💰 Simple Interest and Financial Mathematics

Simple interest is calculated on the original amount only. It's used in basic loans and savings calculations.

🎯 What You'll Learn

Simple interest is calculated on the original amount only. It's used in basic loans and savings calculations.

Understanding interest helps with financial decisions, savings, and basic economics. Essential for understanding how money works in the real world.

I = P × R × T

Interest = Principal × Rate × Time

Interest
(Amount earned)

Principal
(Starting amount)

Rate
(% per year as decimal)

Time
(Number of years)

Given: Calculate simple interest: £500 at 4% per year for 3 years.

Step 1: Identify the values

P = £500, R = 4% = 0.04, T = 3 years

Step 2: Apply the formula I = P × R × T

Interest = £500 × 0.04 × 3 = £60

Step 3: Calculate total amount

Total = £500 + £60 = £560

Answer: Interest = £60, Total = £560

Principal (£)

Rate (% per year)

Time (years)

Interest Earned: £150.00

Total Amount: £1,150.00

Step 1: Convert rate to decimal

5% ÷ 100 = 0.05

Step 2: Apply the formula I = PRT

I = £1000 × 0.05 × 3 = £150

Step 3: Calculate total amount

Total = Principal + Interest = £1000 + £150 = £1150

1. Find simple interest: £200 at 5% for 2 years

2. Calculate total amount: £800 at 3% for 4 years

3. How much interest on £1000 at 2.5% for 5 years?

4. What's the total after 3 years: £600 at 6% simple interest?

5. Find the interest rate if £400 earns £48 in 2 years

Simple Interest = Principal × Rate × Time. Always add to principal for total.