11-12 Calculating the Cost of Credit

CTE Areas of Study: Agriculture

CTSO Competition Overview: Participants in several FFA competitive events may expect a connection to calculating interest. Performance indicators may include the following:

  • Analyze farm/ranch business management information.
  • Apply economic principles and concepts of cooperative business management to the decision-making process.
  • Apply economic principles and concepts of farm business management to the decision-making process.
  • Compute key banking calculations
  • Evaluate farm business management decisions.
  • Explain the responsibilities of maintaining sound finances.

Standards & Objectives

Learning objectives: 

The goal of this activity is to develop a student’s understanding of and ability to perform interest rate calculations. The skills reflect proficiency in mathematics standards for high school. Teachers can use this activity to develop an understanding of the basic formulas and procedures for calculating simple and compound interest rates for credit card debt and loans for personal or agribusiness activities. Discussions in class and practice exercises coordinated in class help students learn the various methods of calculating credit costs and demonstrate the results of decisions made concerning individual and business borrowing. Exercises will center on math calculations and the impact of higher interest rates and longer payment periods on the ability to repay a loan earlier at greater savings.