SIMPLE INTEREST 4.

An Engineer borrowed a sum of money

under the following terms: ₱650,000.00 if
1. A man buys an electric fan from a paid in 90 days, or ₱600,000.00 if paid in 30
merchant that charges ₱1,500.00 at the end days. What is the equivalent annual rate of
of 90 days. The man wishes to pay cash. simple interest?
What is the cash price if money is worth 10%
simple interest?

2. What amount will be available in eight 5. What is the annual rate of interest if ₱265
months if ₱15,000.00 is invested now at 10% is earned in four months on an investment of
simple interest per year? ₱15,000?

6. A man made a loan of P5,000.00 for a

period of 15 months at a simple interest of 15
3. ₱1,000.00 becomes ₱1,500 in three years. %, What must be the amount due at the end
Find the simple interest rate. of the loan period?
7. Compute the future worth of P2000 10. Glen received a $2,250 loan from a bank.
invested at 10% simple interest for 4 years After six months, he paid back $2,295. Find
and seven months, the rate of interest.

8. Determine the accumulated amount using 11. A person deposits $5,000 in a bank
the exact simple interest on P1000.00 for the account which pays 6% simple interest per
period from January 20, 1990 to November year. Find the value of his deposit after 4
28 of the same year at 15% interest rate. years.

9. A man invests $16,500 in two kinds of 12. If you invest $1,000 at an interest rate of
treasury notes, which yield 7.5% and 6% 5% per year, how much interest will you earn
annually. After two years, he earns $2,442 in in 2 years?
interest. How much does he invest at the 6%
rate?
13. A principal amount of $2,500 is invested 16. A sum of $800 is borrowed at a simple
at a simple interest rate of 4% per year. What interest rate of 7% per year. What is the total
is the interest earned after 3 years? amount to be paid after 2 years?

14. Calculate the simple interest on a loan of 17. What is the simple interest on a principal
$1,500 at an interest rate of 6% per year for 4 of $4,000 at a rate of 5% per year for 1.5
years. years?

15. If $3,000 is invested at a simple interest 18. Calculate the simple interest earned on
rate of 3% per year, how much interest will be $3,500 at an interest rate of 5% per year over
earned in 5 years? a period of 2 years.
19. A person borrows $10,000 at 7% simple
interest per annum. How much interest will he
pay after 3 years?

20. A sum of $12,000 is lent out at 5% per

annum simple interest for 5 years. What will
be the amount after 5 years?
COMPOUND INTEREST 3. If the interest rate of a certain account is
6.5%, compute the (a) single payment
1. By the condition of a wall, the sum of present worth factor; and (b) single payment
₱2,000 is left to a girl to be held in trust fund compound amount factor at the end of 18
by her guardian until it amounts to ₱5,000, years.
when will the girl received the money if the
fund is invested at 8% compounded
quarterly?

4. Find the compound interest on $5,000 for 3

years at an annual interest rate of 5%,
compounded annually.

2. A student plan to deposit ₱1,500 in the

bank now and another ₱3,000 for the next 2
years. If he plans to withdraw ₱5,000 3 years
after his last deposit for the purpose of buying
shoes, what will be the amount of money eft
in the bank after one year of his withdrawal?
Effective annual interest rate is 10%.

5. Calculate the amount and compound

interest on $2,000 for 2 years at an annual
interest rate of 6%, compounded semi-
annually.
6. What is the compound interest on $1,500 9. What is the compound interest on $8,000
for 1 year at an annual interest rate of 8%, for 2 years at an annual interest rate of 9%,
compounded quarterly? compounded semi-annually?

7. Find the compound interest on $10,000 for

5 years at an annual interest rate of 4%,
compounded annually.
10. Find the compound interest on $6,000 for
4 years at an annual interest rate of 3%,
compounded annually.

8. Calculate the amount and compound

interest on $3,000 for 3 years at an annual
interest rate of 7%, compounded annually.
CONTINUOUS COMPOUND 4. Mark invests $12,000 in an account that
compounds continuously at an annual
INTEREST interest rate of 5%. How much will he have in
1. Sarah wants to have $20,000 in 10 years the account after 8 years?
in an account that compounds continuously at
an annual interest rate of 4%. How much
should she invest now?

