11

Business
Mathematics
Quarter 1 – Module 9:
Solving Problems on Simple
Interest

1
 What I Know 7. What is the transaction involving a transfer of money to
another party for safekeeping?
a. loan b. deposit c. principal amount d.
Before we start our lesson, let us check your amortization
prior knowledge about solving problems
involving simple interest. 8. What is the process of diminishing the amount or total in
regular lesser amounts?
Direction: Encircle the letter of the correct answer. a. mortgage b. deposit c. amortization d.
loan
1. What is the product when the principal amount is
multiplied by the interest rate and the number of years? 9. What is defined as money (or property) given with the
a. compound interest c. diminishing interest promise that it will be paid back in the future, usually
b. simple interest d. complicated interest with interest?
a. deposit b. collateral c. loan d.
2. What is the amount due and payable to the holder of a promissory note
financial obligation as of the maturity date of the
obligation? 10. What is described as professional support to aid
a. principal amount c. mortgage customers?
b. monthly amortization d. maturity value a. utilities b. foundation c. services d. product

3. How many days are used when ordinary interest is 11. Thomas wants to start an online business. How much
applied? interest will he have to pay if he will borrow an amount
a. 360 b. 362 c. 364 d. 365 of ₱50,000.00 from a bank payable for two years at a
simple interest rate of 6.5% per year?
4. In computing for the interest, which among the following a. ₱5,000.00 b. ₱5,500.00 c. ₱6,000.00
variables is NOT included? d. ₱6,500.00
a. principal amount c. paid loan
b. rate d. time 12. Timothy deposited P150,000.00 in a bank. What is the
maturity value of Timothy’s money in three years if the
5. What is defined as the charge for the privilege of bank offers a simple interest of 1% per annum?
borrowing money? a. ₱150,500.00 b. ₱152,500.00 c. ₱154,500.00 d.
a. interest b. withdrawal c. deposit d. credit ₱155,500.00

6. What is described as a loan, secured by a collateral, that 13. Stephen wanted to purchase a car. The bank offered him
the borrower is obliged to pay at a specific term? a car loan amounting to ₱1,200,000.00 payable within 4
a. amortization b. loan c. deposit d. years with a simple interest rate of 8.2% per annum.
mortgage What is the maturity value of the loan?
a. ₱1,592,500.00 c. ₱1,594,700.00
2
 b. ₱1,593,600.00 d. ₱1,595,800.00
From the previous modules, you have learned about percent,
14. If a house is sold for P3,000,000.00 and the bank mark-up, markdown, mark-on, and solved problems involving
requires 20% down payment, what is the amount of buying and selling. Let us see what have you learned from the
mortgage? previous topics.
a. ₱2,400,000.00 c. ₱2,600,000.00
Activity 1: Let’s Play Detective!
b. ₱2,500,000.00 d. ₱2,700,000.00
Direction: Decode the scrambled words through Atbash Cipher.
15. Using exact interest, what is the amount due (maturity Tell something about the word you decoded. Refer to the key for
value) if ₱20,000.00 is invested at 9% simple interest for guidance. Do your best and good luck!
150 days?
a. ₱20,639.73 b. ₱20,739.73 c. ₱20,839.73 d.
₱20,939.73

Lesson Solving Problems on

Simple
9 Interest
In this module, you will be taught on how to solve problems
involving simple interest. Let us now begin!

What’s In

3
 1. A 2-year loan of ₱50,000.00 is made with a simple interest
rate of 4% per year. Find the interest earned.

I = _______ P = _______ r = _______ t = _______

2. A total of ₱120,000.00 is invested at a simple interest rate of

6% monthly for 4 months. How much interest is earned on this
investment?

I = _______ P = _______ r = _______ t = _______

SCRAMBLED WORD DECODED WORD 3. An investor gained an amount of ₱11,200.00 in 2 years after
YFHRMVHH BUSINESS investing his money at an annual simple interest rate of 7%.
IZGV How much money did he invest?
NZIPFK
KVIXVMG I = _______ P = _______ r = _______ t = _______
WRHXLFMGH
YFBRMT ZMW HVOORMT 4. How long will 1 million pesos earn a simple interest of
₱100,000 at 1% per annum?

I = _______ P = _______ r = _______ t = _______

What’s New 5. If an entrepreneur applies for a loan amounting to

P500,000.00 in a bank, the simple interest of which is ₱157,500
for 3 years, what interest rate is being charged?
How do you find the activity? Are not you excited to learn new
things? They say that knowledge is power. The more knowledge I = _______ P = _______ r = _______ t = _______
you gain the powerful you get.
Do not you agree? Try this activity and aim to get further
enhance your knowledge. Let us go!

Activity 2: Who Am I?

Direction: Identify the I (interest), P (principal amount), r (rate),

and t (time) in every problem involving simple interest. Write
your answers on the spaces provided.
4
 What is It Rate is the amount of a charge or payment (usually in percent)
with reference to some basis of calculation.

