Math RWLO Template Title Placeholder



Who Wants to be a Millionaire?

Project Overview

Saving for the future can be a daunting task. But, if people are consistent and begin a savings plan when they are young, it is possible to be a millionaire upon retirement.

In this project, students will investigate various types of monthly savings investments, varying interest rates and the formula used to calculate monthly savings payments. Students will compare the effect of rate changes upon their investment over a period of time.

At the end of the lesson, students will compare results with classmates and make predictions about the effect of fluctuating interest rates on their future investments.

Student Learning Objectives

For this RWLO, the student will be able to:

• Use the internet to investigate differing ways to invest money on a monthly basis. (CD’s, IRA’s, Money Market Accounts, Annuities, etc.)

• Use the internet to obtain current interest rates for various types of savings accounts.

• Use the Savings Payment Formula to calculate the amount of a savings payment.

• Compare results with classmates in order to make predictions.

Procedure

Time: Approximately 45-60 minutes

Materials: Internet access, scientific or graphing calculator, paper and pencil

Prerequisites: Students should have a working knowledge of calculator usage with formulas

Implementation: This RWLO can be started by assigning investigative work outside of class. Then students work together in groups to calculate savings payments and investigate the effect of changing the term and the rate upon the savings payment. Students will find a class average and make predictions about the results.

Steps:

1. Outside of class, have students investigate various financial websites to decide on a type of savings plan. (CD, IRA, Money Market, Annuities, etc.)

2. Have students make a table to compile their findings from Step 1. Use Table I in the Content Material section.

3. Separate students into groups of 2-3 students.

4. Review the formula for savings payment.

5. Allow students to investigate the result of changing the term in the savings payment formula. Use Table II in the Content Material section.

6. Allow students to investigate the result of fluctuating interest rates on the savings payment. Use Table III in the Content Material section.

7. Within each group, have students find the average savings payment from #5 and #6.

8. Have students compile information from each group and calculate a class average savings payment.

9. Have students make predictions concerning the amount required in monthly savings, the term and the interest rate needed to be a millionaire upon retirement. Use Table IV in the Content Material section.

Content Material

Would you like to be a millionaire when you retire? Is this goal attainable? The answer is YES, provided you begin a savings plan when you are young, make regular contributions and continue saving until your retirement in 30 or 40 years.

Student Directions:

• Go to at least three of the websites listed under “Financial Institutions” and gather information about various savings plans. You may use a website of your choice provided you get your teacher’s approval.

• Make a table of your findings as follows:

Type of Savings Term (years) Interest Rate Brief Detail

(Use Table I at the end of the section.)

Savings Payment Formula:

[pic] where FV is Future Value

r = interest rate as a decimal

t = time in years

• Next, investigate how changing the term affects the savings payment. Make a table of your findings.

Type of Savings Term (years) Interest Rate Savings Payment Amount

25

30

35

40

45

(Use Table II at the end of the section.)

• As an example: Use the savings payment formula to calculate the monthly payment required to accumulate $1,000,000 over a 40 year period at 5% interest compounded monthly.

• Next, investigate how fluctuating interest rates affect the payment. Choose the term that will be the best for you and use it for each calculation. You may refer to websites you have already used to find current interest rates or go to . You may use one of the Savings Payment Calculators websites given.

• Make a table of your findings.

Type of Savings Term (years) Interest Rate Savings Payment Amount

(Use Table III at the end of this section.)

• Find an average for the savings payments in the previous two tables. Do this at the bottom of Table II and Table III. Compile your average with the other groups to get a class average.

• Based on your findings, make predictions about how much should be saved each month to become a millionaire at retirement.

(Use Table IV at the end of this section.)

To determine if your answers are reasonable use the following website to calculate the amount you need to deposit each month to achieve your savings goal:

|Top of Form |

|Savings calculator |

| |

|Calculate the amount you need to deposit each month to achieve your savings goals. |

| |

|How much do you want to save? |

|$ |

|[pic] |

| |

|How many years do you have in which to save it? |

|  |

|[pic] |

| |

|What interest rate do you expect to earn on your savings? |

|  |

|[pic] %, with [pic]daily or [pic]monthly compounding. |

| |

|* To earn the most money, compare interest rates locally and nationally. |

| |

|How much money can you spare for your first deposit or investment? |

|$ |

|[pic] |

| |

|Do you wish to skip savings two weeks each year? |

|  |

|[pic] Yes  [pic] No  |

| |

|When do you wish to make your first deposit? |

|  |

|[pic][pic][pic],   [pic] |

| |

| |

| |

|[pic] |

| |

|................................................ |

| |

|Monthly deposit required |

|$ |

|  [pic] |

| |

|To make that monthly deposit, you should be setting aside |

| $ [pic] daily or $ [pic] weekly. |

| |

| |

|[pic] |

|[pic] |

| |

|Bottom of Form |



This website is a Simple Savings Calculator. It allows you to choose your own monthly savings amount and watch it grow over a period of time. This is just a simple calculator that lets you see how much with regular deposits your savings will grow.

Referenced URLs:

Financial Institutions:

•

•

•

•

•

•

•

•

•

Interest Rates:

•

Savings Payment Calculators:

• calculators

• calc/retire

•

Table I Types of Savings Plans

(10 points) from Financial Institutions

Type of Savings Term Interest Rate Brief Detail

(CD, IRA, Money Market, (years)

Annuity, etc.)

Table II Effect of Changing the Term

(20 points)

Type of Savings Term Interest Rate Savings Payment Amount

(years)

25

30

35

40

45

Calculate the average of the savings payments ________________________

(5 points)

Table III Effect of Changing the Interest Rate

(20 points)

Type of Savings Term Interest Rate Savings Payment Amount (years)

Calculate the average of the savings payments ________________________

(5 points)

Table IV Predictions

(20 points)

Assessment

The purpose of this assignment is for students to discover that it is possible to become a millionaire upon retirement with adequate monthly savings. The following is a suggested rubric for this assignment. Points may be changed or modified at the teacher’s discretion.

Table of Financial Institutions – 10 points

Table of the Effect of Changing the Term on a Savings Payment – 20 points

Table of the Effect of Changing Interest Rates on the Savings Pmt. -20 points

Finding the Average Savings Payment for the previous two tables – 10 points

Making a Prediction Based on Findings – 20 points

Total 80 points

Links to Course Competencies

This RWLO could be applied in the following courses: Beginning Algebra through College Algebra, College Mathematics, Pre-Calculus, and others. Specifically, this RWLO meets the following course competencies:

• Evaluate savings payments using the Savings Payment Formula.

• Use a scientific calculator and/or website to calculate savings payments.

• Use computers to investigate real-world problems.

• Work together in groups to attain a common goal.

• Analyze results using real-world data.

• Make predictions based upon research.

Supplementary Resources

These websites are merely suggested websites to be used for this lesson. There are many more that can be found by performing a search using a search engine if students are so inclined.

Financial Institutions:

•

•

•

•

•

•

•

•

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Interest Rates:

•

Savings Payment Calculators:

• calculators

• calc/retire

•

Recommendations

Recommendations for Integration: This lesson can be integrated into Beginning Algebra through College Algebra, College Mathematics, Pre-Calculus, and others where formulas and calculators are used.

Back-up: If websites are down, the teacher can supply current interest rates from newspapers or other sources. Students can perform all computations using a calculator.

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