**Simple Interest** *KS3 Revision*

## What you need to know

**Things to remember:**

- You need to pay attention to how long an investment is and how often interest is gained or paid.
- Knowing how to find basic percentages will help.

Let’s look at some key vocabulary:

**Interest **refers to how much money you gain or pay based on a principal amount of money.

**Principal amount **refers to how much money is involved to start with.

**Simple interest **stays the same, the amount going up or down by the same amount each time.

We also need to remember how we find some of our basic percentage amounts.

Percentage Division

100% \div1

50% \div2

25% \div4

20% \div5

10% \div10

5% \div20

4% \div25

2% \div50

1% \div100

*You invest £2500 with a company who tell you that you will gain 2% interest every year for 7 years. How much money is your investment worth at the end?*

** **

We will look at this in 3 steps.

** **

**Step 1: **Find how much your investment changes by each year.

Percentage Division

2% \div50

\pounds2500 \div 50=\pounds50

**Step 2:** Multiply the amount found in **Step 1** by how long the investment is.

\pounds50\times5=\pounds250

**Step 3:** Add the value in **Step 2** to the original amount.

\pounds2500+\pounds250=\pounds2750

*You borrow £200 and pay back 4% every month. How much will you have left to pay after 6 months?*

**Step 1: **Find how much your investment changes by each month.

Percentage Division

4% \div25

\pounds200 \div 25=\pounds8

**Step 2:** Multiply the amount found in **Step 1** by how long you have been paying back for.

\pounds8\times6=\pounds48

**Step 3:** Subtract the value in **Step 2** from the original amount.

\pounds200-\pounds48=\pounds152

## Example Questions

**Question 1:** You invest £300 and receive 10% a month interest. How much will your investment be worth after 7 months?

**Step 1: **Find how much your investment changes by each year.

Percentage Division

10% \div10

\pounds300 \div 10=\pounds30

**Step 2:** Multiply the amount found in **Step 1** by how long the investment is.

\pounds30\times7=\pounds210

**Step 3:** Add the value in **Step 2** to the original amount.

\pounds300+\pounds210=\pounds510

**Question 2:** You borrow £870 and pay back 20% every month. How much will you have left to pay after 3 months?

**Step 1: **Find how much your investment changes by each month.

Percentage Division

20% \div5

\pounds870 \div 5=\pounds174

**Step 2:** Multiply the amount found in **Step 1** by how long you have been paying back for.

\pounds174\times3=\pounds522

**Step 3:** Subtract the value in **Step 2** from the original amount.

\pounds870-\pounds522=\pounds348