- Home
- > Maths I
- > Numbers and Money
- > Interest
In this section you will revise: simple interest, simple interest over multiple years, simple interest over a fraction of a year.
Simple interest
If you put money into a bank or building society they will pay you interest on this money.
If you have borrowed money, from a bank or building society for a mortgage or other loan, you have to pay them interest.
Simple interest is calculated on a yearly basis (annually) and depends on the interest rate. The rate is often given per annum (p.a.) which means per year.
Take a look at the Percentage revision bite if you need to brush up on percentages.
Example
Sally deposits £600 into an account with an interest rate of 5% per annum. Calculate the interest that Sally receives in one year and find how much money she has in the account after one year.
Interest = 5% of £600
= 5/100 x £600
= £30
New balance = £600 + £30
= £630
After one year Sally will have £630.
Now try this question:
- Question
Jamie's bank account pays interest at a rate of 4.3% per year. If he puts £850 into his account, how much will Jamie have after a year?
- Answer
Interest = 4.3% of £850
= 4.3/100 of £850
= £36.55
New balance = £850 + £36.55
= £886.55
The final balance after a year will be £886.55
© MMIX