Understanding Simple Interest

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🧭 Overview

• Subject: Mathematics
• Year Level: Year 9
• Duration: 59 minutes
• Curriculum Link:
  NSW Mathematics Syllabus – Stage 5
  MA5-FIN-C-01: Solves financial problems involving simple interest, earning money and spending money.
• Topic: Financial Mathematics – Simple Interest
• Main Focus: Solve problems involving simple interest using the formula:
  I = P × r × n,
  where:
  I = Interest,
  P = Principal (Initial amount),
  r = Interest rate per time period (as a decimal),
  n = Number of time periods.

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🎯 Learning Intentions

By the end of this lesson, students will be able to:

• Understand the concept of simple interest and where it's used in real life.
• Use the formula I = P × r × n to calculate interest.
• Solve contextual problems involving loans, savings, and investment.
• Discuss financial implications of simple interest in everyday scenarios.

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✅ Success Criteria

Students will be successful when they can:

• Accurately identify the principal, interest rate, and number of time periods from a problem.
• Use the formula without a calculator and with one.
• Justify their thinking in at least one real-world financial scenario.
• Participate in group discussions and complete a differentiated task.

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⏳ Lesson Breakdown (59 Minutes)

0:00 – 0:05 | Welcome & Warm-Up (Hook Activity)

"What Would You Choose?" Visual Voting Game (Think-Pair-Share)

Pose a scenario on the board:

Would you rather receive $1000 today, or earn 10% of $1000 annually for 3 years in savings?

Students vote by moving to corners of the room. Discuss ideas, rationale, and introduce the concept of simple interest vs instant cash.

Goal: Spark real-world relevance and curiosity.

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0:05 – 0:15 | Explicit Instruction (I Do)

Topic Explanation & Formula Introduction

• Write the formula on the board:
  I = P × r × n

Break it down:

• P = Principal (initial loan or savings amount)
• r = Interest rate per time period (e.g. 7% per year = 0.07)
• n = Number of time periods (typically years)

Model Example:

If you invest $1200 for 3 years with 5% simple interest, how much interest will you earn?

Step by step:

• P = 1200
• r = 0.05
• n = 3

I = 1200 × 0.05 × 3 = $180

Finish with:

"So, total balance after 3 years = $1200 + $180 = $1380"

Use slides with colourful visuals and annotation to show clear, slow steps. Embed financial literacy with contextual explanations (What is interest? Why do banks offer it? How is it different from compound interest?).

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0:15 – 0:25 | Guided Practice (We Do)

Think Tank – Smart Savers Challenge

Group students into mixed-ability triads. Provide each group with a Simple Interest Scenario Card tailored to the real world, e.g.:

• Saving for a new phone.
• Taking a short-term car loan.
• Putting birthday money into a term deposit.

Example Scenario:

Taylor saved $1500 in a term deposit for 2 years at 4% per annum simple interest. How much interest will Taylor earn by the end?

Differentiation:

• Green Cards: Direct calculation questions with all info clearly presented
• Orange Cards: Missing value problems (e.g. find r, find n)
• Red Cards (Extension): Wordy problems requiring multiple steps, including working out the final total amount.

Teacher circulates and supports groups, asking guiding questions and checking for misconceptions.

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0:25 – 0:35 | Independent Task (You Do)

Simple Interest Station Rotation

Set up three learning stations around the room. Allow students to rotate every 5 minutes. Assign stations according to readiness level (based on previous task and teacher observation).

🟢 Station 1: Foundation – "Interest Detectives"

• Scaffolded worksheet
• Fill in missing elements: P, r, n or I
• Use manipulatives (fake money, bank terms printed on cards) to connect maths with physical concepts

🟠 Station 2: Standard – "Bank Teller Training"

• Standard worksheet with bank-like entries
• Students calculate interest for various clients
• Mixture of calculations and short answer reflections

🔴 Station 3: Extension – "Finance Fixers"

• Real-world challenge problems:
  If Luka plans to buy a car in 2 years and wants to know how much he’ll need to save now to have $1,300 extra by then, what is the minimum amount needed today at 5% simple interest?
• Introduces idea of rearranging formula to find P

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0:35 – 0:40 | Quick Review (Mini Whiteboard Challenge)

Rapid-fire 3-question quiz using mini whiteboards:

1. What does “n” represent in the simple interest formula?
2. Calculate interest: $500 at 6% for 4 years.
3. True or False: The higher the rate of interest, the more money you earn.

Use this as a chance to correct and reinforce key ideas.

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0:40 – 0:50 | Real-World Application (Discussion & Reflection)

Money Matters Circle

Students sit in a discussion circle. Prompt:

“Why is it important to understand how interest works?”
“When might borrowing money cost more than you think?”
“Who might benefit more from simple interest, and who might not?”

Encourage diverse perspectives. Optional: play a short (1-minute) dramatisation from a fictional student explaining how they learnt a tough lesson from borrowing.

Use this time to drive financial literacy skills and connect maths to life beyond school.

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0:50 – 0:57 | Exit Activity (Reflection Slip)

Distribute Simple Interest Reflection Slips asking:

1. Rate your understanding of simple interest (1–5).
2. One thing I found easy:
3. One thing I still don’t get:
4. A real-life situation where I might use this is:

Use these to inform future planning or small group follow-ups.

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0:57 – 0:59 | Dismissal

Quick positive feedback and preview of next lesson:

“Next time, we’ll look at comparing simple interest with compound interest. Which one do banks prefer—and why might you want to know the difference?”

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🧠 Differentiation Strategies

Ability Level	Strategy
Lower (Support)	Visual learning aids (money props), tiered worksheets, scaffolded steps
Mid (Core)	Guided practice with peer support, real-world examples with modest complexity
High (Extension)	Open-ended scenarios, complex problems, rearranging formulas, justifying responses

Teacher actively monitors and adjusts support throughout.

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📘 Resources

• Whiteboard + markers
• Mini whiteboards & markers
• Visual slides (optional for projector)
• Fake money / printed banking props
• Differentiated worksheets
• Reflection slips
• Scenario Cards (colour-coded)

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📌 Assessment for Learning

• Observation of group work engagement and reasoning during station tasks
• Mini whiteboard responses for real-time feedback
• Reflection slip exit ticket
• Work samples from Station Rotations

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🌟 Extension & Home Task (Optional)

Homework Prompt:

Interview a parent, caregiver or adult about a time they saved or borrowed money with simple interest.
Summarise their experience and calculate how much interest was involved. Bring a 1-minute summary to discuss next class.

Encourages family financial conversations.

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🔚 Teacher Notes

• Emphasise the difference between percent (%) and decimal (r = 0.06 for 6%)—this is a common student error.
• Use Australian institutions (e.g. Commonwealth Bank, Westpac) for relatable examples.
• Anchor all tasks in current societal contexts, e.g. inflation, cost-of-living, first-time savings.

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💬 Teacher Feedback Opportunities

Encourage teachers to record student reflections and mini quiz data to track growth across financial skills. Revisit in following units on compound interest, budgets, or earning income.

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This lesson seamlessly embeds numeracy, financial literacy, and real-life application—empowering Australian Year 9 students to become confident and critical financial thinkers.