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Simple Interest

The document provides examples of calculating simple and compound interest for various scenarios involving money deposits, loans, and investments over different periods of time. It gives the principal amount, interest rate, time period, and calculates the interest earned, total interest, and future value under both simple and compound interest assumptions. Examples include a ₱18,000 investment earning 6% over 2 years, an ₱800,000 car loan at 15% for 5 years, a ₱25,000 special savings account at 2% for 8 months, a ₱7,000 loan charged 11% over 3 years, and a ₱5,000 time deposit earning 1.5% for 6 months. Formulas and

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john gabriel bondoy
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658 views

Simple Interest

The document provides examples of calculating simple and compound interest for various scenarios involving money deposits, loans, and investments over different periods of time. It gives the principal amount, interest rate, time period, and calculates the interest earned, total interest, and future value under both simple and compound interest assumptions. Examples include a ₱18,000 investment earning 6% over 2 years, an ₱800,000 car loan at 15% for 5 years, a ₱25,000 special savings account at 2% for 8 months, a ₱7,000 loan charged 11% over 3 years, and a ₱5,000 time deposit earning 1.5% for 6 months. Formulas and

Uploaded by

john gabriel bondoy
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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John Gabriel Bondoy

AC-101

Direction: Compute the annual interest, total interest, and amount to be received or paid
at the end of the term for each scenario below using a simple interest assumption and
compound interest assumption.

1.Your mother invested ₱18,000 in government securities that yield 6% annually


for two years.
Answer:
Simple interest
Year Principal Rate Time Interest Cumulative Total
interest
1 18,000 6% 1 1,080 1,080 19,080
2 18,000 6% 1 1,080 2,160 20,160

Compound interest
Year Principal Rate Time Interest Cumulative Total
interest
1 18,000 6% 1 1,080 1,080 19,080
2 19,080 6% 1 1,144.80 2,224.80 20,224.80
2.Your father obtained a car loan for ₱800,000 with an annual rate of 15% for 5
years.

Simple interest
Year Principal Rate Time Interest Cumulative Total
interest
1 800,000 15% 1 120,000 120,000 920,000
2 800,000 15% 1 120,000 240,000 1,040,000
3 800,000 15% 1 120,000 360,000 1,160,000
4 800,000 15% 1 120,000 480,000 1,280,000
5 800,000 15% 1 120,000 600,000 1,400,000

Compound interest
Year Principal Rate Time Interest Cumulative Total
interest
1 800,000 15% 1 120,000 120,000 920,000
2 920,000 15% 1 138,000 258,000 1,058,000
3 1,058,000 15% 1 158,700 416,700 1,216,700
4 1,216,700 15% 1 182,505 599,205 1,399,205
5 1,399,205 15% 1 209,880.75 809,085,7 1,609,085,75
5

3.Your sister placed her graduation gifts amounting to ₱25,000 in a special


savings account that provides an interest of 2% for 8 months.
Answer:
Simple interest:
Annual interest – (25,000) 0.02 = ₱500.00
Total interest – 25,000 x 0.02 x 8/12 = ₱333.33
Future value – Principal + total interest = ₱25,333.33

Compound interest:
Total interest – ₱332.23
Future value – ₱25,332.23
4.Your brother borrowed from your neighbor ₱7,000 to buy a new mobile phone. The
neighbor charged 11% for the borrowed amount payable after three years.
Answer:
Simple interest
Year Principal Rate Time Interest Cumulative Total
interest
1 7,000 11% 1 770 770 7,770
2 7,000 11% 1 770 1,540 8,540
3 7,000 11% 1 770 2,310 9,310

Compound interest
Year Principal Rate Time Interest Cumulativ Total
e interest
1 7,000 11% 1 770 770 7,770
2 7,770 11% 1 854.70 1,624.70 8,624.70
3 8,624.70 11% 1 948.717 2,573.42 9,573,42

5.You deposited ₱5,000 from the savings of your daily allowance in a time deposit
account with your savings bank at a rate of 1.5% per annum. This will mature in 6
months.
Simple interest:
Annual interest – ₱75.00
Total interest – ₱37.50
Future Value – ₱5,037.50

Compound interest:
Total interest – ₱37.36
Future value – ₱5,037.36

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