Financial Literacy Lesson Plan

Connections to Financial Literacy

 Consumer protection and consumer awareness as students investigate and communicate the difference between
simple and compound interest;
 Personal financial planning by considering various saving and investing options (e.g., RRSP, RESP).

MPM 1D Principles of Mathematics,

Grade 9, Academic
Unit 1 Day 2: Money Grows: Very Interesting! MFM 1P Foundations of Mathematics,
Grade 9, Applied
Curriculum Expectations Learning Goals
Linear Relations At the end of this lesson, students will be able
Overall Expectation to:
By the end of this course, student will:
 demonstrate an understanding of the characteristics of a linear  connect the characteristics of linear and
relation non-linear functions to simple and
compound interest

Specific Expectations:
Understanding Characteristics of Linear Relations
- construct tables of values, graphs, and equations, using a variety of tools
(e.g. graphing calculators, spreadsheets, graphing software, paper and
pencil), to represent linear relations derived from descriptions of realistic
situations.

- compare the properties of direct variation and partial variation in

applications, and identify the initial value (e.g., for a relation described in
words, or represented as a graph or an equation)

Mathematical Process Focus: Connecting: students will connect linear

and non-linear relations to simple and compound interest situations

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Instructional Components and Context
Readiness
Teacher’s Note
Students can The lesson times listed in this lesson are
 Calculate a percent of a number. (review activity included in suggestions. Times will vary depending on the
lesson) prior knowledge of your students with the
 Draw a scatter plot and the corresponding line of best fit. concepts and/or ideas presented.
 Identify some characteristics of a linear relation (y-intercept, rate
of change, Finite Differences) Materials

 Computer Lab (if available)

Terminology  Scientific Calculators
 Chart Paper (Graph)
Simple Interest  Coloured markers
Compound Interest  Metre sticks
RRSP (Registered Retirement Savings Plan)  Link Cubes (optional)
RESP (Registered Education Savings Plan)  Graphing Calculators
GIC (Guaranteed Investment Certificate)  White Boards and Dry Erase Markers
Savings Account (optional)
TFSA (Tax Free Savings account)  post it notes
Canada Savings Bond.
Stock Enough Copies of the following Black Line
Annually Masters 2.1 – 2.8 as required:
Principal
 Financial Terminology
 Calculating Interest
 Simple Interest versus Compound
Interest
 Simple and Compound Interest
Situations
 Apply Simple and Compound Interest
to Situations
 Frayer Models Simple and Compound
Interest
 Exit Card
 Home Activity

Optional: Financial Literacy Lesson 2

Smartboard version (Smart Notebook file)

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Minds On (15 Minutes) Connections
Whole Class: Introduce the following Scenario:

A relative has given you a gift of cash for your birthday. Instead of
spending the money you decide to save it. What could you do with
that money that would allow you to save it for the future?

Groups of 4Think/Pair/Share: Where would you invest your Open

money? Spend a few minutes thinking about any ideas you have Question: students select
and write them down (e.g., on the dry erase board, on paper). (5 the amount of money, and
minutes) their responses will reflect
the amount they choose.
As a class, have the students share their ideas. Teams stand with a
list of Ideas to share. Randomly select a student to share the
amount of money they selected and an idea as to how they could
save it. Teams either check off the idea from their list or add it. The
team sits down whenever all the items on their list are shared. As
the students are sharing ideas write them down on chart paper,
Interactive Whiteboard or Chalkboard. Discuss any ideas that were
missed. Be sure that simple interest and compound interest is
understood.
(10 minutes)

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Action! (45 minutes)

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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From the list of ideas generated as a class give each student a
different financial term from which to find information (see BLM 2.1
for terms. There are extra spaces so that you can add any
additional ideas/words). There should be at least two students with
the same term. Using the internet students write down information
they can find on their term. If the internet is not available then see Students assess their own
BLM 1 (Teacher) for definitions. (5 minutes) learning as they complete
the task
Whole Class Activity Give One Get One
Students walk around the class to find a partner. Each partner takes
a turn sharing the term they have and the information they found
about it (1 minute each). Students then exchange cards and move
off to find another partner and repeat. When students pair up with
someone who has the same word they can compare information and
add to their own before exchanging. Students that encounter the Students will eventually be
same words again can be quizzed about that concept. After about 6 quizzing each other on the
or 7 minutes call time. terms.
Activity Develop word wall
Students find the other student(s) in the class that has the same
word on the card. This will be their partner (group) for the rest of the
class. Hand each group of students another sheet with their term on
it and have them combine the information. Once they have
completed this, post the sheet on the word wall. (15 minutes)
Assess for students ability to
Lead a discussion with the following: calculate percent and their
understanding of various
 If we put money into any of these types of accounts, will the approaches. Consider
amount of money you have remain the same or change? Including an example such
Explain your thinking. as 5.5% of $20 to assess if
students understand 0.5%.
 Describe the difference between Simple and Compound
Interest.

