1. Whiteboardmaths.com © 2007 All rights reserved 5 7 2 1

2. Interest Simple Interest Interest is the amount earned on money that is invested or the amount that is charged on money which is borrowed (Loaned). It is normally expressed as a percentage of the amount of money that is either invested or loaned. Example Question 1 If £400 is invested at a 5% interest rate how much interest is earned each year? 5% of £400 = 5 100 x 400 = £20 Example Question 2 A one year loan of £650 is to be paid back at 8% interest. How much interest is paid on the loan? 8% of £650 = 8 100 x 650 = £52

3. Simple Interest Interest is the amount earned on money that is invested or the amount that is charged on money which is borrowed (Loaned). It is normally expressed as a percentage of the amount of money that is either invested or loaned. Question 1 If £900 is invested at a 4% interest rate how much interest is earned each year? 4% of £900 = 4 100 x 900 = £36 Question 2 A one year loan of £480 is to be paid back at 9% interest. How much interest is paid on the loan? (nearest £). 9% of £480 = 9 100 x 480 = £43

4. SI Simple Interest Simple interest is calculated only on the initial money invested. This money is called the principal (P) and it is invested at rate (R) over a period of time (T). If you build up interest in your account each year then you do not get interest on any interest payments that may have been credited to your account. In most cases money invested earns interest on the interest as well. This is called compound interest. £33.10£30.00Total Interest gained £133.10£130Amount after 3years £121£120Amount after 2 years £110 Amount after 1 year Compound InterestSimple Interest The table below shows how £100 grows over a 3 year period if it is invested at a rate of 10% Simple interest calculations can be useful in giving you a rough idea of how much interest you earn without doing a more complicated compound calculation as demonstrated in the table below.

5. Simple Interest The formula below can be used to calculate simple interest. P x R x T 100 I = = P R T 100 I = Interest P = Principal R = rate of interest T = time in years. Example Question 1 Find the simple interest earned when £600 is invested for 2 years at an annual interest rate of 4%. I = PRT 100 = 600 x 4 x 2 100 = £48

6. Simple Interest The formula below can be used to calculate simple interest. P x R x T 100 I = = P R T 100 I = Interest P = Principal R = rate of interest T = time in years. Example Question 2 Find the simple interest earned when £2000 is invested for 5 years at an annual interest rate of 4½%. I = PRT 100 = 2000 x 4.5 x 5 100 = £450

7. Simple Interest The formula below can be used to calculate simple interest. P x R x T 100 I = = P R T 100 I = Interest P = Principal R = rate of interest T = time in years. Example Question 3 Find the simple interest earned when £3500 is invested at an annual interest rate of 4¾% for 6½ years (nearest £) I = PRT 100 = 3500 x 4.75 x 6.5 100 = £1081

8. Simple Interest P x R x T 100 I = = P R T 100 Question 1 Find the simple interest earned when £500 is invested for 3 years at an interest rate of 6%. (nearest £) I = PRT 100 = 500 x 6 x 3 100 = £90 Question 2 Find the simple interest earned when £1500 is invested for 2½ years at an annual interest rate of 4½%. (nearest £) I = PRT 100 = 1500 x 4.5 x 2.5 100 = £169

9. Simple Interest P x R x T 100 I = = P R T 100 Question 3 Find the simple interest earned when £7500 is invested at an interest rate of 5¼% for 4½ years. (nearest £). I = PRT 100 = 7500 x 5.25 x 4.5 100 = £1772 Question 4 I = PRT 100 = 2400 x 4.75 x 3.5 100 = £400 Find the simple interest earned when £2400 is invested at an annual interest rate of 4¾% for 3½ years. (nearest £10).

