Simple Interest
The simple-interest formula and its rearrangements, why simple interest grows the amount in an arithmetic progression, and the standard exam patterns: doubling and tripling times, and recovering the principal from two amounts at different times.
What you will be able to do
- Apply the simple-interest formula and solve it for principal, rate or time.
- Use the fact that simple interest per year is constant.
- Find the time for a sum to double or triple at a given simple-interest rate.
- Recover the principal and rate from amounts known at two different times.
What is inside this lesson
- 1What simple interest is
- 2The formula and its rearrangements
- 3Doubling and tripling
- 4Worked example: interest and amount
- 5Worked example: doubling and tripling times
- 6Worked example: principal from two amounts
- 7Common mistakes
- 8Quick revision
- 9Practice
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What simple interest is
Simple interest is interest calculated only on the original principal, for the whole term. Nothing is added to the principal along the way, so the interest earned in each year is the same.
That makes simple interest a linear process: the amount after t years is the principal plus a fixed yearly interest times t. Most exam questions exploit this straight-line behaviour rather than the formula itself.
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