Put the following four questions on the board and have each
students pick one to solve. If appropriate suggest students that pick
Parallel Tasks. Students
an easier question to try and solve one of the others.
can select a question that is
appropriate to their level of
Determine: 50% of $40 13% of $30
readiness.
25% of $60 7% of $25
Circulate and provide scaffolding questions to students requiring
assistance.
Select students with standard and non-standard solutions to explain
their methodology (BLM 2.2).
Ask the following common questions:
 Before you did the calculation how did you know your Alternative Open Question:
Complete the following:
answer would be more than, less than or equal to ½ of the ____% of _____ = 15
original amount? Have students share their
 Give an example of a percent that would give an answer of answers with the class, and
more than the original amount? justify their equation. If it
doesn’t come from students,
Hand out BLM 2.3, one chart is for calculating simple interest, one is provide examples of greater
for calculating compound interest. than 100%, 0%, 1% and
benchmark percents (e.g.,
Start with simple interest and as a class determine the first two rows. 25%, 50%)
Working in pairs, students complete the chart, showing their
calculations in the space below each table. Repeat for compound
interest.

Students complete the questions shown below the chart. Then ask
the following question which Literacy
OAME Financial studentsMath
answer on Plan
Lesson theirGrade
sheet:9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Action (continued)

Assign or have pairs select a simple or compound interest situation (BLM 2.4). Link
cubes could be used for the first simple interest scenario. Students complete the
table and graph the data, either by hand, using graph chart paper or by using
Fathom or spreadsheet software. (BLM 2.5)
Parallel Tasks. Students are
Students find the pair that has the same principal and interest rate as theirs but with given a situation based on
the other type of interest. For example the two situations that would form one group readiness as per teacher
of 4 would be made up of a pair with $100 invested at 10% for 10 years simple observations or students
interest with a pair with $100 invested at 10% for 10 years compounded annually. select based on interest.

The groups of 4 compare the two graphs, describe the similarities and differences,
and conjecture some conclusions.

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Consolidation (15 minutes)

Two students from each group come to the front and put their
graphs under the appropriate heading: Simple Interest or
Compound Interest Consolidation questions
allow students to reflect
As a class discuss the similarities and differences between the and extend what they
situations and graphs. have learned.

Ask the following common questions:

 What type of relation is exhibited by simple interest?

Explain.
 What type of relation is exhibited by compound interest?
Explain.
 Could you have determined this without graphing?
Explain. (e.g., Process for determining the finite
differences from the table of values)
 Will the y-intercept of a simple interest or compound
interest graph ever be 0? If so when? If not why not?

Exit Card allow teachers to

determine the readiness of
Hand out two copies of Frayer model template (BLM 2.6), one for individual students to move
simple interest and one for compound interest. Students write forward
down ideas on post it notes for each corner of the template and
read it to the group. Once the students have compiled ideas,
each will complete their own Frayer model.

Students complete the Exit Card (BLM 2.7) and pick up their
Home Activity (BLM 2.8).

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.1: Financial Terminology

Simple
Interest

Compound
Interest
OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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RRSP
(Registered Retirement Savings Plan)

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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RESP
(Registered Education Savings Plan)

Compound
Interest

GIC
(Guaranteed Investment Certificate)

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Savings
Account

TFSA
(Tax Free Savings Account)

Canada Savings
Bond

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Stock

Annually

Percent

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Principal

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.2: Calculating Interest

Pick one of the following and solve. Explain your solution.

Solution:

Explanation:

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.3: Simple Interest Versus Compound Interest

Suppose you invested $100 at 10% interest for ten years. One investment offers
simple interest, while the other offers compound interest compounded annually.
Complete the following charts.