10. Months Simple Interest The formula below can be used to calculate simple interest. P x R x T 100 I = = P R T 100 I = Interest P = Principal R = rate of interest T = time in years. Example Question 4 Find the simple interest earned when £1800 is invested at an annual interest rate of 5% for 18 months (nearest £). I = PRT 100 = 1800 x 5 x 1.5 100 = £135

11. Simple Interest The formula below can be used to calculate simple interest. P x R x T 100 I = = P R T 100 I = Interest P = Principal R = rate of interest T = time in years. Example Question 5 Find the simple interest earned when £2750 is invested for 30 months at an annual interest rate of 5¾% (nearest £). I = PRT 100 = 2750 x 5.75 x 2.5 100 = £395

12. Simple Interest The formula below can be used to calculate simple interest. P x R x T 100 I = = P R T 100 I = Interest P = Principal R = rate of interest T = time in years. Example Question 6 Find the simple interest earned when £4300 is invested for 9 months at an annual interest rate of 4½% (nearest £). I = PRT 100 = 4300 x 4.5 x 0.75 100 = £145

13. Simple Interest P x R x T 100 I = = P R T 100 Question 5 Find the simple interest earned when £2500 is invested at an interest rate of 3¼% for 42 months. (nearest £). I = PRT 100 = 2500 x 3.25 x 3½ 100 = £284 Question 6 I = PRT 100 = 6500 x 5.75 x 1.25 100 = £467 Find the simple interest earned when £6500 is invested at an annual interest rate of 5¾% for 15 months. (nearest £10).

14. Simple Interest P x R x T 100 I = = P R T 100 Question 7 Find the simple interest earned when £350 is invested for 3 months at an interest rate of 2¼% (nearest £). I = PRT 100 = 350 x 2.25 x 0.25 100 = £2 Question 8 Find the simple interest earned when £1750 is invested for 51 months at an annual interest rate of 4¾% (nearest £). I = PRT 100 = 1750 x 4.75 x 4.25 100 = £353

15. Example Question 1 If £400 is invested at a 5% interest rate how much interest is earned each year? Example Question 2 A one year loan of £650 is to be paid back at 8% interest. How much interest is paid on the loan? Question 1 If £900 is invested at a 4% interest rate how much interest is earned each year? Question 2 A one year loan of £480 is to be paid back at 9% interest. How much interest is paid on the loan? (nearest £). Interest Worksheet 1 Worksheets

16. Simple Interest 1 Worksheet 2 Example Question 1 Find the simple interest earned when £600 is invested for 2 years at an annual interest rate of 4%. Example Question 2 Find the simple interest earned when £2000 is invested for 5 years at an annual interest rate of 4½%. Example Question 3 Find the simple interest earned when £3500 is invested at an annual interest rate of 4¾% for 6½ years (nearest £) Question 1 Find the simple interest earned when £500 is invested for 3 years at an annual interest rate of 6%. (nearest £) Question 2 Find the simple interest earned when £1500 is invested for 2½ years at an annual interest rate of 4½%. (nearest £) Question 3 Find the simple interest earned when £7500 is invested at an annual interest rate of 5¼% for 4½ years. (nearest £). Question 4 Find the simple interest earned when £2400 is invested at an annual interest rate of 4¾% for 3½ years. (nearest £10).

17. Simple Interest 2 Worksheet 3 Example Question 4 Find the simple interest earned when £1800 is invested at an annual interest rate of 5% for 18 months (nearest £). Example Question 5 Find the simple interest earned when £2750 is invested for 30 months at an annual interest rate of 5¾% (nearest £). Example Question 6 Find the simple interest earned when £4300 is invested for 9 months at an annual interest rate of 4½% (nearest £). Question 5 Find the simple interest earned when £2500 is invested at an annual interest rate of 3¼% for 42 months. (nearest £). Question 6 Find the simple interest earned when £6500 is invested at an annual interest rate of 5¾% for 15 months. (nearest £10). Question 7 Find the simple interest earned when £350 is invested for 3 months at an annual interest rate of 2¼% (nearest £). Question 8 Find the simple interest earned when £1750 is invested for 51 months at an annual interest rate of 4¾% (nearest £).