Simple Interest

About this video

Simple interest with the formula SI = (P × R × T) ÷ 100: take P, R and T out of the sentence, multiply, then divide by 100 — for loans and for investments — and answer only what the question asks.

What it covers

The formula SI = (P × R × T) ÷ 100
P is the principal, R the rate as a percentage, T the time in years
Taking the information out of the sentence
The interest is the EXTRA amount; the total is P + SI
Loans and investments work the same way

Extra worked examples

✍️ Extra example: Sipho borrows R2 400 at 9% per year for 3 years. Calculate the simple interest.

1
P = R2 400, R = 9, T = 3 years
Take the important information out of the sentence.
2
SI = (2 400 × 9 × 3) ÷ 100
Multiply P × R × T first, then divide by 100.
3
SI = R648
This is the EXTRA amount he pays back, on top of the R2 400.

✍️ Extra example: Ayanda invests R5 000 at 6% per year for 4 years. How much does she have at the end?

1
P = R5 000, R = 6, T = 4
An investment works exactly like a loan.
2
SI = (5 000 × 6 × 4) ÷ 100 = R1 200
The interest she earns.
3
Total = R5 000 + R1 200 = R6 200
The question asks how much she HAS, so add the interest to the investment.

Exercises to try

Work each one out, then click to reveal the answer.

1
Calculate the simple interest on R1 000 at 10% per year for 2 years.
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SI = (1 000 × 10 × 2) ÷ 100 = R200
2
R3 500 is borrowed at 8% per year for 3 years. How much interest is charged?
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SI = (3 500 × 8 × 3) ÷ 100 = R840
3
R800 is invested at 12% per year for 5 years. What is the total at the end?
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SI = (800 × 12 × 5) ÷ 100 = R480; total = R800 + R480 = R1 280
4
Thandi borrows R4 000 at 7,5% per year for 2 years. How much does she pay back altogether?
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SI = (4 000 × 7,5 × 2) ÷ 100 = R600; she pays back R4 000 + R600 = R4 600
5
R6 000 is borrowed for 18 months at 10% per year. Find the simple interest.
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T must be in years: 18 months = 1,5 years → SI = (6 000 × 10 × 1,5) ÷ 100 = R900

Read the full lessons

💵Grade 8 · Whole NumbersSimple Interest & Budgets (Grade 8)💰Grade 9 · Whole NumbersFinancial Maths: Interest, Hire Purchase & Exchange Rates

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