P6 Mathematics - Term II

Topic 5: Fractions

Lesson 6: Simple Interest

Duration: 45 minutes

Learning Objectives

By the end of this lesson, you will be able to:

• Define simple interest and explain when it's used
• Identify principal, rate, and time in interest problems
• Calculate simple interest using the formula
• Calculate total amount (principal plus interest)
• Solve word problems involving simple interest
• Apply these concepts to real savings and lending situations

Have You Saved Money?

Questions:

• Has anyone saved money with parents or guardians?
• What happens when you save money?
• Should you get more money back than you saved?
• Have you heard of banks or SACCOs?

What is Interest?

Interest: Extra money earned on savings
Or: Extra money paid when borrowing

Two sides:

• Saving: Bank pays YOU interest
• Borrowing: You pay BANK interest

Real-Life Interest in Uganda

Where you see interest:

• Banks: Centenary, DFCU, Stanbic
• SACCOs: Village savings groups
• Mobile money: Savings accounts
• Loans: Borrowing for business or school fees

Key Terms: Principal

Principal (P):
The original amount of money saved or borrowed

Examples:

• Save 10,000 shillings → Principal = 10,000
• Borrow 50,000 shillings → Principal = 50,000

This is your starting amount!

Key Terms: Rate

Rate (R):
The percentage of interest per year

Examples:

• 5% per year
• 8% per year
• 10% per year

Written as a percentage!

Key Terms: Time

Time (T):
The length of time (usually in years)

Examples:

• 2 years
• 5 years
• 6 months = 0.5 years

Must be in years for our formula!

Key Terms: Interest

Interest (I):
The extra money earned or paid

This is what we calculate!

Example:
Save 10,000 for 1 year at 10%
Interest = 1,000 shillings
(The extra money you earn)

The Simple Interest Formula

Write this in large letters in your book:

I = (P × R × T) / 100

Where:

• I = Interest
• P = Principal
• R = Rate (%)
• T = Time (years)

Example 1: Calculating Interest

Problem:
Akello saves 50,000 shillings in a bank.
The bank gives 8% interest per year.
Calculate interest after 2 years.

Given:
P = 50,000, R = 8%, T = 2 years

Example 1: Solution

Step 1: Write formula
I = (P × R × T) / 100

Step 2: Substitute values
I = (50,000 × 8 × 2) / 100

Step 3: Calculate
I = 800,000 / 100 = 8,000

Answer: Akello earns 8,000 shillings interest

Example 2: Borrowing Money

Problem:
Okello borrows 100,000 shillings at 10% per year.
How much interest will he pay after 3 years?

Given:
P = 100,000, R = 10%, T = 3

Solve: I = (100,000 × 10 × 3) / 100

Example 3: Converting Months to Years

Problem:
A trader borrows 200,000 at 12% per year for 6 months.
Calculate interest.

Important: 6 months = 0.5 years!

Solution:
I = (200,000 × 12 × 0.5) / 100
I = 1,200,000 / 100 = 12,000 shillings

Your Turn: Practice

Solve in your exercise book:

A farmer saves 80,000 shillings at 5% per year for 4 years. Calculate the simple interest.

Remember:

• Identify P, R, T
• Write the formula
• Substitute and calculate

Calculating Total Amount

Important question:
How much money do you get back in total?

Formula:
Total Amount = Principal + Interest
A = P + I

You get back your original money PLUS interest!

Example: Total Amount

Problem:
Sarah saves 60,000 at 6% per year for 5 years.
Calculate: a) Interest b) Total amount

Solution:
a) I = (60,000 × 6 × 5) / 100 = 18,000

b) Total = P + I = 60,000 + 18,000 = 78,000

Sarah receives 78,000 shillings in total

Finding Principal (Advanced)

Sometimes we know I, R, T and need to find P!

Example:
After 2 years at 10%, someone earned 4,000 interest.
What was the principal?

Working backwards:
4,000 = (P × 10 × 2) / 100
400,000 = P × 20
P = 20,000 shillings

Finding Rate (Advanced)

Sometimes we need to find the rate!

Example:
Principal 50,000 earned 6,000 interest in 3 years.
What was the rate?

