Part 4:
More Complex Arithmetic Skills

Simple Interest

If you have money invested in a bank or building society, your money earns you interest, i.e. you can take out more money than you had put in.

Simple interest is now calculated only when the period of time of the investment is one year or less.

Here is a formula for Simple Interest =   PRT    
100

The simple formula is used to find the amount of interest payable, where:

P = Principal = amount of money invested
R = Rate of interest per annum (i.e. annually) in percentage terms
T = Time for which the money is invested, given in years.

Example 4.4a

Calculate the amount in the bank if £320 is invested for 85 days at an annual rate of 6.2%.