MAYAMOT NATIONAL HIGH SCHOOL

SENIOR HIGH SCHOOL

MR. RHONNIEL a. aGBAYANI

teacher
 DEFINITION OF TERMS

SIMPLE INTEREST - Interest that is computed

on the principal. The interest remains
constant throughout the term.

LENDER OR CREDITOR - Person ( or

institution) who invests the money or
makes the funds available
 DEFINITION OF TERMS

BORROW OR DEBTOR- A person ( or

institution) who owes the money or avails
of the funds from the lender.

ORIGIN OR LOAN DATE- The date on which

money is received by the borrower
 DEFINITION OF TERMS

REPAYMENT DATE OR MATURITY DATE- Date

on which the money borrowed or loan is
to be completely repaid.

TIME OR TERM (t)- Amount of time in years

the money is borrowed or invested; length
of time between the origin and maturity
dates.
 DEFINITION OF TERMS

PRINCIPAL (P)- Amount of money

borrowed or invested on the origin date.

RATE (r)- annual rate, usually in percent,

charged by the lender, or rate of increase
of the investment.
 DEFINITION OF TERMS

INTEREST (I)- Amount paid or earned for

the use of money.

MATURITY VALUE OF FUTURE VALUE (F)-

amount after t years that the lender
receives from the borrower on the maturity
date.
 FORMULAS
I-Simple Interest I=Prt
P-Principal
F=P+I or F=P+Prt or F=P (1+rt )
r-Rate of interest or simply rate
I
t-Time ( in year ) P= or P=F-I
rt
F-Future Value ( or maturity value ) I
t=
Pr
number of months
t=
12
I
r=
Pt
Example 1: Complete the table below by finding the
unknown

Principal (P) Rate (r) Time (t) Interest

(a) 2.5% 4 years 1,500
36,000 (b) 1.5 years 4,860
250,000 0.5% (c) 275
500,000 12.5% 10 (d)
Example 1: Complete the table below by finding the unknown
Principal (P) Rate (r) Time (t) Interest d. I = ?
(a) 2.5% 4 years 1,500 Given : P = 500000
36,000 (b) 1.5 years 4,860 r = 12.5% or 0.125
250,000 0.5% (c) 275
t = 10
500,000 12.5% 10 (d)
I = Pr t
a. P = ? b. r = ? c. t = ? = 500000 ( 0.125 )(10 )
Given : r = 2.5% or 0.025 Given : P = 36, 000 Given : P = 250, 000 I = 625, 000
t=4 t = 1.5 r = 0.5% or 0.005
I = 1,500 I = 4,860 I = 275
I I I
P= r= t=
rt Pt Pr
1500 4860 275
= = =
( 0.025)( 4 ) ( 36000 )(1.5) ( 250000 )( 0.005)
P = 15, 000 P = 0.09 or 9% P = 0.22 years
Example 1: Complete the table below by finding the unknown

Principal Rate Time

Interest (i) Future Value (F) F=(P+I)
(P) (r) (t)
F = 15, 000 + 1500
15,000 2.5% 4 1,500
= 16,500
F = 36, 000 + 4, 860
36,000 9% 1.5 4,860
= 40, 860
F = 250, 000 + 275
250,000 0.5% 0.22 275
= 250, 275
F = 500, 000 + 625, 000
500,000 12.5% 10 625,000 = 1,125, 000
Example 2: A bank offers 0.25% annual simple interest rate for a
particular deposit. How much interest will be earned if 1 million
pesos is deposited in this savings account for 1 year?

Given :
P = 1, 000, 000 , r = 0.25% or 0.0025, t = 1 year
Find : I
I = Prt
= (1, 000, 000 )( 0.0025 )(1)
I = Php.2,500
Example 3: How much interest is charged when P50,000 is
borrowed for 9 months at an annual simple interest rate of 10%?

Given :
P = 50, 000 , r = 10% or 0.10, t = 9 months
9
Find : I t= year
12
I = Prt t = 0.75 year
9
= ( 50, 000 )( 0.10 )  
 12 
I = Php.3750
Example 4: When invested at an annual interest rate of 7%, the
amount earned P11,200 of simple interest in two years. How much
money was originally invested?

Given :
I = 11, 200 , r = 7% or 0.07, t = 2 years
Find : P
I
P= P = Php. 80, 000
rt
11, 200
=
( 0.07 )( 2 )
Example 5: Find the present value of P86,000 at 8% simple interest
for 3 years?

Given :
F = 86, 000 , r = 8% or 0.08, t = 3 years
Find : P
86, 000
F = P (1 + rt ) P=
1 + ( 0.08 )( 3)
F
P= P = Php.69,354.84
1 + rt
Example 6: If an entrepreneur applies for loan amounting to
P500,000 in a bank, the simple interest of which is Php. 157,500 for 3
years, what interest rate is being charged?