Simple Interest

Year Principal Interest Interest Total

Rate Amount
0 100 100
1 100 0.10 100 x 0.10 = 10 110
2 100 0.10 100 x 0.10 = 10 120
3
4
5
6
7
8
9
10

Compound Interest

Year Principal Interest Interest Total

Rate Amount
0 100 100
1 100 0.10 100 x 0.10=10 110
2 110 0.10 110 x 0.10=11 121
3
4
5
6
7
8
9
10

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Questions

1. Compare the two tables stating Similarities and Differences

Similarities Differences

2. If you were to invest your money which account would you pick? Why?

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Teacher Reference Sheet1 for BLM 2.3 Simple Interest Versus Compound
Interest (Answers)

Suppose you invested the $100 you got for your birthday in two of the
investments we have discussed at 10% interest for ten years. One investment
offers simple interest, while the other offers compound interest compounded
annually. Complete the following charts.

Simple Interest

Year Principa Interest Interest Total

l Rate Amount
0 100 0.10 10 110
1 100 0.10 10 120
2 100 0.10 10 130
3 100 0.10 10 140
4 100 0.10 10 150
5 100 0.10 10 160
6 100 0.10 10 170
7 100 0.10 10 180
8 100 0.10 10 190
9 100 0.10 10 200
10 100 0.10 10 210

Compound Interest

Year Principa Interest Interest Amount

l Rate
0 100 0.10 10 110
1 110 0.10 11 121
2 121 0.10 12.10 133.10
3 133.10 0.10 13.31 146.41
4 146.41 0.10 14.64 161.05
5 161.05 0.10 16.11 177.16
6 177.16 0.10 17.72 194.88
7 194.88 0.10 19.49 214.37
8 214.37 0.10 21.44 235.81
9 235.81 0.10 23.58 259.39
10 259.39 0.10 25.94 285.33

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.4: Simple and Compound Interest Situations

$10 invested at 10% simple interest for 10 years

$10 invested at 10% compounded annually for 10 years

$20 invested at 12% simple interest for 10 years

$20 invested at 12% compounded annually for 10 years

$30 invested at 8% simple interest for 10 years

$30 invested at 8% compounded annually for 10 years

$40 invested at 14% simple interest for 10 years

$40 invested at 14% compounded annually for 10 years

$50 invested at 6% simple interest for 10 years

$50 invested at 6% compounded annually for 10 years

$60 invested at 5% simple interest for 10 years

$60 invested at 5% compounded annually for 10 years

$70 invested at 4% simple interest for 10 years

$70 invested at 4% compounded annually for 10 years

$80 invested at 3.5% simple interest for 10 years

$80 invested at 3.5% compounded annually for 10 years

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.5: Application of Simple Interest or Compound Interest Situation

Complete both tables for your situation and then use chart paper or Fathom/
Excel or graphing calculators generate a graph of your data.

Write or paste your situation here:

Year Total
Amount
0
Year Principa Interes Interest Total 1
l t Rate Amount 2
0 3
1 4
2 5
3 6
4 7
5 8
6 9
7 10
8
9
10

In your group of four compare the graphs of simple interest and compound
interest.

Similarities Differences

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.6: Simple Interest and Compound Interest Frayer Models

Definition Facts/Characteristics

Examples Non-examples
Simple Interest

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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 Definition Facts/Characteristics

Examples Non-examples
Compound
Interest

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.7: Exit Card

a) If you invest $100 in a savings account that offers 8% compounded

annually, how much would you have after 3 years? How much more or
less would you have if you invested it in an account that offered simple
interest at the same rate?

Years Principal Interest Interest Total

Rate Amount
0
1
2
3

Years Principal Interest Interest Total

Rate Amount
0
1
2
3

b) Connect each type of interest situation to the two types of relations: linear and
non-linear. Justify your answer.

c) Connect each type of interest situation to a savings option available from a

financial institution. Reflect on what factors make each option appropriate
selections.

Teacher Reference Sheet for BLM 2.7 Exit Card (Answers)

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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If you invest the $100 in a savings account that offers 8% compounded annually,
how much would you have after 3 years? How much more or less would you
have if you invested it in an account that offered simple interest at the same rate?

Compound Interest

Year Principal Interest Interest Total

s Rate Amount
0 100 100
1 100 0.08 8 108
2 108 0.08 8.64 116.64
3 116.64 0.08 9.33 125.97

Simple Interest

Year Principal Interest Interest Total

s Rate Amount
0 100 100
1 100 0.08 8 108
2 100 0.08 8 116
3 100 0.08 8 124

You would earn $1.97 less with simple interest.

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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BLM 2.8: Home Activity

You have a choice of two different savings accounts to invest $100:

1. 10% simple interest

or

2. 8.5% interest compounded annually.

