Numerical aptitude · Percentages and money
Simple interest, made easy
💡 The idea
With simple interest you earn the same interest every year, worked out on the money you first put in.
🧭 The method: 3 steps
- Work out one year of interest: rate% of the money.
- Multiply by the number of years.
- Need the amount? Add the money back on.
🎬 Every kind of question, in pictures
Pick a kind. Guess the answer first, then watch the picture work it out. Tap any step to see it in the picture.
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✏️ Worked examples
Example 1. Interest on $2,000 at 5% a year for 3 years?
- One year: 5% of 2,000 = $100
- Three years: 100 × 3 = $300
⚡ Shortcut: 2000 × 5 × 3 ÷ 100 = 300.
Example 2. $4,000 lent at 10% for 2 years. Amount to pay back?
- Interest = 10% × 4,000 × 2 = $800
- Amount = 4,000 + 800 = $4,800
Example 3. Money doubles in 8 years at simple interest. Rate?
- Doubling means the interest = the money itself = 100%
- 100% in 8 years → 100 ÷ 8 = 12.5% a year
⚠️ Where people go wrong
- “Interest” and “amount” are different: amount = money + interest.
- Don’t forget to multiply by the years.
- Doubling is 100% interest, not 200%.
📌 Remember
- I = P × R × T ÷ 100
- Amount = P + I
- Doubles in n years → rate = 100 ÷ n %