APPOINTMENT Questions & Answers

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This activity works great with more participants. If possible, put a string on the Sign that says PRINCIPAL such that it can go around the volunteer’s neck of the guitar (see below). To show how money grows with interest. To show how quickly money increases when using compound interest vs. Interest is only interesting when you’re getting it. Just how many of you would like to make money when you’re sleeping?

How about when you’re on vacation? Great, you’re going to love this next activity. Have the signs ready and ask for just one volunteer to start. Have one volunteer come up and hand him the sign that says Principal to place around his neck of the guitar. Ask the individuals what they think the term Principal means.

Explain that the Principle is the amount of money they invest. It is known as Capital also. 100 at 100% interest using something called SIMPLE INTEREST. Simple interest is when you only earn interest on the initial amount you make investments, i.e., the Principle. Has the Principal holding the sign that says Simple Interest. 100), just how many more people do we need in advance?

Right…One. MAY I gets one volunteer? 200. Let’s keep going. After the second year, remember, we’re still investing the main at 100% using SIMPLE INTEREST so, again, we are in need of one more person in the front. MAY I gets another volunteer? After the third year, we invest the principal again at 100% using SIMPLE INTEREST so we are in need of yet another person up here.

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And following the fourth season, we invest the principal again at 100% using SIMPLE INTEREST so we need yet another person. 500. Pretty good. Everyone except for the Principal may take a chair. Is everyone ready for some fun now? Great. Has anyone heard about something called Compound Interest ever? 100 at 100% interest using COMPOUND INTEREST.

Hand the Principal the Compound Interest Sign now. First, let’s learn the difference between Simple and Compound Interest. With Simple Interest, you merely earn interest on your Principal. With Compound Interest, you earn interest on your Principal AND the Interest you earn on the way. Essentially, your Interest becomes more Principal.