G S Rehill's Interactive Maths Software Series - "Building a Strong Foundation in Mathematics" from mathsteacher.com.au.

Order a 12-month Year 7 Interactive Maths software Homework Licence for only $19.95. Order a 12-month Year 8 Interactive Maths software Homework Licence for only $19.95. Order a 12-month Year 9 Interactive Maths software Homework Licence for only $19.95. Order a 12-month Year 10 Interactive Maths software Homework Licence for only $19.95.

Year 10 Interactive Maths - Second Edition

Simple Interest

If you have extra money you can invest it in a bank, building society or government bonds, for example, and this investment will earn money for you.

The sum of money invested is called the principal. We often denote the principal by P.  The money earned by the principal is called the interest and it is earned at a rate known as the interest rate.  Interest is often represented by I and the interest rate by r.

There are many ways in which interest is calculated and paid. The simplest of the methods used is called simple interest.

Let us consider an example of an investment on simple interest terms of $100 invested for 3 years at 10% per annum (p.a.).

The investor also gets the principal of $100 back at the end of the third year.

Note that we could have calculated the interest, I, as follows:

In general:

If $P is invested at the rate of r per annum for t years, then the total (simple) interest, $I, earned is given by

I = Prt

Example 15



Both r and t need to be expressed in the same units. So, if the rate is measured in per cent per annum (i.e. annually), then the time needs to be measured in years.

Key Terms

principal, interest, interest rate, simple interest, simple interest formula

| Home Page | Order Maths Software | About the Series | Maths Software Tutorials |
| Year 7 Maths Software | Year 8 Maths Software | Year 9 Maths Software | Year 10 Maths Software |
| Homework Software | Tutor Software | Maths Software Platform | Trial Maths Software |
| Feedback | About mathsteacher.com.au | Terms and Conditions | Our Policies | Links | Contact |

Copyright 2000-2020 mathsteacher.com Pty Ltd.  All rights reserved.
Australian Business Number 53 056 217 611

Copyright instructions for educational institutions

Please read the Terms and Conditions of Use of this Website and our Privacy and Other Policies.
If you experience difficulties when using this Website, tell us through the feedback form or by phoning the contact telephone number.