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4 Simple Interest

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22 views

4 Simple Interest

Uploaded by

wintermochijimin03
Copyright
© © All Rights Reserved
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Mary the Queen College Pampanga, Inc.

GE 4: Final Period

Business Mathematics

Introduction: This topic is used in by every commercial institution in making their system work. It has also
a vast applications in the area of accounting, inventory, management, marketing, sales projection and
market analysis. This topic will also covers investment problems.

Objectives: At the end of the week, the students should be able to;
1. Solve problems involving simple interest and compound interest
2. Compute the maturity value of a certain loans or investment

Simple Interest

Formulas:

I=Prt I=F–P
F=P+I F =P(1 + rt)
Where:
I – amount of interest generated in a loan or investment
P – Principal amount or Present value of the money
F – Future amount or Final amount of the money
r – Rate of interest
t – Period of time of the loan or investment in years

𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒅𝒂𝒚𝒔
If Time t is in days;
𝒕= → 𝑶𝒓𝒅𝒊𝒏𝒂𝒓𝒚 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕: 𝑰𝒐
𝟑𝟔𝟎

𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒅𝒂𝒚𝒔
𝒕= → 𝑬𝒙𝒂𝒄𝒕 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕: 𝑰𝒆
𝟑𝟔𝟓

Example:
1. An investment of P 120, 000 is transacted for 7 months at 5.8%. Find the following.
a. The interest I, b. Maturity Value F
Given: P = P120, 000, t = 7 mos. R = 5.8% = 0.058
Solution:
I = P r t = 120, 000 (0.058) (7/12) The term t must be in years
I = P 4, 060.00
F = P(1 + rt) = 120, 000 [1 + (0.058)(7/12)]
F = P124, 060.00
2. Mr. Lino Kho borrowed ₱5,000 in a bank charging 12% simple interest with an agreement
that he would pay the principal and the interest at the end of the term. If he paid ₱6,200 at
the end of the term, for how long did he use the money?
Given: Principal (P) = ₱ 5,000.00, Final amount (F) = 6200 Rate (r) = 0.12,
Required: Term (t)

Solution:

𝑰 = 𝟔, 𝟐𝟎𝟎. 𝟎𝟎 − 𝟓, 𝟎𝟎𝟎. 𝟎𝟎 = 𝟏, 𝟐𝟎𝟎. 𝟎𝟎


I=Prt I=F–P

𝑰 𝟏𝟐𝟎𝟎
𝒕= =
𝑷𝒓 𝟓𝟎𝟎𝟎(𝟎. 𝟏𝟐)

t = 2 years

3. At what rate of simple interest did Mrs. Nathalie Sod invest the amount of ₱23,500 for it to
earn a simple interest of P3,525 for 3 years?
Given: Principal (P) = ₱ 23,500, Interest (I) = ₱ 3,525, Time (t) = 3 years
Required: Rate of interest (r)

Solution:

r=
𝑰
From the simple interest formula I = P r t

𝑷𝒕

3525
𝑟= = 0.05 ∗ 100
23, 000 (3)

𝒓 = 𝟓%

Name: DONNA CATHERINE G. MORALES Date: 11/14/2022


Section: AKITA Score:

1. Mr. Lucky Chan issued a check for ₱ 16,800 to settle a loan of ₱ 12,750 he got two years ago. How
much simple interest rate was he charged?
2. How long will it take ₱ 50,000 to grow to ₱ 75,000 if the simple interest rate is 12.5%?

3. A father wishes to have an amount of ₱ 235,000 at the end of 5 years. How much should he deposit
if the bank charges 7.5% simple interest?

4. Mrs. Corry Pot borrowed ₱ 15,000 and repaid the loan after a year with interest rate at 10.25%
simple interest. Find the maturity value paid by Mrs. Co.

5. What final amount would Dr. Tina Lee get if she deposited ₱ 50,000 for 3 years and 10 months at
5.6% simple interest?

6. For 209 days, what would be the interest if Ms. Nathalie Sod invested ₱ 43,500 at
a. 5.75% ordinary simple interest?
b. 5.75% exact simple interest?
c. How much is the difference between these two investments?
7. Use ordinary interest to find the final amount due on ₱75,150 for 420 days at 12. 75%.

8. Use exact interest to find the interest and final amount due on ₱25,345 for 636 days at 10.25%.

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