5. A company wants to accumulate $50,000

in 15 years in an account that compounds
continuously at an annual interest rate of
2. John invested $8,000 in an account that 2.5%. How much should they invest now?
compounds continuously. After 6 years, he
has $10,000. What is the annual interest
rate?

6. Emma invested $3,500 in an account that

compounds continuously. After 4 years, the
amount in the account is $4,200. What is the
3. Lisa deposited $5,000 in an account that annual interest rate?
compounds continuously at an annual
interest rate of 3%. How long will it take for
her investment to grow to $7,500?
7. Tom wants to double his investment of 9. A university wants to have $100,000 in its
$1,200 in an account that compounds endowment fund in 25 years. If the account
continuously at an annual interest rate of 7%. compounds continuously at an annual
How long will it take for his investment to interest rate of 4%, how much should the
double? university invest now?

8. Anna invests $10,000 in an account that 1o. A trust fund was established with $15,000
compounds continuously at an annual and it grew to $18,000 in 5 years. If the
interest rate of 6%. How much will she have account compounds continuously, what is the
in the account after 5 years? annual interest rate?
DISCOUNT

𝑑 such that the effective annual discount rate

1. Suppose the store applies a discount rate

d is 0.10 (10%). Sarah plans to pay for the

laptop after 2 years (n=2). The list price of the
laptop is $2,500.
 Find the annual interest rate i.
 Determine the price P Sarah will pay
after 2 years.
 Calculate the total discount amount D
Sarah receives.

3. Emma is looking to purchase a designer

handbag with a list price of $800. The store
applies a discount rate d of 0.12 (12%) over 4
years.
 Find the annual interest rate i.
 Determine the price P Emma will pay
after 4 years.
 Calculate the total discount amount D
Emma receives.

2. John wants to buy a new smartphone with

a list price of $1,200. The store offers a
discount rate d of 0.15 (15%) applied over a
period of 3 years.
 Find the annual interest rate i.
 Determine the price P John will pay
after 3 years.
 Calculate the total discount amount D
John receives.
4. Michael is considering buying a gaming
console with a list price of $500. The store
provides a discount rate d of 0.08 over 5
years.
 Find the annual interest rate i.
 Determine the price P Michael will pay
after 5 years.
 Calculate the total discount amount D
Michael receives.

5. Sophia plans to buy a new bicycle with a

list price of $1,500. The store offers a
discount rate d of 0.10 over 2 years.
 Find the annual interest rate i.
 Determine the price P Sophia will pay
after 2 years.
 Calculate the total discount amount D
Sophia receives.
INFLATION 2. A company plans to purchase new
machinery in 3 years. The current cost of the
1. A company is planning to invest in a project machinery is $400,000. The annual inflation
that will require an initial investment of P rate is 5%. Determine the future cost of the
today. Due to inflation, the future cost of the machinery after 3 years.
project is expected to increase. The current
annual inflation rate is f=5% and the rate of
interest i=7%. The company plans to start the
project 3 years from now.
 Calculate the future cost FC of the
project after 3 years if the present cost
P is $100,000.
 Determine the future worth F of today's
investment if the investment grows at
the interest rate i over the same
period, while also considering the
inflation rate f.
 If the company wants to determine the
uninflated present worth P of the future
cost F at the end of 3 years, find P.

3. A company is planning to invest in a new

project that currently costs $800,000. The
annual inflation rate is 5%, and the company
expects to make this investment in 4 years.
The company wants to determine how much
they need to set aside today if they can earn
an annual interest rate of 7% on their
investments. Calculate the present cost that
the company needs to invest today to cover
the future cost of $800,000 after 4 years,
considering the inflation and interest rate.
4. A non-profit organization plans to build a 5. A university wants to set up a scholarship
community center, which will cost $500,000 in fund to provide for future tuition costs. The
the future. The organization has $450,000 current tuition fee is $30,000, and the

annually at a rate of 6% over the next 5

available today. The annual inflation rate is university expects the tuition fee to increase
4%, and they expect to make this purchase in
3 years. Determine the rate of interest the years. They want to ensure that the fund will
organization needs to earn on its current cover the future cost. Determine the future
funds to ensure they have the required cost of the tuition after 5 years and the
amount to cover the future cost in 3 years. present amount they need to set aside today,
assuming the university can invest the money
at an interest rate of 8%.