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To Gather
Graphing technology
In this activity, students compare linear and exponential growth in a context involving simple and compound interest. The initial balances are chosen so that the two options stay pretty close for small values of time. The intersection of their graphs is far enough from 0 that it is not easily noticed with only a few calculations. The graph for simple interest is linear. The graph for compound interest is exponential, but it is relatively flat for small values of time. As the domain values increase, students may notice that the values of the two options get closer and closer, or they may notice from the graph that the gap between the two graphs gets smaller.
Look for students who make different choices for the investment option, as the better option would depend on the length of investment, which is unspecified. As in the case of the fish's offers in an earlier lesson, simple interest is better if the investment term is short, but compound interest becomes increasingly more favorable as time passes. Some students may not recognize this until they graph the two functions in the last question. Identify students who decide to change their earlier choice and can defend the change. Ask them to share later.
Arrange students in groups of 2. Encourage students to think quietly about the questions before conferring with their partner. Provide access to graphing technology.
Use Three Reads to support reading comprehension and sense-making about this problem. Display only the problem stem and the tables, without revealing the questions.
Remind students that simple interest is found by adding interest based only on the initial investment and does not compound by adding interest to the interest from previous time periods.
A family has $1,000 to invest and is considering two options: investing in government bonds that offer 2% simple interest, or investing in a savings account at a bank, which charges a $20 fee to open an account and pays 2% compound interest. Both options pay interest annually.
Here are two tables showing what they would earn in the first couple of years if they do not invest additional amounts or withdraw any money.
Bonds
| years of investment | amount in dollars |
|---|---|
| 0 | $1,000 |
| 1 | $1,020 |
| 2 | $1,040 |
Savings Account
| years of investment | amount in dollars |
|---|---|
| 0 | $980 |
| 1 | $999.60 |
| 2 | $1,019.59 |
Students may have trouble choosing an option without additional information. Ask them to think about what might make sense for their own family or to give circumstances that would justify a choice.
Consider surveying the class to see the choices that students made. Select students who made different choices to explain their responses, starting with those who opted for the bonds. Display their reasoning and graphs for all to see. If no students consider a time frame beyond 8 or 9 years, ask students which option would be better if the money could be left alone for 20 years. Discuss questions such as:
Point out that the exponential function here (the balance of the savings account) has a relatively slow rate of growth. It takes it a relatively long time before it overtakes the linear function, but it eventually does.
To Gather
Graphing technology
This activity prompts students to again compare a linear function with an exponential one, but this time without a context, and the exponential function grows much more slowly over a long period of time. Even if students predict that the exponential function will grow more quickly because it is exponential, they still need to decide which one reaches 2,000 first.
Monitor for students who:
Making graphing and spreadsheet technology available gives students an opportunity to choose appropriate tools strategically (MP5).
Present the two equations that define two functions,
Select work from students with different strategies, such as those described in the Activity Narrative, and ask them to share later.
Complete the table of values for the functions
Based on the table of values, which function do you think grows faster? Explain your reasoning.
| 1 | ||
| 10 | ||
| 50 | ||
| 100 | ||
| 500 | ||
The goal of this discussion is to recognize that exponential functions will eventually be greater than linear functions, even when they initially grow slowly.
Display, for all to see, 2–3 approaches from previously selected students. Use Compare and Connect to help students compare, contrast, and connect the different approaches. Here are some questions for discussion:
Emphasize that the table needs to be continued for a long time to identify when the values of
If not already illustrated by students who used graphing, show this dynamic sketch and zoom out:
Though for quite a while it doesn't seem like the values of
Building Toward