Simple Interest | Mathematics for GCSE/IGCSE - Year 11 PDF Download

Simple Interest

• Interest is extra money added every year (or month) to an original amount of money
• Simple interest is interest that is the same amount each time. 
  • It can be beneficial, such as depositing £100 into a bank account and earning simple interest of 10% every year. After one year, you would have £110; after two years, you would have £120, and so on. 
• However, it can also be detrimental, like owing £100 to a friend and being charged simple interest of 10% for each year you delay repayment. 
  • After the first year, you would owe them £110; after the second year, you would owe them £120, and so on.
• If £ P is your initial amount of money and simple interest is added to it at a rate of R % per year for T years, then the total amount of interest gained, £ I, is given by the formula:
  
• Keep in mind that this formula calculates the amount of simple interest accrued over T years, not the total sum of money after T years.
  • To determine the total amount of money after T years, add the interest £I to the initial amount £P.