. ... Extra Practice. Find the simple interest earned to the nearest cent for each principal, interest rate, and time. Question 14 (request help) Question 15 ...

  17. PDF solve real-world problems involving personal and family budgets and net

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  18. Grade 8 Financial Literacy Resources

    Below are the downloadable Grade 8 financial literacy learning sessions created by Ontario Certified Teachers at United for Literacy. The learning sessions are accompanied by downloadable presentations, performance tasks, and worksheets. Please be mindful of the students' and their families' lived experiences, and modify the content ...

  19. PDF NAME DATE PERIOD Lesson 8 Homework Practice

    Lesson 8 Homework Practice Financial Literacy Find the simple interest earned to the nearest cent for each principal, interest rate, and time. 1. $750, 7%, 3 years 2. $1,200, 3.5%, 2 years 3. $450, 5%, 4 months 4. $1,000, 2%, 9 months 5. $530, 6%, 1 year 6. $600, 8%, 1 month Find the simple interest paid to the nearest cent for each loan ...

  20. PDF Lesson: Simple Interest Binogi in Your Math Classroom

    Grade 8 - F1.4 Financial Literacy: Example of Learning Objectives and Big Ideas Specific Expectation Learning Objectives F1.4 determine the growth of simple and compound interest at various rates using digital tools, and explain the impact interest has on long-term financial planning To calculate simple interest to solve problems. Assessment 1.

  21. Grade 7 McGraw Hill Glencoe

    Email your homework to your parent or tutor for free; ... Chapter 2: Percents; Lesson 8: Financial Literacy: Simple Interest. ... Guided Practice: Question 1 (request help) The Masters family financed a computer that cost $1,200. If the interest rate is 19%, how much will the family owe for the computer after one month if no payments are made? ...