Time can be defined as the duration or term used in solving

There, you can now identify different variables simple interest.
involving simple interest. With this, it is now
simpler to solve problems involving interest wherever it is At this point, let us deepen your understanding on how to solve
applied. Just remember the key words and it will come easily. problems involving interest. Let us have the following
examples:
Our main goal in this module is for you to solve problems
involving simple interest. But before we discuss how to solve A. David started his small business by borrowing an amount of
such problems, let us define first the following terms: ₱20,000.00 payable for 3 years as a simple interest rate of 8%
annually. How much is the interest that he has to pay?
A deposit is a financial term that means money is held at a
bank. It is a transaction involving a transfer of money to Simple Interest (I):
another party for safekeeping. 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎� × 𝑟𝑎𝑡𝑒 × 𝑡𝑖𝑚𝑒

A loan is a money (or property) given with the promise that it � = 𝑷𝒓�
will be paid back in the future, usually with interest. Given:
� =?
Services are professional support to aid customers. This is 𝑷 = ₱20,000.00
sometimes described as the intangible product. � = 3 𝑦𝑒𝑎𝑟𝑠
𝒓 = 8%
Utilities refer to the basic amenities like electricity and water.
Solution:
� = 𝑷𝒓�
Mortgage is a loan, secured by a collateral, that the borrower � = (₱20,000) (0.08) (3)
is obliged to pay at specified terms. � = ₱�, 𝟖𝟎𝟎. 𝟎𝟎

Amortization is the process of reducing a cost or total in

regular small amounts. B. Margaret was given ₱200,000.00 by her parents and she
deposited it in a bank. Find the maturity value of Margaret’s
money in five years if the bank offers a simple interest of 1%
Interest is described as the money paid regularly at a per annum.
particular rate for the use of money lent, or for delaying the
repayment of a debt.
Maturity Value (F):
Principal is the original amount invested or borrowed.
� = 𝑃 (1 + 𝑟𝑡)
5
 �=𝑃+𝐼 Given:
�=? 𝑷 = ₱200,000.00 𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 = 0.25 × ₱4,000,000
𝒓 = 1% � = 5 𝑦𝑒𝑎𝑟𝑠 = ₱�, 𝟎𝟎𝟎, 𝟎𝟎𝟎. 𝟎𝟎

𝑀𝑜𝑟𝑡𝑔𝑎𝑔𝑒 = ₱4,000,000 – ₱1,000,000

Solution:
= ₱�, 𝟎𝟎𝟎, 𝟎𝟎𝟎. 𝟎𝟎
� = 𝑷 (� + 𝒓�)
� = ₱200,000 [1 + (0.01) (5)] E. Using ordinary interest, what is the amount due (maturity
� = ₱𝟐�𝟎, 𝟎𝟎𝟎. 𝟎𝟎 value) on ₱40,000.00 invested at 10% simple interest for 6
months. Assume that 1 month is equal to 30 days.
Edward borrowed ₱2,200,000.00 payable for 5 years to
purchase a pick-up truck. A bank offered him a car loan with
For Ordinary Interest: I = P × (r/360) × t
simple interest rate of 6.75% per year. What is the maturity
value of the loan?
Given:
I=? P = ₱40,000
Given:
�=? 𝑷 = ₱2,200,000.00
r = 10% t = 6months or 180 days
𝒓 = 6.5% � = 5 𝑦𝑒𝑎𝑟𝑠
Solution:
Solution:
� = 𝑷 (� + 𝒓�)
� = ₱40,000 (0.1/360) (180)
� = ₱2,200,000 [1 + (0.065)(5)]
= ₱𝟐, 𝟎𝟎𝟎. 𝟎𝟎
� = ₱𝟐, 𝟗��, 𝟎𝟎𝟎. 𝟎𝟎
If a house and lot is sold for ₱4,000,000.00 and the bank
�=𝑃+𝐼
requires 25% down payment, find the amount of mortgage.
= ₱40,000 + ₱2,000
= ₱�𝟐, 𝟎𝟎𝟎. 𝟎𝟎
Mortgage:

Down payment = down payment rate × cash price

Amount of the loan (mortgage) = cash price −
down payment

Given: down payment = ? cash price =

₱4,000,000.00
mortgage = ? down payment rate =
25%

Solution:
6
 3. When investing at an annual interest rate of 7%, the
earned ₱11,200 of simple interest in two years. How
much money was originally invested?

What’s More Formula: P = I/rt

OK! The activities challenge us mentally but you have to admit

that it is pretty remarkable how things work in business world.
Right now, you have acquired a lot of skills on how to solve 4. If an entrepreneur applies for a loan amounting to
problems in different situations. So, try to solve the following ₱500,000 in a bank, the simple interest of which is P
problems in the next activity. 157,500 for 3 years, what interest rate is being charged?

Activity 3: Using the Correct Formula Formula: r = I/Pt

Direction: In this activity, you will be given the correct formula

to use in order to solve the problem.

1. John purchases an SUV worth ₱1,200,000, the bank

requires a minimum amount of 20% down payment. How 5. Find the exact interest on a loan of ₱59,580 at 8.5%
much is the down payment? annually for 40 days.

