If you put money into a bank or building society they will pay you interest on this money.
If you have borrowed money from a bank or building society for a mortgage or other loan, you have to pay them interest.
Simple interest is calculated on a yearly basis (annually) and depends on the interest rate. The rate is often given per annum. This means per year.
Sally deposits into an account with an interest rate of per annum.
Calculate the interest that Sally receives in one year and find how much money she has in the account after one year.
After one year Sally will have .
Now try this question:
Jamie's bank account pays interest at a rate of per year.
If he puts into his account, how much will Jamie have after a year?
The new balance after a year will be