C O M E R C I A L

COMMERCIAL
MATHEMATICS
M A T H E M A T I C S
 Interest
It is the sum of money received or
paid for the use of someone else’s
money.

Principal is the original amount borrowed, deposited or

invested. Rate of interest is the percent of the principal paid
per time period. Time is the number of years, months or days.
Simple Interest
It is the interest earned at
the end of the allotted time
between the lender and the
borrower.
Simple Interest
FORMULA: I = Prt
Where I = simple interest
P = principal
r =rate of interest
t = time
Future Value(Maturity Value)
FORMULA
It is the total amount when
the principal is added to the F=P+I
interest.
F = P (1+rt)
 Complete the table below by finding the unknown.

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

(a) 2.5% 4 1500
36,000 (b) 1.5 4860
250,000 0.5% (c) 275
500,000 12.5% 10 (d)
P=?

Given: r = 2.5% = 0.025

t=4
I = 1,500
𝐼
P=
𝑟𝑡
1500
P=
(0.025)(4)
1500
P=
0.1
P = 15,000
r=?

Given: P =36,000
t = 1.5
I = 4860
𝐼
r=
𝑝𝑡
4860
r=
(36,000)(1.5)
4860
r=
54,000
r = 0.09 = 9%
t=?

Given: P =250,000
r = 0.5% = 0.005
I = 275
𝐼
t=
𝑝𝑟
275
t=
(250,000)(0.005)
275
t=
1250
t = 0.22 = 22years
I=?

Given: P = 500,000
r = 12.5% = 0.125
t = 10

I = Prt
I=(500,000)(0.125) (10)
I = 625,000
 Complete the table below by finding the unknown.

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

15,000 2.5% 4 1500
36,000 9% 1.5 4860
250,000 0.5% 22 275
500,000 12.5% 10 625,000
 John invest $5,000 in a savings
account at an annual interest rate
7% for 5 years. How much money
did he earned in interest? What is
the total value of his savings
account at this point?

I = Prt
PROBLEM 1 I = (5,000) (0.07) (5)
I = $1,750

5000 + 1750 = $6750

 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?

I = Prt
PROBLEM 2 I=(1,000,000) (0.0025) (1)
I = 2,500
 How much interests is charged
when P50,000 borrowed for 9
months at an annual simple
interest rate of 10%.

I = Prt
PROBLEM 3 I=(50,000) (0.10)
9
( )
12
I=(50,000)(0.10)(0.75)
I = 3,750
 When invested at an annual
interest rate of 7%, the amount
earned is P11,200 of simple interest
in two years. How much money
was originally invested?
𝐼
P=
𝑟𝑡
PROBLEM 5 P=
11,200
(0.07)(2)
11,200
P=
0.14
P = 80,000
 Find the present value of Php
86,000 at 8% simple interest for 3
years.

F = P(1+rt)

𝐹
P=
PROBLEM 6 P=
1+𝑟𝑡
86,000
1+(0.08)(3)
86,000
P=
1+0.24
P = 69,354.84
 If an entrepreneur applies for a
loan amounting to Php 500,000 in
a bank, the simple interest is Php
157,000 for 3 years, what interest
rate is being charged?
𝐼
r=
𝑝𝑡

PROBLEM 7
157,000
r=
(500,000)(3)
157,000
r=
1,500,000
r = 0.10
r = 10%
 Find the maturity value if 1 million
pesos is deposited in a bank at
an annual simple interest rate of
0.25% after 5 years.
F = P+I

I = Prt
PROBLEM 8 I = (1,000,000)(0.0025)(5)
I = 12,500

F=P+I
F = 1,000,000 + 12,500
F = 1, 012,500
 Find the maturity value if 1 million
pesos is deposited in a bank at
an annual simple interest rate of
0.25% after 5 years.

F = P(1+rt)
PROBLEM 8 F = 1,000,000[1+(0.0025)(5)]
F = 1,000,000 (1+0.0125)
F = 1,000,000 (1.0125)
F = 1, 012,500
 Sally invests $8,000 into an
account paying an annual
interest rate of 8.7%. How many
years will it take for her to earn
$4872 in interest?

𝐼
t=
𝑝𝑟
PROBLEM 9 t=
4872
(8000)(0.087)
4872
t=
696
t = 7 years
 Marie invests $3000 into a savings
account. In 4 years, she earns of a
total of $768 in interest. What is
the annual interest rate offered by
this account.

