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## Nuffield Free-Standing Mathematics Activity

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**Nuffield Free-Standing Mathematics Activity**Simple and compound interest**Where would be the best place to put the money you save?**What do you need to consider when choosing a savings account? What are simple interest and compound interest? In this activity you will use a spreadsheet to compare how your savings would grow in accounts that pay simple interest with those that pay compound interest.**When choosing where to invest your savings, think about:**• the interest rate you will get • how much money you can afford to save • how long you want to leave your money in the account • whether you can withdraw cash instantly, or have to give notice • Compare interest rates using the Annual Equivalent Rate (AER).**Source:**http://www.moneysavingexpert.com/banking/interest-rates#compound**At the end of the activity**• What are the differences in the way simple interest and compound interest are calculated? • What effect does this have on the amount of interest earned? • What difference does it make to the interest earned when you vary: • the amount invested • the rate of interest • the number of years?