Commercial arithmetic II: Simple interest
Answer Text: COMMERCIAL ARITHMETIC IISimple interestInterest is the money charged for the use of borrowed money for a specific period of time. If money is borrowed or deposited it earns interest, Principle is the sum of money borrowed or deposited P, Rate is the ratio of interest earned in a given period of time to the principle. The rate is expressed as a percentage of the principal per annum (P.A).When interest is calculated using only the initial principal at a given rate and time, it is called simple interest (I). Simple interest formulae Simple interest = principal x rate x time/100Example 1 Franny invests ksh 16,000 in a savings account. She earns a simple interest rate of 14%, paid annually on her investment. She intends to hold the investment for #1 1/2# years. Determine the future value of the investment at maturity. Example 2Calculate the rate of interest if sh 4500 earns sh 500 after #1 1/2 #years.
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