Simple interest
Interest is the price of borrowing money, or the reward for saving it. With simple interest it is the same amount every year.
Task 1Interest for one year4 questions
- Principal
- the amount borrowed or saved
- Rate
- the percentage charged or paid for one year
- Interest
- the money charged on a loan, or paid on savings
With simple interest, the interest is always worked out on the principal. To find one year's interest, multiply the principal by the rate and divide by 100.
Worked example: £2,000 at 5% a year. 2,000 × 5 ÷ 100 = £100 of interest for one year.
Task 2More than one year4 questions
Task 3Part of a year2 questions