Simple Interest

Simple Interest is a part of the VCE Further Maths topic Recursion and Financial Modelling and subtopic Compound Interest Investments and Loans.

Interest is paid for borrowing money. There are different ways of calculating interest. Simple interest is a percentage of the amount borrowed and doesn’t change over time. The formula used is I = Prn where:

• I = the interest
• P = the amount initially borrowed
• r = the rate of interest
• n = the number of time periods borrowed for. 

So How Do I Use the Simple Interest Formula?

The video below reviews the most important concepts. 

How to Calculate Simple Interest

These next videos explain simple interest in a variety of contexts. 

Part 1:  Using the Formula

Part 2: Yearly Interest

Part 3: Monthly Interest

Part 4: Interest on Credit Card Statements

Part 5: Rearranging the Formula to Find Unknown Values

Want to learn more? Check out more of our VCE Mathematics resources here!