If you were going to leave the money in the account for 5 years which investment
should you choose? Justify your answer.

Year Principal Interest Interest Total

s Rate Amount
0
1
2
3
4
5

Year Principal Interest Interest Total

s Rate Amount
0
1
2
3
4
5

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Teacher Reference for BLM 2.8 Home Activity (Answers)

You have a choice of two different savings accounts to invest the $100:

1. 10% simple interest

or

2. 8.5% compounded annually.

If you were going to leave the money in the account for 5 years which investment
should you choose? Justify your answer.

Year Principal Interest Interest Total

s Rate Amount
0 100 100
1 100 0.10 10 110
2 100 0.10 10 120
3 100 0.10 10 130
4 100 0.10 10 140
5 100 0.10 10 150

Year Principal Interest Interest Total

s Rate Amount
0 100 100
1 100 0.085 8.50 108.50
2 108.50 0.085 9.22 117.72
3 117.72 0.085 10.01 127.73
4 127.73 0.085 10.86 138.59
5 138.59 0.085 11.78 150.37

The compound interest account would earn you $0.37 more.

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Teacher Reference Sheet: Financial Terminology

The following definitions were taken from Financial dictionary.thefreedictionary.com

simple interest:

Interest computed only on the original principal and not on the sum of the principal plus accrued
interest. The amount of simple interest remains constant.

compound interest:

interest calculated on both the principal and its accumulated interest

A Registered Retirement Savings Plan or RRSP:

is a type of Canadian account for holding savings and investment assets. Introduced in 1957, the
RRSP's purpose is to promote savings for retirement by employees. It must comply with a variety of
restrictions stipulated in the Canadian Income Tax Act. Rules determine the maximum contributions,
the timing of contributions, the claiming of the contribution tax credit, the assets allowed, and the
eventual conversion to an RRIF (Registered Retirement Income Fund) in retirement. Approved assets
include: savings accounts, guaranteed investment certificates (GICs), bonds, mortgage loans, mutual
funds, income trusts, corporate shares (stocks), foreign currency and labour-sponsored funds.

Registered Education Savings Plan, or RESP, is a savings account used by parents to save for their
children's post-secondary education in Canada. The principal advantages of RESPs are a source of
tax-deferred income.

Guaranteed Investment Contract:

A pension plan purchased through a bank or an insurance company for a lump sum in which the
principal is guaranteed by the issuer. One may receive payments from a GIC either in installments or
as a lump sum after retirement. A GIC provides the pensioner with a small interest rate that is not
guaranteed, but the fact that the principal is guaranteed makes it a relatively low-risk investment.

Savings account:

A deposit account held with a financial institution that pays interest but does not allow for direct
withdrawal through checks. Pays interest at a rate higher than that of checking account but lower than
that of treasury bills.

Canada Savings Bond:

A savings bond offered by the Government of Canada and guaranteed by the Bank of Canada.
Originally offered in 1946 as a Victory War Bond, a CSB pays a low, but safe, interest rate. The
interest rate at which a CSB is offered is guaranteed for one year, and then fluctuates according to
prevailing interest rates. A CSB is redeemable for cash at any time, but usually has a maturity of 10
years.

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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Stock:

A portion of ownership in a corporation. The holder of a stock is entitled to the company's earnings and
is responsible for its risk for the portion of the company that each stock represents. There are two main
classes of stock: common stock and preferred stock. Common stock holders have the right to vote on
major company decisions, such as whether or not to merge with another corporation, and receive
dividends determined by management. Preferred stock holders do not usually have voting rights, but
receive a minimum dividend. Stock may be bought or sold, usually, though not always, in the context
of a securities exchange. It is important to note that a single share of a stock usually represents only a
tiny amount of ownership, and, therefore, most stocks are traded in batches of 100.

Annual:

Describing a situation, event, or statement that occurs or is filed only once per year.

Principal:

The total amount of money being borrowed lent or invested.

The Tax-Free Savings Account (TFSA): The following definition was taken from Wikipedia

is an account that provides tax benefits for saving in Canada. Contributions to a TFSA are not
deductible for income tax purposes. Investment income, including capital gains, earned in a TFSA is
not taxed, even when withdrawn. There is a deposit limit of $5000 per year into this account.

OAME Financial Literacy Math Lesson Plan Grade 9: Money Grows: Very Interesting! (Simple and Compound
Interest) 2011
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