Given :
P = Php.500, 000 , I = 157,500, t = 3 years
Find : r
I
r= r = 0.105
Pt
r = 10.5%
157,500
=
500, 000 ( 3)
Example 7: How long will a principal earn an interest equal to half
of it at 5% simple interest?

Given :
1
P= , r = 5% or 0.05, I = P or 0.5P
2
Find : t
I 0.5 P
t= =
0.05 P
t = 10
Pr
0.5 P 0.5
= =
P ( 0.05 ) 0.05
Example 8: Find the maturity value if 1 million pesos is deposited in
a bank at annual simple interest rate of 0.25% after 5 years

Given :
P = 1, 000, 000 , r = 0.25% or 0.0025, t =5
Find : F
F = P (1 + rt )
F = 1, 000, 000 1 + ( 0.0025 )( 5 )  F = 1, 012,500
= 1, 000, 000 (1 + 0.0125 ) The future or maturity value
= 1, 000, 000 (1.0125 ) after 5 years is Php. 1,012,500
 HOMEWORK
A couple with three children are peacefully living in a
barangay near the City proper. The husband is a government
employee while the wife is a rug sewer. They always remind
their children about this: “Bilhin ang kailangan at huwag
kailanganin ang hindi kayang bilhin”. Because of this
teaching, the children open a joint account to certain
cooperative to have a better investment. The total amount they
earned in selling rugs , was put in their account in the
cooperative to help their parents. Their total earnings
amounting to Php. 5,000.00 will earn an interest rate of 7.5%
per year. Help them to compute for the simple interest earned
and maturity value, if their money will be invested in 3 years.
MAYAMOT NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

MR. RHONNIEL a. aGBAYANI

teacher
 DEFINITION OF TERMS

SIMPLE INTEREST – Interest that is computed

on the principal and then added to it.

COMPOUND INTEREST- Interest that is

computed on the principal and also on
the accumulated past interest.
Example 1: Suppose you won 10,000 pesos and you plan
to invest it for 5 years. A cooperative group offers 2%
simple interest rate per year. A bank offers 2%
compounded annually. Which will you choose and why?

Coop − group ( Simple Interest ) Bank ( Compound Interest )

10, 000 ( 0.02 )(1) = 200 → 10, 200 10, 000 ( 0.02 )(1) = 200 → 10, 200
10, 000 ( 0.02 )( 2 ) = 400 → 10, 400 10, 200 ( 0.02 )(1) = 204 → 10, 404
10, 000 ( 0.02 )( 3) = 600 → 10, 600 10, 404 ( 0.02 )(1) = 208.08 → 10, 612.08
10, 000 ( 0.02 )( 4 ) = 800 → 10,800 10, 612 ( 0.02 )(1) = 212.24 → 10,824.32
10, 000 ( 0.02 )( 5 ) = 1, 000 → 11, 000 10,824.32 ( 0.02 )(1) = 216.49 → 11, 040.81
Due to Covid-19 pandemic Miss Dada a female
resident of Barangay May Pagkakaisa somewhere
in Quezon Province thinks of a business that can
provide for her needs as well as the need of her
neighbors so she can be of help even in this trying
time.
Having no money at hand she decided to borrow
from a bank as the start-up capital of Php.
50,000.00 at 7% interest rate compounded annually
and payable within 5 years. Compute for the
interest yield.
 Amount at Amount at the
Interes Compound Interest
TIME the start of end of year t
t Rate
(t) the year t ( r )
Solution Answer (Maturity Value)

50, 000 + 3,500 =

1 50, 000 7% ( 50, 000 )( 0.07 )(1) 3,500
53,500
2 53,500 7% ( 53,500 )( 0.07 )(1) 3, 745 53,500 + 3, 745 =
57, 245
3 57, 245 7% ( 57, 245)( 0.07 )(1) 4, 007.15 57, 245 + 4, 007.15 =
61, 252.15
4 61, 252.15 7% ( 61, 252.15)( 0.07 )(1) 4, 287.65 61, 252.15 + 4, 287.65
= 65,539.80
65,539.80 + 4,587.79
5 65,539.80 7% ( 66, 079.80 )( 0.07 )(1) 4,587.79
= 70,127.59
 ACTIVITY 1.1

1. If P= Php. 4, 500, r= 1.25% and t= 5

years, find the simple interest.

a. What formula will be used?

b. How are you going to express the rate
in percent?
c. How much is simple interest?
 ACTIVITY 1.1

2. If P= Php. 5, 000, r= 2% and t= 8 months,

find the maturity value.

a. What formula will be used?

b. How are you going to express the
time in years?
c. How much is maturity value?
 ACTIVITY 1.2

Find the value of the required components

in each item.

