Institutions: Global | TUT | UCT | UJ | UZ | Wits

23 views
If Peter invests $R1,000.00$ at $8\%$ simple interest per annum (per year). What is the interest for the first year of this investment?
| 23 views

If Peter invests R1,000.00 at 8% simple interest per annum (per year). The interest calculation for the first year of this investment is as follows:

$\text{Simple Interest} = P \cdot r \cdot n$

$SI = 1000 x 0,08 x 1$

$SI = R80,00$

Note: Simple Interest = initial loan amount x interest rate x number of payment intervals; this equals R80.00 interest that will be charged (for the first year)

Should he invest the R1,000.00 at 8% simple interest per annum for 10 years, then the calculation is as follows: $\text{Simple Interest} = P \cdot r \cdot n = 1000 \cdot 0.08 \cdot 10$

$SI = R800,00$

The total value of the ten-year investment is: $A = P (1+r \cdot n) = 1000 (1 + 0.08 \times 10) = R1,800.00$

Note: End value of investment = initial loan amount (1 + interest rate x number of payment intervals) = R1 800.00 (end value of the investment)

by Diamond (55,136 points)