Financial Maths Grade 9: Simple Interest Determine final amount #Finance

hey guys welcome to financial maths so let’s say for example you go to the bank and you put 500 rand in the bank and you leave it there for two years well if you have to go back to the bank and look at how much money you would have you would have more than 500 round the bank gives us

interest when we put money in the bank this bank has told you that they will give you 10 percent pa now that stands for per annum that’s just a fancy way of saying per year what is 10 of 500 round well of means times and percentage is 10 over 100 times 500 and that will give you 50 round but

that’s 10 percent per year your money is going to be in the account for two years and so you will earn a total of 100 rand so when you go look at your money in two years time you would have earned a hundred rand from the bank and so your total would now be the 500 rand plus the 100 rand and

so now you have 600 rand now thankfully we never have to go calculate it like this this isn’t the 15th century guys we’ve got a formula so this formula over here does all of that for us so a is your final amount p is the starting amount i is the percentage and n is the so check how cool

this is p well that’s your starting amount you started with 500 rand your percentage is 10 now you can either type in 10 some calculators have a percentage feature the most popular calculator that students use in south africa is the casio that one does have a percentage you must just look out

for it or what a lot of students like to do as they say 10 over a hundred and then the number of years is two and so you literally just go type all of this in on the calculator like that and so i’ll quickly show you what it looks like so we’re going to type in the 500 round you say

bracket and you say 1 plus oh now if you want to use the percentage you would say 10 then you would say shift and then over here where is it now there’s a percentage sign just above the eight and the nine can you see there’s a little percentage there you’d push that but if you

want to do the other method you would say 10 over 100 then you say times and then there’s two years boom 600 rand and that is exactly how much we had earlier 600 rand so this answer or this formula gives you the final answer and you don’t have to go add the interest or anything like

that so just be careful though so you started with 500 grand it becomes 600 rand so how much did you actually earn well your interest will be the 600 rand minus 500 grand and so you earned 100 run that’s how much you actually earned at the bank you didn’t earn 600 round because you

already had 500 rand to start all right so here’s two practice questions i would highly advise you pause the CashNews.co quickly and try them yourself you have got the answers given to you so go ahead good luck all right so the way that this would work is for number one it says a person

invests 200 grand at a bank over a four year period the bank pays them 12 percent determine the final amount okay well we know that there’s now this handy formula that we use where p is always your starting amount i is always the percentage where you can either type in 12 or you have to say

12 over 100 then the number of years is 4. you type all of that in on the calculator and you get 296. that is the total amount that the person has how much interest did the bank actually give them well that would be 296 minus 200 and so the bank actually gave them 96 rand that’s just for

extra information the actual answer is this one number two a thousand rand is invested for three years the bank offers an interest rate of eight percent pa remember pa is per year determine the final amount so back to our formula where we’re starting off with a thousand rand the interest rate

is eight percent i’m certainly got eight over a hundred and the number of years is three type that all in and you get a thousand two hundred and forty and that’s it guys so it’s a nice formula that helps you to calculate simple interest by the way this what we’ve been doing

in this lesson is all simple interest there is another type of interest called compound which we’ll be tackling in the next couple of lessons