Formula sheet
Simple interest
I = Prt is provided on the exam formula sheet. You still must convert the rate to a decimal, keep the time in years, and know how to rearrange it to find r, t or P when the interest is the value that is already given.
What the symbols mean
- I the simple interest earned or charged, in ringgit (RM)
- P the principal, the original amount, in ringgit (RM)
- r the interest rate per year, written as a decimal (e.g. 3.5% = 0.035)
- t the time, in years
Given in the exam, or memorise?
I = Prt is provided on the exam formula sheet. You still must convert the rate to a decimal, keep the time in years, and know how to rearrange it to find r, t or P when the interest is the value that is already given.
Why it works
Simple interest pays the same amount each year on the original sum.
- One year's interest on principal P at rate r is P × r.
- Nothing is added back to the principal, so every year earns the same P × r.
- Over t years the total interest is P × r × t = Prt.
Worked example 1
Aisyah saves RM4000 in an account that pays 3.5% simple interest per year. How much interest does she earn after 3 years?
- List the values: P = RM4000, r = 3.5% = 0.035, t = 3.
- Substitute into I = Prt: I = 4000 × 0.035 × 3.
- Work left to right: 4000 × 0.035 = 140, then 140 × 3 = 420.
Worked example 2
A principal of RM2500 earns RM200 simple interest over 2 years. Find the yearly interest rate.
- List the values: P = RM2500, I = RM200, t = 2, and r is unknown.
- Rearrange I = Prt to make r the subject: r = I ÷ (P × t).
- Substitute: r = 200 ÷ (2500 × 2) = 200 ÷ 5000 = 0.04.
- Convert to a percentage: 0.04 × 100 = 4%.
Where students go wrong
- Using r as a percentage instead of a decimal, put in 0.035, not 3.5, or the interest comes out 100 times too large.
- Leaving the time in months, t must be in years, so 6 months is 0.5, not 6.
- Confusing the interest with the final balance, I is only the interest earned, while the total in the account is P + I.
Use it with
Source:SPM: Format Pentaksiran mulai 2021, Matematik (1449)
Frequently asked questions
Is r a percentage or a decimal in I = Prt?
Use r as a decimal. Convert the percentage first by dividing by 100, so 3.5% becomes 0.035.
If you leave r as 3.5, your interest comes out a hundred times too big. The time t must also be in years so it matches the yearly rate before multiplying.
How do I find the rate or time from I = Prt?
Rearrange the formula. For the rate, r = I ÷ (P × t); for the time, t = I ÷ (P × r); for the principal, P = I ÷ (r × t).
Substitute the three known values, then work out the single missing one. Remember to convert the rate back to a percentage at the end if needed.
What if the time is given in months?
Convert months to years by dividing by 12, because r is a yearly rate. So 6 months is 0.5 year and 18 months is 1.5 years.
Put this decimal value in as t, then multiply P × r × t as usual. Mixing months with a yearly rate is one of the most common slips.