Simple interest

There is a formula for simple interest

I = PRT
where

 I = interest
 P = amount borrowed (called "Principal")
 R = interest rate
 T = time

Interest is the amount charged on the money (Principal) borrowed from the bank in a specified
period of time, T.

Example 1
A trader put sh. 50.000 in the bank for one year. If the interest Rate was 30%, how much money did
he get as interest?
Interest, I = PRT
30
= 50000 x x 1 = 15,000/ =
100

Example 2

John banked Shs. 150,000 on his account for 2 years at the rate of 5% simple interest. How much
interest did he earn?
Interest = PRT
5
= 150000 𝑥 𝑥2
100

= 15,000

Sponsored by The Science Foundation College +256 753 802709

Exercise
1. Kerto borrowed sh. 50,000 from a bank which charges a simple interest of 18 per annum. How
much interest will Kerto pay after 2 years?

2. Opio put Shs. 60,000 in the bank. If the interest rate was 8% per year, how much interest did
he get after 6 months?

3. Mukasa put Shs. 80,000 in the bank. If the interest rate was 10%, how much interest did he
get after 9 months?

4. Musa deposited Sh. 60,000/= in Crane Bank which offers an interest of 12% per year. How much
interest did Musa receive from the bank after 9 months?

5. Amooti deposited Shs 15,000 in a bank, which offers interest rate of 2½ % per year for one
year. Find the interest.

6. Kintu put Shs 40,000 in Stanbic Bank. If the interest rate was 10% per year, how much simple
interest did he get after 9 months?

Sponsored by The Science Foundation College +256 753 802709

 7. Odama deposited Sh 120,000 in bank, which gives a simple interest rate of 4% per year. Find
his interest after 3 months.

8. Mary borrowed sh 100,000/= from her club to be returned in 3 months at a simple interest rate
of 5% per month. Find out the total amount of money Mary returned to the club after 3
months.

9. Olinde lends sh 300,000 to Mugisha at an interest rate of 5% per year for 4 months
a) Find the interest gained by Olinde.

b) How much money altogether did Mugisha pay back?

Sponsored by The Science Foundation College +256 753 802709

 10. (a) Okello's wage was increased by 10% to Shs 77,000 per month. Find his old salary.

(b)If his new wage of Shs 77,000 was decreased by 5%, find his final wage.

11. A farmer banked Shs. 3 million in Nile bank. If he banked 20,000-shilling notes, how many notes did
he bank?

12. A bank gives a simple interest rate of 12% per annum. What will be the interest on
sh.400,000 banked for 9 months?

13. A trader got a simple interest of shs 18,000 after depositing shs90,000 in a bank at an interest of 10%
per annum. For, how long was his money in the bank?

14. David got a loan of shs. 500,000 from the bank at a simple interest rate of 20% per annum. What was
the interest on the loan after a period of 9 months?

Sponsored by The Science Foundation College +256 753 802709

 15. A farmer banked shs 26,000 for 4 months at a simple interest rate of 8% per year, find his interest.

16. David deposited money in a bank which offer a simple interest rate of 2 ½ % per year. After
9 months, his account had an amount of 163000. Calculate the money David deposited in
the bank. (5marks)

17. Hajati bought 120 shares from a village SACCO at a simple interest rate of 30% per year. Each
share cost sh. 3, 000.
(a) Find her total interest after 3 ½ years. (03marks0

(b) Calculate the total amount of money Hajati has in the SACCO after 3 ½ years

Sponsored by The Science Foundation College +256 753 802709

Suggested answers
1. Kerto borrowed sh. 50,000 from a bank which charges a simple interest of 18 per annum. How
much interest will Kerto pay after 2 years?

I = PRT
18
= 50000 x 𝑥 2 = 18,000 ≠
100

2. Opio put Shs. 60,000 in the bank. If the interest rate was 8% per year, how much interest did
he get after 6 months?

I = PRT
8 6
= 60000 x 𝑥 = 𝑠ℎ𝑠 2,400
100 12

3. Mukasa put Shs. 80,000 in the bank. If the interest rate was 10%, how much interest did he
get after 9 months?
10 9
Interest, I = PRT = 80000 x x = 6000 /=
100 12

4. Musa deposited Sh. 60,000/= in Crane Bank which offers an interest of 12% per year. How much
interest did Musa receive from the bank after 9 months?
From I = PRT
12 9
Interest, I = 60000 𝑥 𝑥 = 𝑠ℎ𝑠 5400
100 12

