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in today's video we're going to look at

simple interest and see how we can

calculate it

to understand how it works let's imagine

that you had 200 pounds of savings

and that you lent it to somebody at a

simple interest rate of three percent a

year

what does that actually mean

well it means that at some point that

person will have to pay you back the

original hundred pounds they borrowed

plus an extra three percent for every

year that they're borrowing the money

so to find out how much they'd owe you

after just one year

would you need to find three percent of

200 pounds which would be the interest

and add that to the original 200 pounds

we've already covered how to find a

percentage of a number in another video

but the technique that we'll use here is

to take the percentage number so 3

divide it by 100 to turn it into a

decimal

so 0.03

and then multiply that by the number

that you want a percentage of

so because we want 3

of 200 pounds we do 0.03 times 200

which is 6 pounds

and now that we know that the interest

would be 6 pounds a year we just add

that to the original 200 pounds to find

out that the person would owe you 206

pounds

now of course they might not have

borrowed it for just one year they may

have borrowed it for a longer period

so let's now try and find out how much

the w if they kept it for two years

for this we could just take how much

they do after one year so the 206 pounds

and then add on another year's worth of

interest so add six pounds

which would bring the total debt to 212

pounds

this technique is pretty good if you

just have very low numbers so one year

two year three years and so on

but if they ask for a much longer period

like 10 years then we might need to use

a slightly different technique

for this we could still take the

original 200 pounds

but this time we need to add 10 times

the annual interest

because they're borrowing it for 10

years

so 200 pounds

plus 10 times 6 pounds because it's

going to be an extra 6 pounds of

interest each year

so that gives us 200 pounds plus 60

pounds

or 260 pounds in total

let's try another one and give the video

a pause if you want to give it a go

first

so in this question we're told that dora

invests 600 pounds for six years in a

bank account

and that the account pays simple

interest at a rate of 2.1 percent per

year

our job is to work out the total amount

of money that shall have at the end of

the six years

so for this one we need to take the 600

pounds original investment

because you'll get that back at the end

and add six years worth of annual

interest

and remember to look at the annual

interest we just convert the 2.1 percent

to a decimal by dividing it by 100 which

would be 0.021

and then multiply it by the original

amount of 600 pounds

so that would give us 12 pounds 60 of

interest each year

then if we substitute this into our

equation we get 600 pounds plus 6 times

12 pounds 60.

and so if we simplify that that gives us

600 pounds plus 75 pounds 60

and so a total of 675 pounds 60 pence

anyway that's everything for this video

so i hope that made sense

if you liked it then please do give us a

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and we'll see you again soon cheers