1. Find the simple interest and maturity

value if P= Php. 13,000, r= 0.8% and t=
2.5 years.
2. If Is= Php. 625, r=2% and t=3 years, find
the present value
 ACTIVITY 1.3

Complete the table below by finding the

unknown.
MATURITY
PRINCIPAL RATE TIME INTEREST
VALUE
PHP. 45,000 2% 2.5 YEARS

1.2% 4 YEARS PHP. 4,560

PHP. PHP.
3%
105,000 114,450
MAYAMOT NATIONAL HIGH SCHOOL
SENIOR HIGH SCHOOL

MR. RHONNIEL a. aGBAYANI

teacher
 FORMULAS
Ic -Compound Interest
F=P (1 + r )
t
P-Principal or present value
r-Rate of interest or simply rate Ic = F − P
t-Time ( in year )
F
or P = F (1 + r )
−t
F-Future Value ( or maturity value ) P=
(1 + r )
t
Example 1: Given: P= 18,500 pesos, r=3% and compounded
annually for 3 years, find the maturity value (F) and the
compounded Interest

Given :
P = 18,500 , r = 3% or 0.03, t = 3 year
Find : F and I C
Example 1: Given: F= 15,000, r=2% compounded annually for 4
years, find the present value (P).

Given :
F = 15, 000 , r = 2% or 0.02, t = 4 years
Find : F and I C
 COMPOUND MORE THAN ONCE A YEAR
FREQUENCY OF CONVERSION (m)- number of conversion period in
on year.
Example : Annually (1), Semi-Annually (2), Quarterly (4), Monthly
(12), and Daily (365)

CONVERSION OR INTEREST PERIOD- time between successive

conversion period in one year.

TOTAL NUMBER OF CONVERSION PERIOD (n)

 COMPOUND MORE THAN ONCE A YEAR

n=mt= ( frequency of coversion )( time in years )

Nominal rate ( i m
) -annual rate of interest
Rate ( j) of interest for each conversion period
m
i annual rate of int erest
j= =
m frequency of conversion
 SITUATIONS m n im j
2% m = 1, t = 3 im
i =r
m
j=
compounded m
Annually n = mt
annually for 3 i1 = 0.02 0.02
m= 1 = (1)( 3) =
years 1
=3 j = 0.02
2%
m = 2, t = 3 im
compounded Semi- i =r
m
j=
m
semi- annually n = mt
i 2 = 0.02 0.02
annually for 3 m= 2 = ( 2 )( 3) =
2
years j = 0.01
=6
 SITUATIONS m n im j
2% m = 4, t = 3 im
i =r
m
j=
compounded m
Quarterly n = mt
quarterly for i 4 = 0.02 0.02
m= 4 = ( 4 )( 3) =
3 years 4
= 12 j = 0.005

2% m = 12, t = 3 im
i =r
m
j=
compounded Monthly n = mt
m
monthly for 3 m= 12 i12 = 0.02 0.02
=
years = (12 )( 3) 12
= 36 j = 0.0016
 SITUATIONS m n im j
2% m = 365, t = 3 im
i =r
m
j=
compounded m
Daily n = mt
daily for 3 i 365 = 0.02 0.02
m= 365 = ( 365 )( 3) =
years 365
= 1095 j = 0.0000548

F
F = P (1 + j )
n P=
(1 + j )
n

where :
im
F = maturity value j=
m
P = Pr esent value n = mt
Example 3: Given P= 50,000 pesos , i4=0.03, m=4,
t=4, find F and IC.

F = P (1 + j )
n

m
i F = P (1 + j )
n
j= n = mt
m = 50000 (1 + 0.0075 )
16
= ( 4 )( 4 )
0.03 F = 56349.61
= = 16
4 IC = F − P
= 0.0075
= 56349.61 − 50000
I C = 6,349.61
Example 4: Given F=45,000 pesos , i2=0.02, m=2, t=4,
find IC.

F F
P= P=
(1 + j )
n
(1 + j )
n

45000
=
(1 + 0.01)
m 8
i n = mt
j=
m = ( 2 )( 4 ) P = 41,556.75
0.02
= =8 IC = F − P
2 = 45, 000 − 41,556.75
= 0.01
I C = 3, 443.25
 ACTIVITY 2.1
1. If P= Php. 85,500, and r= 1.25%
compounded monthly for 1 year, find the
compound interest.
a. What is the first component that should be
find?
b. What formula will be used?
c. How much is the maturity value?
d. How are will you find the simple interest?
e. How much is the simple interest?