Formula: DP = rate × cash price Formula: I = P × (r/365) × t

2. A bank offers 0.25% annual simple interest rate for a

particular deposit. How much interest will be earned if 1
million pesos will be deposited in his savings account for
1 year?

Formula: I = Prt

7
 ________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________

2. How can you identify the formula to be used in solving

problems involving simple interest? You can cite keywords if
you want.
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________

What I Have Learned

Let us check what have you learned. Do this activity and

answer, and be one of the elites!

Activity 4: Give Me Your Idea

Direction: Write your ideas about the lesson you have just
taken. Write your answers on the space provided.

1. What is the difference between mortgage from amortization,

services from utilities, and deposits from loans?
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
8
 What I Can Do

Answer: _________________
Now, here is another activity that will enable you to apply
3. Alain started a school bus business using a van worth ₱3.2M.
the lesson on real life situations.
He got a car from a bank with a simple interest at a rate of 5%
per year. What is the maturity value of the loan after 5 years?
Activity 5: What’s the Problem?
Solution:
Direction: Solve the following problems involving interest using
the right formula to get the correct answer. List first the given
from the problem and show your solutions on the space
provided and write your final answer on the blank.

1. Kevin borrowed an amount of ₱50,000.00 from the bank.

How much interest will he have to be pay on the loan for 3
years at a simple interest rate of
7.5% per year?
Answer: _________________
Solution:
4. As newlyweds, Mr. And Mrs. Cruz wanted to purchase their
dream house worth ₱5,000,000.00 and the bank requires 15%
down payment, find the amount of mortgage.

Solution:

Answer: _________________

2. Bruce has been saving his lunch money and it reached an

amount of ₱30,000.00 To secure his money and gain a small
interest, he deposited it in the bank. How much is Bruce’s
money after ten years if the bank offers a simple interest of Answer: _________________
1.5% per annum.
5. Using ordinary interest, what is the future value on a
Solution: ₱125,000.00 invested at 9% simple interest for 5 months.
Assume that 1 month is equal to 30 days.
9
 borrowing money?
Solution: a. interest b. withdrawal c. deposit d.
credit

5. What is the amount due and payable to the holder of a

financial obligation as of the maturity date of the
obligation?
Answer: _________________ a. principal amount c. mortgage
b. monthly amortization d. maturity value

6. In computing for the interest, which among these

Assessment variables is not included?
a. principal amount b. rate c. paid loan d.
time

7. What is described as a loan, secured by a collateral, that

Great Job! Let us test what you have learned from the very start the borrower is obliged to pay at specified terms?
of our lesson. a. amortization b. loan c. deposit
d. mortgage
Direction: Encircle the letter of the correct answer.
8. It is defined as a financial term that means money held
1. What is described as the professional support rendered
at a bank. Also is a transaction involving a transfer of
to aid customers?
money to another party for safe keeping.
a. utilities b. foundation c. services d.
a. loan b. deposit c. principal amount
product
d. amortization
2. How many days are used when ordinary interest is
9. What is the process of diminishing the amount or total in
applied?
regular lesser amounts?
a. 360 b. 362 c. 364 d. 365
a. mortgage b. deposit c. amortization d.
loan
3. What is result when the principal amount is multiplied by
the interest rate and the number of years?
10.What is defined as the money (or property) given with
a. compound interest c. diminishing
the promise that it will be paid back in the future, usually
interest
with interest?
b. simple interest d. complicated
a. deposit b. collateral c. loan d.
interest
promissory note
4. What is defined as the charge for the privilege of
11.Mr. Gomez wanted to start an online business on a loan
10
 of P 1000,000.00. How much interest will he have to be
pay on a loan for two years at a simple interest rate of
6.5% per year?
a. ₱10,000.00 b. ₱11,000.00 c. ₱12,000.00
d. ₱13,000.00

12.Miguel Palermo wanted to purchase a car. The bank

offered him a car loan amounting to ₱1,500,000 payable
for 5 years at a simple interest rate of 8.2% per year.
What is the maturity value of the loan?
a. ₱2,292,500.00 c. ₱2,194,700.00
b. ₱2,115,000.00 d. ₱2,195,800.00

13.Bugoy deposited P300,000.00 in the bank. What is the

maturity value of Bugoy’s money in three years if the
bank offers a simple interest of 1% per annum?
a. ₱309,000.00 c. ₱314,500.00
b. ₱312,500.00 d. ₱315,500.00

14.If a house is sold for P3,000,000.00 and the bank requires

10% down payment, what is the amount of the
mortgage?
a. ₱2,500,000.00 c. ₱2,700,000.00
b. ₱2,600,000.00 d. ₱2,800,000.00

15.Using exact interest, what is the amount due (maturity

value) on P40,000.00 invested at 9% simple interest for
150 days?
a. ₱41,639.73 b. ₱41,739.73 c. ₱41,479.45 d.
₱41,939.73

11
 Additional Activities

Wow! You did a very good job! Solving problems involving

Simple Interest may be a little complicated but it is used in real
life situations. Enumerate real-life situations wherein solving
Simple Interest can be applied.

1. _____________________________________

2. _____________________________________

3. _____________________________________

4. _____________________________________

5. _____________________________________

12