# Simple Interest

Borrowing P over t periods at simple interest r means you have to pay Pr interest each period before reimbursing P. In total, you have to pay back: $$P \left( 1 + rt \right)$$

## Example

You borrowed 10000 at a simple rate of 5% for 3 years.

• Every year, you have to pay \$10000 \times 5\% = \$500 interest.
• The last year you also have to give back \\$10000

In total, you have to give back: $$10000 \left( 1 + 0.05 \times 3 \right) = 1150$$