Name:
CAPS Reference
Topic
Gr 10
Date:
Time: 1 HR
Finance & Growth
Simple Interest
1. GOT IT! [10 MIN]
Simple Interest is calculated purely on the initial amount of money invested, called the
principal amount. The interest, a percentage of the principal, is added to the principal after
the desired time.
Formula: 𝑨𝑨 = 𝑷𝑷 ( 𝟏𝟏 + 𝒊𝒊×𝒏𝒏)
𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹
𝐴𝐴 = 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎
𝑃𝑃 = 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎
𝑖𝑖 = 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 −>
𝑟𝑟
100
𝑛𝑛 = 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑖𝑖𝑖𝑖 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦
Example 1:
Frank invests 𝑅𝑅6 500 at 10,5% simple interest per annum for 5 years. Determine how much
Frank final amount will be at the end of the term.
Answer:
𝐴𝐴 = 𝑃𝑃 ( 1 + 𝑖𝑖×𝑛𝑛)
10,5
𝐴𝐴 = 6500 ( 1 +
×5)
100
𝐴𝐴 = 𝑅𝑅 9 912,50
𝐴𝐴 = ?
𝑖𝑖 =
10,5
100
𝑃𝑃 = 6 500
𝑛𝑛 = 5
2. GO AHEAD [35 MIN].
2.1 Sam invests 𝑅𝑅4 200 at a simple interest rate of 9% per annum. How long will it take
for Sam investment to grow to 𝑅𝑅8 358.
2.2 Pauline borrows an amount from the bank. The bank charges her 11,5% per
annum, simple interest. Pauline pays the 0bank a total of 𝑅𝑅219 000 after a 4-year
term. What was the original amount (principal amount) the Pauline borrowed from
the bank?
2.3 You are investing an amount and would like it to double it over a period of time.
The bank offers you a simple interest rate of 14%. Determine how long it will take
in terms of 𝑥𝑥. (HINT: make the principal amount equal to 𝑥𝑥)
2.4 Reece would like to make an investment. He has R45 000 to invest. The following
two banks gave him a quote on the investment. Which offer would be the best for
Reece, explain mathematically.
Options
Bank A
Bank B
Simple interest rate per annum
10,5%
7,9%
Term
2
4
2.5 Sally loans 𝑅𝑅7 000, it accumulated over a period of 3 years to 𝑅𝑅9 730. What simple
interest rate would she need to make the above statement true?
3. CHECK YOUR WORK! [15 MIN]
4. HELPFUL VIDEO
https://www.youtube.com/watch?v=ZWCXrbnMN-E
http://study.com/academy/lesson/how-to-find-simple-interest-rate-definitionformula-examples.html