Simple interest
key notes:
i = prt
where:
- i is the interest earned
- p is the principal (starting amount)
- r is the interest rate expressed as a decimal
- t is the time in years
note: To find the total amount in an account, calculate the interest and then add it to the principal.
Learn with an example
Ayana has ₹50,000 in a savings account that earns 11% interest per year. The interest is not compounded. To the nearest rupee,
how much interest will she earn in 5 years?
Round your answer to the nearest rupee.
Write the rate as a decimal.
11% = 0.11
Calculate the interest earned.
i = prt
= ₹50,000 · 0.11 · 5
= ₹27,500
There is no need to round your answer to the nearest rupee, because it is already an
even rupee amount.
The interest will be ₹27,500.
Lee has ₹20,000 in a savings account that earns 15% interest per year. The interest is not compounded.
How much will he have in total in 3 years?
Write the rate as a decimal.
15% = 0.15
Calculate the interest earned.
i = prt
= ₹20,000 · 0.15 · 3
= ₹9,000
Find the total amount by adding the interest to the principal.
₹9,000 + ₹20,000 = ₹29,000
The total amount will be ₹29,000
Ayana has ₹90,000 in a savings account that earns 14% annually. The interest
is not compounded.
How much interest will she earn in 4 years?
Use the formula i = prt, where i is the interest earned, p is the principal
(starting amount), r is the interest rate expressed as a decimal, and t is the
time in years. ₹_____
Write the rate as a decimal.
14% = 0.14
Calculate the interest earned.
i = prt
= ₹90,000 · 0.14 · 4
= ₹50,400
The interest will be ₹50,400.00.
Let’s Practice!
