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    Business Math Module 7

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    CJ WATTPAD
    This document discusses simple interest and how to calculate it using the formula I=PRT, where I is interest, P is principal, R is the interest rate, and T is time. Simple interest applies to short-term loans of less than 1 year where interest accrues but does not compound. Several word problems are provided as examples of how to use the simple interest formula to calculate interest for various loan scenarios.

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    Business Math Module 7

    Uploaded by

    CJ WATTPAD
    443 views5 pages
    This document discusses simple interest and how to calculate it using the formula I=PRT, where I is interest, P is principal, R is the interest rate, and T is time. Simple interest applies to short-term loans of less than 1 year where interest accrues but does not compound. Several word problems are provided as examples of how to use the simple interest formula to calculate interest for various loan scenarios.

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    This document discusses simple interest and how to calculate it using the formula I=PRT, where I is interest, P is principal, R is the interest rate, and T is time. Simple interest applies to short-term loans of less than 1 year where interest accrues but does not compound. Several word problems are provided as examples of how to use the simple interest formula to calculate interest for various loan scenarios.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    443 views5 pages

    Business Math Module 7

    Uploaded by

    CJ WATTPAD
    This document discusses simple interest and how to calculate it using the formula I=PRT, where I is interest, P is principal, R is the interest rate, and T is time. Simple interest applies to short-term loans of less than 1 year where interest accrues but does not compound. Several word problems are provided as examples of how to use the simple interest formula to calculate interest for various loan scenarios.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Business Math Module – Finals 3

    Simple Interest
    Interest is the percent of the amount of credit extended. In loans, it may be
    treated as an expense on the part of the borrower or debtor and may be viewed
    as an income on the part of the lender or creditor. Short-term and long-term
    credits or transactions are commonly offered by banks or any credit companies.
    Short-credits are credits good for one day or up to one year, while long term
    credits are those for longer than one year.

    - typically expressed as annual percentage rate (APR)

    The world of finance calculates interest in two different ways:


    1. Simple Interest
    2. Compound Interest

    Simple Interest
    • A simple interest system primarily applies to short-term financial transactions, with a time frame
    of less than one year. In this system, which is explored in this chapter, interest accrues but does
    not compound.

    Compound Interest
    • A compound interest system primarily applies to long-term financial transactions, with a time
    frame of one year or more. In this system, which the next chapter explores, interest accrues and
    compounds upon previously earned interest.
    To compute the simple interest, we use

    • I = PRT.

    • I = Interest, P= Principal, R= Rate, T= Time

    • Principal

    • refers to the original sum of money borrowed in a loan or put into an


    investment.

    Word problem

    On October, Carl borrowed an amount of ₱200,000 from PQR Cooperative at an interest rate of 2% to
    finance his house renovation. How much is the interest if his due date is October of the following year?

    Given

    P = P 200,000

    R= 2% or .02

    T= 1

    Word Problem

    • On December 2019 , Cacarot borrowed an amount of ₱350,000 from ABC Bank an interest rate
    of 5% to finance his capital. How much is the interest if his due date is December of the 2021?

    • I = 350,000 x .05 x 2

    • I = 35,000

    Word problem
    • Compute for the interest on a credit purchase of ₱30,000 at 8% for 10 and 15 months.

    • Scenario One:

    • P = 30,000

    • R = .08

    • T = 10 (Given months) / 12 (one year in months)

    • Scenario Two:

    • P = 30,000

    • R = .08

    • T = 15 (Given months) / 12 (one year in months)

    Computation:

    Scenario one:

    Scenario Two:

    Activity:

    1. Compute for the interest on a loan of ₱250,000 at 12% for 14 and 23 months.
    2. Carl borrowed an amount of ₱152,000 from BDO at an interest rate of 13.5% to finance his
    Business Expansion. How much is the interest if his loan is payable for 3years?
    3. The ad informs the borrower that the company only charges 18% annual interest. How much is
    the interest if she is planning to settle the debt within 8 months.
    4. Mr. Simone deposits P80,000 in one simple interest account and payable within 6 years, how
    much is the interest?

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