Skip to content
Let’s explore how much interest Holly earns on her investment over 4 years using simple interest.
Understanding the Problem:
Holly invests £500 in a bank account that pays a simple interest rate of 1.5% per year. We want to find the total interest she earns after 4 years.
Calculating the Annual Interest:
First, we need to find 1.5% of £500. To do this, we convert 1.5% to a decimal: 1.5/100 = 0.015
Then, we multiply the decimal by the initial investment:
0.015 x £500 = £7.50
So, Holly earns £7.50 in interest each year.
Calculating the Total Interest After 4 Years:
Since the interest is simple interest, it remains the same each year. To find the total interest after 4 years, we multiply the annual interest by the number of years:
£7.50 x 4 = £30
Answer:
Holly has got a total of £30 in interest at the end of 4 years.
Why is this useful?
Understanding simple interest is important for:
- Understanding basic investment options.
- Calculating earnings on savings accounts.
- Making informed financial decisions.
If you’re studying for your GCSE Foundation and find these types of calculations tricky, remember there’s support available. Online Maths Tuition For GCSE Foundation can provide targeted guidance to help you master these essential skills and boost your confidence.
