SME
Grade 7 Math · Problem type
Simple interest
Use this for “$500 at 4% a year for 3 years: how much interest?”
Table
Time (t)
(years)
Amount in all (A)
($)
This is an example. Type your own values to start a new problem.
$
I
=
$
P
×
r
%
×
t
A
Amount in all
worked out (not typed) · $
Formulas
I
=
P
×
r
÷
100
×
t
(interest
=
principal
×
rate
per
year
÷
100
×
time)
60 = 500 × 4 ÷ 100 × 3
A
=
P
+
I
(amount
in
all
=
principal
+
interest)
560 = 500 + 60
Assumptions
•
The principal is the money saved or borrowed. Each year earns the same r% of it.
•
Simple interest does not earn interest on interest.
•
The amount in all is the principal plus the interest.
Step-by-step
WE KNOW
P = $500 (principal), r = 4% (rate per year), t = 3 years (time)
FIND
interest (I), amount in all (A)
Step 1 · Find interest (I)
Use I = P × r ÷ 100 × t (interest = principal × rate per year ÷ 100 × time)
Each
year
earns
r
%
of
the
principal;
multiply
by
the
years.
I
=
500
×
4
100
×
3
I
=
2,000
100
×
3
I
=
20
×
3
I
=
$60
Step 2 · Find amount in all (A)
Use A = P + I (amount in all = principal + interest)
Add the interest to the principal.
A
=
500
+
60
A
=
$560
Check
Put the numbers back in. Both sides should match.
60 = 500 × 4 ÷ 100 × 3 ✓
560 = 500 + 60 ✓
Topic check
See what you know: 5 questions on this topic
New questions each time. Pass to mark it complete.
Refresh
Related lessons
Tax, tip, markup, discount and percent change
Main lesson
Discount and sale price
Use this for “A $64 coat is 30% off. What is the sale price?”
Percent increase and decrease
Use this for “The price went from 50¢ to 60¢. What is the percent increase?” or “After a 25% increase it costs $50. What was the original price?”
Percent error
Use this for “A kitchen scale reads 245 g for a 250 g weight. What is the percent error?”
Tax, tip, markup, discount or commission?
Use this for “Is it a markup or a discount?” before working out the percent.