SIMPLE INTEREST

What is Simple Interest?

When at the time of returning the loan to the

bank, we have to pay back an amount somewhat
bigger than the borrowed loan amount. This
additional amount is called Simple Interest.
 Factors that influence interest paid
after an amount is borrowed or
deposited
Principal- the amount borrowed

Time- how long the amount was borrowed for (in years)

Rate- what interest was charged (annual % rate)

 Formulas

Amount to Payback= Principal + Simple Interest

where,
Simple Interest = Principal × Rate × Time (worded formula)
I=P×R×T (symbolic formula)
 Example 1

Mr. Whyte borrowed $10000 from a bank at 8% per

annum for 3 years.
Calculate:
a) The sum of money Mr. Whyte had to pay the bank as
simple interest?
b) The total amount of money repaid to the bank
Answer
 Example 2

Mr. Davis invested $12450 in a bank at 7% per annum

for 6 years.
Calculate:
a) The interest he was paid?
b) The total amount of money he would have received at
the end of the period of investment.
Answer
 Transposing the Simple
Interest Formula
 
NB. P- principal, R-rate, T-time, I- interest


When finding:
The simple Interest The Principal
I= P=
The rate per cent per annum The time in years
R= T=
 WHAT IS THE
CONNECTION
BETWEEN
PERCENTAGE
PROFIT & LOSS AND
SIMPLE INTEREST?