# Chinese New Year: A Simple Lesson in Debt, Percent, and Loan Interest

Subjects

• Arts & Humanities
--Language Arts
• Mathematics
--Applied Math
--Arithmetic
• Social Studies
--Economics
--Holidays
--Regions/Cultures

• 6-8
• 9-12

Brief Description

A Chinese New Year tradition lends itself to a simple lesson in percent and loan interest.

Objectives

Students

• understand the concepts of interest and percent.
• apply their knowledge to figure out total debt on monies borrowed.

Keywords

interest, percent, loan, borrow, money, Chinese New Year, China

Materials Needed

Lesson Plan

Kung Hey Fat Choi! That's Happy New Year or, more accurately, May Prosperity Be With You, in Chinese.

Each year, Chinese New Year falls somewhere between January 21 and February 19 (click for this year's date).

In China, the start of the new year is a time of celebration. According to tradition, the new year is also a time for clearing away bad luck and paying off old debts.

Explain to students that

In most of the world, people who borrow money pay interest on the money they borrow. Interest is an extra charge paid for the privilege of being allowed to borrow money. Interest is usually stated in terms of a percent of the money borrowed. For example, a person might borrow \$1,000 and pay 5% interest on that money. That means the person will actually pay back \$1,000 plus 5% more.

But how does a borrower figure out how much money will be owed or paid back? Explain students that

• a percent is a fraction of 100. For example, if you take a test with 100 questions on it and you get all the right answers, you earn a score of 100 out 100, or 100%. If you only got half of the questions correct, then you got 50 out of 100, or 50/100, or 50%. If you got 83 questions correct, you got 83/100 or 83 %.
• you can also think of percent in terms of a dollar. A dollar has 100 cents, which is also written as \$1.00. If you have half a dollar, you have 50 cents, or \$ .50 (or 50% of a dollar). If you have a quarter, you have 25 cents or \$ .25 (or 25% of a dollar). If you have a dime, you have 10 cents or \$ .10 (or 10% of a dollar). If you have a nickel, you have 5 cents or \$ .05 (or 5% of a dollar). If you have a penny, you have 1 cent or \$ .01 (or 1% of a dollar.
• percents are often written as decimals. For example if you borrowed money and you are charged 1% interest, you would write the interest being charged as 1% or as .01 percent.

Provide students with an example of how they might figure interest:

Let's say you borrow \$1,000 at 5 percent interest.
How much would you have to pay back?
To find out, you would multiply the amount borrowed times (x) the interest rate.

\$1,000.00
x .05
\$ 50.0000, or \$50.00

The total interest you would be charged is \$50.00. To figure out the total amount of money that you would need to pay back, add the interest to the amount borrowed for a total of

\$1,000.00
+ 50.00
------------
\$1,050.00

Share another example: Ask students to tell you how they would figure the total charge if they borrowed \$2,000 at 10% (or .10) interest. Multiply \$2,000.00 x .10 = \$200.00 interest, for a total amount owed of \$2,000.00 + \$200.00, or \$2,200.00.

Provide students with additional practice on the Kung Hey Fat Choi! work sheet.

Assessment

WORK SHEET ANSWERS: 1. \$1,050.00, 2. \$2,080.00, 3. \$1,035.00, 4. \$5,350.00, 5. \$472.00.

Lesson Plan Source

EducationWorld.com

Submitted By

Gary Hopkins

National Standards

MATHEMATICS: Number and Operations
NM-NUM.3-5.1 Understand Numbers, Ways of Representing Numbers, Relationships Among Numbers, and Number Systems
NM-NUM.3-5.2 Understand Meanings of Operations and How They Relate to One Another
NM-NUM.3-5.3 Compute Fluently and Make Reasonable Estimates
NM-NUM.6-8.1 Understand Numbers, Ways of Representing Numbers, Relationships Among Numbers, and Number Systems
NM-NUM.6-8.2 Understand Meanings of Operations and How They Relate to One Another
NM-NUM.6-8.3 Compute Fluently and Make Reasonable Estimates
NM-NUM.9-12.1 Understand Numbers, Ways of Representing Numbers, Relationships Among Numbers, and Number Systems
NM-NUM.9-12.2 Understand Meanings of Operations and How They Relate to One Another
NM-NUM.9-12.3 Compute Fluently and Make Reasonable Estimates

SOCIAL SCIENCES: Economics
NSS-EC.5-8.11 Money
NSS-EC.5-8.12 Interest Rates
NSS-EC.9-12.11 Money
NSS-EC.9-12.12 Interest Rates

LANGUAGE ARTS: English
NL-ENG.K-12.9 Multicultural Understanding

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