1 Press Ctrl-A ©G Dear2010 – Not to be sold/Free to use Simple Interest Stage 6 - Year 11 Applied Mathematic (Preliminary General 1)

2 When do we use simple interest? Government Investment Bonds and Private Company Debentures and Comparing Investments and Loans and Term Deposits

3 The Formula I = P r nI = P r n I = Simple Interest P = Principal (Money) r = Rate of Interest as a decimal. n = Number of Interest Periods.

4 Example I = P r nI = P r n John invests $50,000 for 5 years at 6% p.a. in Government Bonds I = x0.06 x 5 [6% = 6÷ 100 = 0.06] = $15,000

5 Table for $1 I = P r nI = P r n % % % % Periods Interest I = 5000 x0.63 = $3,150 7% 9 years

6 Table for $1 I = P r nI = P r n % % % % Periods Interest I = 250 x0.35 = $ %pa 7 years

7 Graphs for $1I = P r nI = P r n % % % % PeriodsInterest Periods % 6% 7% 8%