Question

Colin invests £1200 into his bank account.

He receives 10% per year simple interest.
How much will Colin have after 3 years?
Give your answer to the nearest penny where appropriate.

Answer 1

He will earn £360, for a total in his account of £1560.

The formula for simple interest is

I = prt, where I is the amount of interest, p is the principal invested or borrowed, r is the rate as a decimal number, and t is the amount of time. Using our information we have:

I = 1200(0.1)(3) = 360

This is the amount of interest. We add this to his original 1200 to get the total amount:
1200 + 360 = 1560.