5. Amooti deposited Shs 15,000 in a bank, which offers interest rate of 2½ % per year for one
year. Find the interest.

I = PRT
5
= 15000 x 𝑥 1 = 𝑠ℎ𝑠. 375
200

6. Kintu put Shs 40,000 in Stanbic Bank. If the interest rate was 10% per year, how much simple

Sponsored by The Science Foundation College +256 753 802709

 interest did he get after 9 months?
10 9
I = PRT = 40000 x 𝑥 = 𝑠ℎ𝑠 3000
100 12

7. Odama deposited Sh 120,000 in bank, which gives a simple interest rate of 4% per year. Find
his interest after 3 months.

I = PRT
4 3
= 120,000 𝑥 𝑥 = shs 1200
100 12

8. Mary borrowed sh 100,000/= from her club to be returned in 3 months at a simple interest rate
of 5% per month. Find out the total amount of money Mary returned to the club after 3
months.
Money returned = P + I

= P + PRT
5
= 100000 + 100000 x 𝑥3
100

= 100000 + 15000

= 115000/=

9. Olinde lends sh 300,000 to Mugisha at an interest rate of 5% per year for 4 months
c) Find the interest gained by Olinde.
I = PRT
5 4
= 300000 x 𝑥 = 5000
100 12

d) How much money altogether did Mugisha pay back?

Money paid back = principal + interest

= 300000 + 5000

= 305,000

Sponsored by The Science Foundation College +256 753 802709

 10. (a) Okello's wage was increased by 10% to Shs 77,000 per month. Find his old salary.

Let the old wage be x

(100% + 10%) of x = 77000

110
𝑥 = 7700
100
100
x = 77000 x = 70,000
110

therefore, Okello’s old salary was 70,000/=

(b)If his new wage of Shs 77,000 was decreased by 5%, find his final wage.
His new salary = (100% - 5%) of 77000
95
= 𝑥 77000 = 73150
100

Okello’s new salary will be sh. 73150

11. A farmer banked Shs. 3 million in Nile bank. If he banked 20,000-shilling notes, how many notes did
he bank?
𝑡𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 3000000
Number of notes = = = 150
𝑎𝑚𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑛𝑜𝑡𝑒 20000

12. A bank gives a simple interest rate of 12% per annum. What will be the interest on
sh.400,000 banked for 9 months?
12 9
I = P x R x T = 400000 x 𝑥 = shs. 36,000
100 12

13. A trader got a simple interest of shs 18,000 after depositing shs90,000 in a bank at an interest of 10%
per annum. For, how long was his money in the bank?
I=PxRxT
𝟏𝟎
90000 x 𝒙 𝑻 = 18000
𝟏𝟎𝟎

T = 2 years

14. David got a loan of shs. 500,000 from the bank at a simple interest rate of 20% per annum. What was
the interest on the loan after a period of 9 months?
I=PxRxT

Sponsored by The Science Foundation College +256 753 802709

 P = 500000
R = 20%
9
T = 9months = 𝑦𝑒𝑎𝑟
12
9 20
I = 500000 𝑥 𝑥 = 75, 000
12 100

15. A farmer banked shs 26,000 for 4 months at a simple interest rate of 8% per year, find his interest.
8 4
Interest = P x T x R = 26000 𝑥 𝑥 = 3360
100 12

16. David deposited money in a bank which offer a simple interest rate of 2 ½ % per year. After
9 months, his account had an amount of 163000. Calculate the money David deposited in
the bank. (5marks)
Let the principle be P

Principal (P) + interest (P X R X T) = 163000

5 9
P+Px 𝑥 = 16300
200 12

P = 16000

Money deposited in the bank = 16000

17. Hajati bought 120 shares from a village SACCO at a simple interest rate of 30% per year. Each
share cost sh. 3, 000.
(c) Find her total interest after 3 ½ years. (03marks0
Total money for the shares = 120 x 3000 = 360000 /=
30 7
I = PRT = 360000 x 𝑥 = 378000 /=
100 2

(d) Calculate the total amount of money Hajati has in the SACCO after 3 ½ years
Money in the SACCO = P + I
= 360000 + 378000
= 738000

Sponsored by The Science Foundation College +256 753 802709

Sponsored by The Science Foundation College +256 753 802709