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Simple Interest

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Elementary Mathematics Number – Rates and Money (2) Understanding Commerce Simple Interest

Money that is borrowed from a bank, credit union, or any other financial institution is charged. Similarly, money that is deposited into an account at a bank, credit union, or any other financial institution receives an interest

The sum borrowed is called the Principal (P).

The interest is calculated as a % of the Principal and is called the Rate (R)

The extra sum paid or charged is the Interest or Simple Interest (S.I or I)

Example:

Calculate the interest (I) paid on a loan of $1300 at a rate of 2% per annum for period of 2 year (T). Calculate the amount that is to be paid.

Interest on $1300 at 2% for 2 year

I = (1300 x 2 x 2)/ 100 = 5200/100= $52

Amount to be paid = $1300 +$52 = $1352

Exercises

There are 6 questions in this exercise.

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