Stage 5 Mathematics: Financial Planning Fundamentals
Key Concept: Compound Interest
NSW Syllabus Reference: MA5.2-4NA (Money and Financial Mathematics)
Compound interest is calculated on the initial principal and accumulated interest:
A = P(1 + r)n
Where:
A = Total amount
P = Principal amount
r = Interest rate per period
n = Number of periods
Real-World Application Activity
Compare savings plans for Sydney Metro expansion:
- Plan A: 3.5% p.a. simple interest
- Plan B: 3.2% p.a. compound interest (monthly)
Practice Exercises
Basic Recall:
Calculate total amount after 2 years for $5,000 at 4% compound annual interest.
Application:
If Zoe invests $2,000 in Plan B, how much more will she earn than Plan A after 18 months?
Critical Thinking:
Why might governments choose compound interest models for infrastructure projects?
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English Integration: Financial Literacy Texts
Comparative Analysis Exercise
Analyze this product description vs. financial contract:
"Double your savings effortlessly!" vs. "APR of 3.2% compounded monthly"
- Identify persuasive language techniques
- Calculate actual returns from both claims
- Write a consumer advisory paragraph
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