8.12.D
The Standard
calculate and compare simple interest and compound interest earnings
Texas Essential Knowledge and Skills for Mathematics
Teacher's field guide
What This Standard Means
What Students Need to Do
- Students calculate interest earned using simple and compound interest terms. They compare the earnings for investments with the same or different principal, rate, and time.
What Mastery Looks Like
- Students identify the principal, annual rate, time, and compounding period from a problem. They calculate each investment's interest earned and explain which option earns more.
Common Misconceptions
- Students may report the final balance instead of the interest earned. They may enter 5% as 5 rather than 0.05, or apply simple interest repeatedly as if it compounds.
How to Assess It
- Exit ticket: Compare $1,000 invested for three years at 4% simple interest and 4% compounded annually. Find each investment's earnings and the difference.
Lesson moves
Ways to Teach It
Use play money to build year-by-year balance tables for equal investments earning simple interest and compound interest.
Ask students to write why compound interest usually earns more than simple interest when the principal, rate, and time are equal.
Give pairs investment cards to calculate, compare, and sort from least to greatest interest earned.
Compare two savings account offers from sample bank ads, then choose one and justify the choice with calculations.
Keep exploring
Related Standards
- 7.13.E
The 7th Grade version of this standard.
- 7.13.A
calculate the sales tax for a given purchase and calculate income tax for earned wages
- 8.12.B
calculate the total cost of repaying a loan, including credit cards and easy access loans, under various rates of interest and over different periods using an o...
- 2.11.A
calculate how money saved can accumulate into a larger amount over time
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