Remember: Interest on a loan compounds too: unpaid, the pile owed grows faster each year. The same snowball can roll for you or against you. Sooner is cheaper.
Read and answer
Read the story first, then answer.
Maya's bike loanMaya loved a bike in the window that cost one hundred pretend coins, but she had no coins yet. Mr. Moss ran a made-up lending barn and would lend Maya one hundred coins, so she became the borrower and he the lender, with a promise to pay the coins back. But borrowing had a price. Each year, the barn added interest: one new coin for every ten coins owed joined the unpaid pile. Maya zoomed off on her new bike while the pile she owed sat quietly. After one year she owed 110, and after five years 160. After ten years she owed 256, which is more than double! It was the Snowball Garden again, but now it worked against Maya, because interest on interest made the pile grow faster every year. So timing mattered: sooner is cheaper. Then Maya tried paying thirty coins every year. The snowball slowed and shrank, and in year five the pile was gone, with 126 coins paid in all.
1
The barn adds 1 coin for every 10 owed. Maya owes 121 coins, so coins are added next year.
2
If Maya pays nothing for ten years, she owes 256 coins, which is more than double the 100 she borrowed.
TrueFalse
3
Look at the table. After 3 years unpaid, Maya owes coins.
4
If Maya pays back after 3 years, she hands back 133. That is coins more than the 100 she borrowed.
5
Maya can pay back after 1, 3 or 5 years. Which costs her the least extra?
After 1 year: an extra 10After 3 years: an extra 33After 5 years: an extra 60
6
Circle each thing that works against a borrower.
Interest charged on interest already owedPaying a little each yearA loan nobody has paid for yearsCoins growing in a savings gardenPaying a loan back early
7
The longer a loan waits, the more it grows.
TrueFalse
Order, match and fix
8
Number the steps of Maya's story.
Maya pays thirty a year and the pile shrinks
Maya sees a bike she cannot pay for yet
With nothing paid, the pile grows
Mr. Moss lends her a hundred coins
9
Join each word to what it means.
1borrower
2lender
3interest
4snowball
Aextra coins added to what is owed
Bthe one who owes the coins
Cthe one who lends the coins
Da pile owed that grows faster each year
10
Maya says: paying thirty coins a year makes the pile grow even faster. Is Maya right?
YesNo
11
Paying 30 a year, Maya owes 80, 58, 33 and 6 at the end of years 1 to 4. She is done in year .
12
Stretch: Maya paid 126 coins in all for a loan of 100. That is coins more than she borrowed.
13
In your own words, why is paying back sooner cheaper?
14
Draw a snowball rolling downhill, bigger at each turn. Label it 110, then 121, then 133.
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