𝐼
r=
𝑝𝑡

PROBLEM 10
768
r=
(3000)(4)
768
r=
12,000
r = 0.064
r = 6.4%
 James invests Php 25,000 into an
account paying 8% annual
interest. How many years will it
take for his account to reach Php
43,000.
25,000 + I = 43,000
I = 43,000-25,000
I = 18,000

PROBLEM 11
𝐼
t=
𝑝𝑟
18,000
t=
(25,000)(0.08)
18,000
t=
2000
t = 9 years
COMPOUND INTEREST
It is the interest earned on
previously earned interest
added to the principal.

In compound interest, the

present value will be used
instead of principal.
 Frequency of conversion
(m) – the number of times
the interest will be added
Compound Interest to the present value. It
may be annually or
Nominal rate (r) – annual
interest rate
effective (1), semi-
annually (2), quarterly (4),
Aside from present value and or monthly (12).
rate of interest, compound
interest will use the following
terms:
Periodic rate (j) – annual Number of conversions
interest rate per frequency (n) – product of frequency
of conversion of conversions and time
 FORMULA
Compound Interest 𝑟
j=
Aside from present value 𝑚
and rate of interest,
compound interest will use
n = mt
the following terms: I = F-P
Future/Maturity Value
It is the total amount when FORMULA
the principal is added to the 𝑛
interest. F = P (1 + 𝑗)
 Find the maturity value and
interest if Php 10,000 is deposited in
a bank at 2% compounded
quarterly for 5 years.

𝑟
j=
𝑚
0.02
j=
PROBLEM 1 4
j= 0.005

n = mt
n= (4)(5)
n= 20 conversion periods
 Find the maturity value and
interest if Php 10,000 is deposited in
a bank at 2% compounded
quarterly for 5 years.

Maturity Value (F)

PROBLEM 1 F = P (1 + 𝑗)𝑛
F = 10,000 (1 + 0.005)20
F = 11,048.96
 Find the maturity value and
interest if Php 10,000 is deposited in
a bank at 2% compounded
quarterly for 5 years.

Compound Interest
PROBLEM 1 I = F-P
I = 11,048.95 – 10,000
I = 1,048.96
 Find the maturity value and
interest if Php 10,000 is deposited in
a bank at 2% compounded
monthly for 5 years.

𝑟
j=
𝑚
0.02
j=
PROBLEM 1 12
j= 0.0016

n = mt
n= (12)(5)
n= 60 conversion periods
 Find the maturity value and
interest if Php 10,000 is deposited in
a bank at 2% compounded
monthly for 5 years.

Maturity Value (F)

PROBLEM 1 F = P (1 + 𝑗)𝑛
F = 10,000 (1 + 0.0016)60
F = 11,050.79
 Find the maturity value and
interest if Php 10,000 is deposited in
a bank at 2% compounded
monthly for 5 years.

Compound Interest
PROBLEM 1 I = F-P
I = 11,050.79 – 10,000
I = 1,050.79
 Cris borrows P50,000 and promise
to pay the principal and interest at
12% compounded monthly. How
much must he repay after 6 years.

𝑟 𝑚𝑡
F = P(1 + )
𝑚
PROBLEM 1 F = 50,000(1 +
0.12 (12)(6)
12
)
72
F = 50,000(1 + 0.01)
72
F = 50,000(1.01)
F = P102,354.97
 FORMULA
𝐹
Present Value at P= 𝑟 𝑚𝑡
Compounded (1+ )
𝑚
Interest 𝐹
P = 𝑛
(1+𝑗)
 Find the present value of P50,000
due in 4 years if money is invested
at 12% compounded semi-annually.

𝑟
j=
𝑚
0.12
j=
PROBLEM 2 2
j= 0.06

n = mt
n= (2)(4)
n= 8
 Find the present value of P50,000
due in 4 years if money is invested
at 12% compounded semi-annually.

