Simple Interest

 The money invested/borrowed is called the principal.

 The money earned by the investment/borrowed is called the interest.
 The money invested/borrowed for a length of time is called the period of investment,
which is the time (years/months).
 The bank/institution/person calculates the interest payable at a fixed percent per annum,
which is called the rate (%).
 The amount collected at the end of the period is the sum of the principal and the interest.
P- Principal
R- Rate
T- Time
SI – Simple interest
A – Amount
I-Interest
Formulae
P×R×T
SI =
100
A=P+ I
Example 1
Solution
(a) P = $5000
R = 12.5%
T = 2 yrs
P×R×T
SI =
100
$ 5000 ×12.5 ×2
SI =
100
SI = 50 x 12.5 x 2
= $1 250
(b) A = P + I
P = $5000
I = $1250
A = $(5000 + 1250)
= $6250
Example 2

SOLUTION
(a) P = $10 000
R = 8%
T= 3 YRS
PRT
SI =
1OO
10000× 8 ×3
=
100
 = $100 x 8 x 3
=$2 400

(b) A = P + I
= $(10000 + 2400)
= $12 400

(c) 3 yrs = 36 mths

A
Instalment per month =
total mths
$ 12400
¿
36
¿ $ 344.44
Example 3

Solution
PRT
SI =
100
SI 100=PRT
SI 100
=P
RT
100 SI
¿ P=
RT
100 SI
¿ R=
PT
 100 SI
¿T=
PR

(a) P = ?
R = 5%
T = 6 mths = 0.5 YRS
SI = $1680
SI 100
P=
RT
$ 1680 ×100
P=
5 × 0.5
$ 168000
P=
2.5
P=$ 67 200

(b) P = $8500
R=?
T = 6.5 yrs
SI = $3867.50
SI 100
R=
PT
3867.50 ×100
R=
8500 × 6.5
386750
R=
55250
R=7 %

(C) P = $5400
R = 8.75%
T =?
SI = $1890.60
SI 100
T=
PR
1890.60× 100
T=
5400× 8.75
189060
T=
47250
T =4 YEARS