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Open the envelope on your desk Is anyone a millionaire?

Are you a millionaire?. Open the envelope on your desk Is anyone a millionaire?. Starter: Investing your Money. Four banks have accounts for ‘ would be millionaires ’ For a specific investment amount, they have interest rates that guarantee you will be a millionaire in just one year.

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Open the envelope on your desk Is anyone a millionaire?

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  1. Are you a millionaire? • Open the envelope on your desk • Is anyone a millionaire?

  2. Starter: Investing your Money • Four banks have accounts for ‘would be millionaires’ • For a specific investment amount, they have interest rates • that guarantee you will be a millionaire in just one year C % increase over 1 year New Savings Accounts • How much money would you have after a year? Note: You must only round to the nearest pence What amount would you have to have started with for this to have worked?

  3. Eeekkk! Seems the banks got it wrong Z • A review by the Year 10 Maths Authority has highlighted an error with the ‘would be millionaire’ accounts – they don’t make you a millionaire • The banks’ money men say it was a typo in the offer, they actually guarantee you will be a millionaire after 2 years • Work out how much interest you made in the first year, then add this to your 1 year total • Are you a millionaire yet? Note: You must only round to the nearest pence What about after 3 years?

  4. Hmmm it’s still not working!! Z • The Year 10 Maths Authority are up in arms, these accounts are still not making them actual millionaires • Now the bank’s money men are saying your calculations are wrong, its based on compound interest, not simple interest • In pairs, discuss what compound interest could be and how it might be calculated? http://www.youtube.com/watch?v=NXuDDm-DnLE

  5. Compound Interest • Jack puts £500 into a savings account with an annual interest rate of 5% - how much will he have after 4 years if he doesn’t add or withdraw any money? At the end of year 1 Jack has £500 × 1.05 = £525 At the end of year 2 Jack has £525 × 1.05 = £551.25 At the end of year 3 Jack has £551.25 × 1.05 = £578.81 At the end of year 4 Jack has £578.81 × 1.05 = £607.75 We can write this in a single calculation as: £500 × 1.05 × 1.05 × 1.05 × 1.05 = £607.75 Or using index notation as: £500 × 1.054 = £607.75

  6. Compound Interest – making you a millionaire! • Calculate the compound interest on your investment over two years • Hopefully you are now a millionaire! 

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