Contextualization

Theory

The concept of interest is closely linked to the idea of remuneration of money over time. When we lend money, whether to a bank or to a friend, we expect to receive a higher amount in return, as a way to compensate for the time we were without that resource. This compensation is known as interest.

There are two main types of interest: simple and compound. In the first case, interest is calculated on the loan or investment amount, called capital, and set at a monthly percentage. In the case of compound interest, the interest rate applies to the updated capital, causing the total amount to grow exponentially.

On the other hand, we have the concept of the value of money over time, which basically tells us that $1.00 today is not equal to $1.00 tomorrow. This happens because of purchasing power, inflation, interest, and other factors that cause the value of money to change over time.

Contextualization

In our daily lives, whether deciding on a purchase on credit or a financial investment, we are dealing with interest and the value of money over time. Understanding these concepts allows us to make better financial choices, whether to save, invest, or take out loans.

Knowledge about interest and the value of money over time is also essential for the country's economy. In the financial market, for example, professionals use these concepts to analyze and predict trends, as well as to establish prices and rates. In companies, these ideas are employed to evaluate investment projects, estimate cash flows, and set prices.

Here are some reliable references to deepen the study of these concepts:

• Khan Academy: Simple Interest and Compound Interest
• Portal da Educação: Value of Money Over Time

Practical Activity

Title: "The Value of Time: A Journey Through Interest"

Project Objective

This project aims to explore the concept of interest (simple and compound) and the value of money over time. Groups of 3 to 5 students will investigate how different interest rates and time periods can affect a sum of money in an investment or loan scenario.

Additionally, the project also aims to develop socio-emotional skills, such as teamwork, time management, critical thinking, and presentation skills.

Project Description

Students will create an imaginary "bank" and develop various financial products such as savings accounts, personal loans, and mortgages, each with its interest rate and conditions. Based on this, each group should simulate and present real scenarios of investments and loans over different time periods, considering variables of simple and compound interest, inflation, and changes in purchasing power.

Required Materials

• Notebooks or paper for notes and calculations
• Calculators
• Computer with internet access for research and report preparation
• Spreadsheets (such as Excel or Google Sheets) to simulate loan or investment situations
• Presentation software (such as PowerPoint or Google Slides) for the final presentation

Step by Step

1. Divide the class into groups of 3 to 5 students.
2. Students should start by researching simple interest, compound interest, and how the value of money changes over time.
3. Each group should then create an imaginary 'bank' and develop their financial products. They should decide on the interest rates and terms for each product.
4. From there, the groups should simulate different loan and investment scenarios, varying not only the interest rates but also the time.
5. Students should record all their calculations, decisions, and results in a spreadsheet.
6. Finally, each group should write a report detailing their process and findings and create a presentation to share their discoveries with the class.

Project Delivery

The completed project will include a written report and a presentation. The report should cover the following points:

• Introduction, where they will contextualize the theme, explain its relevance and real-world application, as well as the objective of this project.
• Development, addressing the theory behind the central themes, detailed explanations of the activities, description of the methodology used, and presentation and discussion of the results obtained.
• Conclusion, where they should summarize the main points of the project, explain the learnings obtained, and draw conclusions about the project.
• Bibliography, indicating the research sources, such as books, web pages, videos, etc.

The presentation should be structured similarly to the report but in a more concise and visually appealing manner. It should include graphs or diagrams that illustrate their calculations and results.