I have asked teachers I know who are teaching financial concepts in their classrooms, many of whom have participated in a Math Forum professional development course, to contribute their stories to this blog, this is the third, courtesy of Patty, about an activity that she did  with high school students.

Fitting financial topics into my regular curriculum has proven quite challenging!

Recently, we worked on the topic of exponential functions and some of their applications. We did many activities and explorations including the ever famous m & m lab! However, the following is my favorite performance assessment of the unit for two reasons:

  1. it required an understanding of the mathematical concepts, the scenario and reflection of solutions.
  2. it let me work in financial topics and discussions that often get overlooked in the typical curriculum.

A Hypothetical Scenario:

An eccentric billionaire has recently decided to give you all $10,000 to invest in one of the options below. You cannot take the money out until 10 years from now. Compare for each option the amount of money that would be available at the end of 2 years, 5 years, 7 years and 10 years. Explain which of the following investments you would place your money in and why. You must include graphs and computations to validate your conclusions. Click here for a copy of the worksheet used to help students organize their thinking.

  • Option 1: Place your money in an account earning 4% annual simple interest.
  • Option 2: Place your money in an account earning 3 6/8 % annual interest, compounded quarterly.
  • Option3: Place your money in an account earning 3 ½ % annual interest, compounded continuously.

After students completed the above, they had to pick 5 more data points to include in each option (they were encouraged to use a wide variety ranging from 6 months to 75 years).

Students then answered the following questions:

  • At any time do the options yield the same amount of money or return? How do you know? Explain your answer with a graph(s).
  • Is there any time simple interest would be the best choice? Any time compounding continuously is best? Explain your answers in a sentence or two.

The tasks created thoughtful discourse for days!  Students developed a real understanding of compound interest and have since demonstrated the ability to transfer that knowledge to the behavior of other exponential functions.

I’ve asked Patricia to share some of her students’ work and hope to be posting that here soon!