🧱 See It
Recall the percent-of-a-number method from earlier levels. Simple interest means a bank pays a percentage of your savings once per year — not compounding on top of previous interest. The amount earned stays exactly the same each year, since it's always based on the original amount saved.
✏️ Draw It
| Year | Principal | Interest Earned | Running Total |
|---|---|---|---|
| 1 | $500 | $20 | $520 |
| 2 | $500 | $20 | $540 |
| 3 | $500 | $20 | $560 |
The interest earned is the same $20 every single year — it's always calculated from the original $500 principal, never from the growing total.
🔢 Write It
I = P × R × T
Interest = Principal × Rate × Time, where Rate is written as a decimal (percent ÷ 100) and Time is in years.
Identify all three values — P, R, and T — and label them explicitly before multiplying anything.
💡 Worked Examples
Example 1 — $500 principal, 4% annual rate, over 3 years. Find the interest earned.
- Identify the values:
P = 500,R = 4% = 0.04,T = 3 - Multiply:
I = 500 × 0.04 × 3 500 × 0.04 = 20, then20 × 3 = 60- Answer: $60 interest
Example 2 — Find the total amount in the account after those 3 years.
- Add the interest to the original principal:
$500 + $60 - Answer: $560
🧠 Quick Reference
I = P × R × T (Principal × Rate × Time). The interest amount ADDS to your original principal to give the total amount in the account. Simple interest never compounds — the same interest amount every year, always based on the original principal.