Step 2: Write down the formula
A=P(1 +in)Step 3: Substitute the values
A= 1000 (1 +0,073)
= 1210
Step 4: Write the final answer
At the end of 3 years, Carine will have R 1210 in her bank account.
Worked example 2: Calculating interest on a loan
QUESTION
Sarah borrows R 5000 from her neighbour at an agreed simple interest rate of 12,5% p.a. She will pay back
the loan in one lump sum at the end of 2 years. How much will she have to pay her neighbour?
SOLUTION
Step 1: Write down the known variables
P= 5000
i=0,125
n= 2Step 2: Write down the formula
A=P(1 +in)Step 3: Substitute the values
A= 5000 (1 +0,1252)
= 6250
Step 4: Write the final answer
At the end of 2 years, Sarah will pay her neighbour R 6250.
332 9.2. Simple interest