You have been asked by your friend to describe this topic. Your friend knows very little about math but learns well with pictures and analogies. Come up with a creative way to explain the concept of “compound interest” to your friend.  Go to http://bankrate.com/brm/calc/savecalc.asp.  If you want to save $25,000 for a down payment on a house and you have ten years to save this amount, how much would you need to save monthly to achieve this goal if the interest rate is 5% compounded monthly? 

What happens if you can increase your interest rate to 8%? 

NOTE: Enter $100 for the “How much money can you spare for your first deposit or investment”. Come up with your own example of compound interest.