Working backwards:
6,000 = (50,000 × R × 3) / 100
600,000 = 150,000 × R
R = 4%

Finding Time (Advanced)

We can find how long it takes!

Example:
How long for 40,000 to earn 8,000 interest at 5%?

Working backwards:
8,000 = (40,000 × 5 × T) / 100
800,000 = 200,000 × T
T = 4 years

Your Turn: Complete Problem

Solve in your exercise book:

Akello borrows 120,000 at 8% for 2 years.

Calculate:
a) The interest she must pay
b) The total amount she must pay back

Interest and Profit: The Connection

Remember profit from last lesson?

Similarities:

• Interest is like profit on money
• Both use percentage calculations
• Both show how money grows

Interest = "Profit" from saving

Real-Life Application: School Fees

Problem:
Sarah wants to save for school fees. She deposits 150,000 in a SACCO at 8% per year. How much interest after 3 years? What's her total?

Solution:
I = (150,000 × 8 × 3) / 100 = 36,000
Total = 150,000 + 36,000 = 186,000

Real-Life Application: Business Loan

Problem:
A shopkeeper borrows 250,000 at 9% for 2 years to buy stock. How much total must he pay back?

Solution:
I = (250,000 × 9 × 2) / 100 = 45,000
Total = 250,000 + 45,000 = 295,000

Summary: The Formula

Always remember:

I = (P × R × T) / 100

And:
Total Amount = P + I

Four values: I, P, R, T - if you know three, you can find the fourth!

Why This Matters

Financial decisions:

• Should I save in this bank or that SACCO?
• Is this loan too expensive?
• How long to save for my goal?

Planning:

• Calculate future savings
• Budget for loan repayments
• Compare different options

Quick Assessment

Answer in your exercise book:

1. Calculate interest on 40,000 at 5% for 3 years
2. Okello saves 100,000 at 6% for 2 years. Find interest and total.
3. Principal 80,000 at 10% for 4 years. Find interest.
4. After 5 years at 8%, earned 12,000 interest. Find principal.

Challenge: Comparing Options

Which is better for saving 100,000 for 3 years?

Option A: 6% per year
Option B: 5% per year

Calculate interest for both and compare!

Homework: Parts A and B

Part A: Calculating Interest (4 problems)

1. 30,000 at 6% for 2 years
2. 50,000 at 8% for 5 years
3. 75,000 at 4% for 3 years
4. 200,000 at 10% for 1 year

Part B: Interest and Total Amount (3 problems)
5. Akello saves 60,000 at 5% for 4 years
6. Okello borrows 90,000 at 12% for 2 years
7. Farmer saves 120,000 at 7% for 3 years

Homework: Parts C and D

Part C: Finding Other Values (3 problems - Advanced)
8. After 5 years at 6%, earned 9,000 interest. Find principal.
9. 40,000 earned 8,000 in 4 years. Find rate.
10. 80,000 at 5% earned 16,000. Find time.

Part D: Word Problems (2 problems)
11. Sarah's SACCO savings problem
12. Shopkeeper's loan problem

Congratulations!

You've completed Topic 5: Fractions!

You learned:

• Multiplying and dividing fractions
• BODMAS and decimal operations
• Ratio and proportion
• Percentages and conversions
• Profit and loss
• Simple interest

Looking Ahead

Next Topic: Data Handling

Your future:

• Secondary school will revisit compound interest
• Business studies uses these concepts
• Economics requires financial mathematics
• Daily life needs these skills constantly

Key Takeaways: Simple Interest

Formula: I = (P × R × T) / 100

Four variables: Know three, find the fourth

Total Amount: P + I

Saving: Earn interest (good!)
Borrowing: Pay interest (cost of using money)

Always: Think about what makes financial sense

Financial Wisdom

Save early and regularly
Understand interest before borrowing
Compare different savings options
Calculate before deciding
Let your money work for you

Thank You!

You've worked hard in Topic 5!

Keep practicing:

• Review your notes regularly
• Apply these skills in real life
• Ask questions when unsure
• Help others understand

Mathematics is a life skill - use it wisely!