Consumer Mathematics: Financial Management
Simple interest
Interest calculated only on the original amount, using the given formula I = Prt.
| English | Simple interest |
|---|---|
| Bahasa Melayu | Faedah mudah |
| 中文 | 单利 |
How it is used
A deposit of RM2,000 earns simple interest at 3.5% per year for 2 years. Using I = Prt, I = 2000 × 0.035 × 2 = RM140, so the total interest earned is RM140.
Where it shows up in SPM
In Financial Management, simple interest is tested in both Paper 1 (a quick I = Prt calculation) and Paper 2 (find interest or the final amount, sometimes comparing two savings plans). Watch for a rate per month, which must be matched to a time in months.
Don't confuse it with
Open the chapter: Consumer Mathematics: Financial Management →
Frequently asked questions
What does each letter in I = Prt stand for?
I is the interest, P is the principal (starting amount), r is the yearly rate written as a decimal, and t is the time in years. If the rate is 4%, use r = 0.04, not 4, in the formula.
What if the time is given in months?
Convert months to years before using I = Prt, since the yearly rate matches time in years. For 9 months use t = 9/12 = 0.75.
For example, RM1,200 at 5% for 9 months gives I = 1200 × 0.05 × 0.75 = RM45.
How do I find the final amount, not just the interest?
Add the interest to the principal: final amount = P + I. From the RM2,000 example earning RM140, the final amount is 2000 + 140 = RM2,140.
This total is the maturity value of the savings.