Simple & Compound Interest
Simple interest grows on the original principal only; compound interest grows on principal plus the interest already earned. That single difference generates every question in the chapter — and the gap between the two is where the marks hide.
Don't read this page — work through it. Each block asks you to commit to an answer before it tells you anything.
Start here: what do you already know?
Interest — true or false?
6 statements · 10s each
The formulas
| Quantity | Formula |
|---|---|
| Simple interest | SI = P × R × T / 100 |
| Amount (SI) | A = P + SI |
| Compound amount | A = P(1 + R/100)^T |
| Compound interest | CI = A − P |
| CI − SI (2 years) | P(R/100)² |
| CI − SI (3 years) | P(R/100)² × (3 + R/100) |
The 2-year difference formula is worth more marks than the rest combined — questions are built around it precisely because it looks like it needs long work.
Sort by which interest applies
Simple or compound?
0/6SI = PRT/100
Which group does it belong to?
Commit to the answer
Compute, then check
1/4What is the simple interest on 1000 at 10% per annum for 2 years?
230
Method, in order
Match the quantity to its formula
Quick reference
Exam tip: when a question gives the difference between CI and SI for 2 years, do not compute both. P(R/100)² gives the answer in one step, and that is exactly why the question is set.