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!