Present Value
𝐹
P= 𝑛
PROBLEM 2
(1+𝑗)
50,000
P=
(1+0.06)8
50,000
P=
(1.06)8
P = P31,370.62
 What is the present value of P25,000
due in 2 years and 6 months if
money is worth 10% compounded
quarterly. 𝑟
j=
𝑚
0.10
j=
PROBLEM 3
4
j = 0.025

n = mt
n = (2.5)(4)
n = 10
 What is the present value of P25,000
due in 2 years and 6 months if
money is worth 10% compounded
quarterly.
Present Value
𝐹
P=
PROBLEM 3
𝑛
(1+𝑟)
25,000
P=
(1+0.25)10
25,000
P=
(1.025)10
P = P19,529.96
 How long will it take P3,000 to
accumulate to P3,500 in a bank
savings account at 0.25%
compounded monthly?

GIVEN:
t=?
PROBLEM 4 P = 3,000
F = 3,500
r = 0.25% or 0.0025
m = 12
 How long will it take P3,000 to
accumulate to P3,500 in a bank
savings account at 0.25%
compounded monthly?

𝑟
j=
PROBLEM 4
𝑚
0.0025
j=
12
j = 0.000208
 F = P (1 + 𝑗)𝑛
3500 = 3000 (1 + 0.000208)𝑛
3500 3000(1 + 000208)𝑛
=
3000 3000
1.1667 = (1.000208)𝑛
PROBLEM 4 log 1.1667 = 𝑙𝑜𝑔1.000208𝑛
log 1.1667 = n log 1.000208
log 1.1667 𝑛 log 1.000208
=
log 1.000208 log 1.000208
n = 741
 n = tm
741 = t (12)
741 𝑡 (12)
=
12 12
t = 61.75
PROBLEM 4 t=5.15 years
t=5.2 years
 Php 200,000 grows Php 242,000 in
2years. What is the nominal interest
rate compounded annually.

r= ?
m=1
PROBLEM 5 P = 200,000
F = 242,000
t=2
 Php 200,000 grows Php 242,000 in
2years. What is the nominal
interest rate compounded
annually.

n = tm
PROBLEM 5 n = (2)(1)
n=2
 F = P (1 + 𝑗) 𝑛
242,000 = 200,000 (1 + 𝑗)2
242,000 200,000(1 + 𝑗)2
=
200,000 2000,000
1.21 = (1 + 𝑗)2
PROBLEM 5 1
(1.21) =(1 + 𝑗)
2
1
22

1.1 = 1+j
1.1-1 = j
j = 0.1
 Php 200,000 grows Php 242,000 in
2years. What is the nominal
interest rate compounded
annually.
𝑟
j =
𝑚
𝑟
0.1 =
PROBLEM 5 1
(0.1)(1)
r = 0.1
r= 10%
 If Php 500,000 grows to Php 750,000
at a 2% interest rate compounded
annually, how many years will it
take?

GIVEN:
t=?
PROBLEM 6 P = 500,000
F = 750,000
r = 0.02
m=1
 If Php 500,000 grows to Php 750,000
at a 2% interest rate compounded
annually, how many years will it
take?

𝑟
j=
PROBLEM 5
𝑚
0.02
j=
1
j = 0.02
 F = P (1 + 𝑗)𝑛
750,000 = 500,000 (1 + 0.02)𝑛
750,000 500,000(1 + 0.02)𝑛
=
500,000 500,000
1.5 = (1.02)𝑛
PROBLEM 5 log 1.5 = 𝑙𝑜𝑔1.02𝑛
log 1.5 = n log 1.02
log 1.5 𝑛 log 1.02
=
log 1.02 log 1.02
n = 20.48
 n = tm
20.48 = t (1)
20.48 𝑡 (1)
=
PROBLEM 5 1 1
t = 20.48
t = 20 years
 At what nominal rate
compounded semi-annually will
P10,000 accumulate to P15,000 in
10 years?

n = tm
PROBLEM 5 n = (10)(2)
n = 20
 F = P (1 + 𝑗) 𝑛
15,000 = 10,000 (1 + 𝑗)20
15,000 10,000(1 + 𝑗)20
=
10,000 10,000
1.5 = (1 + 𝑗)20
PROBLEM 5 1
(1.5) =(1 + 𝑗)
20
1
2020

1.0205 = 1+j
1.0205-1 = j
j = 0.0205
 At what nominal rate
compounded semi-annually will
P10,000 accumulate to P15,000 in
10 years?
𝑟
j =
𝑚
PROBLEM 5
𝑟
0.0205 =
2
(0.0205)(2) = r
r = 0.041 or 4.1%
THANK YOU