New
New
Year 10
Foundation

Simple interest calculations

I can carry out simple interest calculations.

New
New
Year 10
Foundation

Simple interest calculations

I can carry out simple interest calculations.

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Lesson details

Key learning points

  1. Simple interest is calculated once and then added repeatedly.
  2. By considering the calculations for simple interest, you can be more efficient.
  3. Through understanding the structure, you can reverse the calculations to find the original amount.

Keywords

  • Rate of interest - The rate of interest is the percentage by which an amount increases

  • Simple Interest - Interest is money added to savings or loans. Simple interest is always calculated on the original amount

  • Compound interest - Compound interest is the interest calculated on the original amount and the interest accumulated over the previous period.

Common misconception

Pupils should pay careful attention to what the question asks. Working out the overall amount after a simple or compound increase is different to working out the total interest only.

Pupils can underline or highlight the key instruction to the question e.g. Total amount or total interest, to remind them of the need to subtract from the original amount or not.

Pose the question, "If you have £100 in a bank account that offered x% simple interest rate per year over y years, how many different examples of x and y can pupils give so the overall money in the account is £180?"
Teacher tip

Licence

This content is © Oak National Academy Limited (2024), licensed on Open Government Licence version 3.0 except where otherwise stated. See Oak's terms & conditions (Collection 2).

Lesson video

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6 Questions

Q1.
Which statement is the equivalent of "Increase 76 by 30%"?
Correct answer: Find 130% of 76
Find 30% of 76
Find 70% of 76
Q2.
If I increase £90 to £99, what is the percentage gain?
Correct Answer: 10, 10%
Q3.
If you invest £500 for three years and receive 2% simple interest each year, how much will you have at the end?
Correct Answer: 530, £530
Q4.
If I increase £70 to £86.10, what is the percentage gain?
Correct Answer: 23, 23%
Q5.
Which statement is the equivalent of "Decrease 130 by 40%"?
Work out 40% of 130
Divide 130 by 40
Correct answer: Work out 60% of 130
Q6.
If I increase £80 to £86.40, what is the percentage gain?
Correct Answer: 8, 8%

6 Questions

Q1.
If I invest £400 over 3 years at 2% interest, I have £424. Is this simple or compound interest?
Correct answer: simple
compound
it could be either
Q2.
If I invest £600 over 2 years at 2.5% interest, I have £630.38. Is this simple or compound interest?
simple
Correct answer: compound
it could be either
Q3.
If I invest £1500 over 5 years at 1.9% interest, I have £1642.50. Is this simple or compound interest?
Correct answer: simple
compound
it could be either
Q4.
If I invest £10 over 2 years at 4% interest, I have £10.80. Is this simple or compound interest?
Correct answer: simple
compound
it could be either
Q5.
If I invest £46.21 over 1 year at 4% interest, I have £48.06. Is this simple or compound interest?
simple
compound
Correct answer: it could be either
Q6.
Which investment results in more money at the end: an investment of £30 at a rate of 2% simple interest for 4 years, or £30.50 at a rate of 3.5% compound interest for 2 years?
The simple interest investment produces more money.
Correct answer: The compound interest investment produces more money.