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Simple&Compound Interest

This document discusses simple and compound interest, providing examples to illustrate the difference between the two. Simple interest is calculated on the original principal only, while compound interest is calculated on the previous balance including all interest earned. Formulas for calculating simple and compound interest are provided, along with example problems to demonstrate applying the concepts.

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darlene martin
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261 views22 pages

Simple&Compound Interest

This document discusses simple and compound interest, providing examples to illustrate the difference between the two. Simple interest is calculated on the original principal only, while compound interest is calculated on the previous balance including all interest earned. Formulas for calculating simple and compound interest are provided, along with example problems to demonstrate applying the concepts.

Uploaded by

darlene martin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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SIMPLE AND COMPOUND

INTEREST
OBJECTIVES:
Illustrate simple and compound interests (
M11GM-IIa-1)
Distinguish between simple and compound
interests ( M11GM-IIa-2)
MOTIVATION
“ Money is not free to borrow”

“ How much does it cost to borrow


money?”
Find your compatibility R
1. 6% 6. 200% E
2. 5% 7. 0.75% V
3. 10%
4. 81/2% I
5. 10.5% E
W
a. Find your compatibility
1. 6% —> 0.06
2. 5% —> 0.05
3. 10% —> 0.10
4. 81/2% —> 0.085
5. 10.5% —> 0.105
6. 200% —> 2.00
7. 0.75% —> 0.0075
Answer each.
8. What percent of 24 is 12?
9. What is 25% of 108?
10. 48 is what percent of 60?
11. 30 is 40% of what number?
Answer each.
8. What percent of 24 is 12? 50%
9. What is 25% of 108? 27
10. 48 is what percent of 60? 80%
11. 30 is 40% of what number? 75
A. Activity
COMPARING SIMPLE AND COMPOUND INTEREST
You deposited Php 1,000.00 in a savings account
that earns 6% interest per year.
a. Copy and complete the first table that show
balance after 10 years with simple interest.
b. Copy and complete the second table that
shows the balance after 10 years with interest
that is compounded annually.
t Principal Annual Balance at End Year
Interest
1 1,000.00 60.00 1,060.00
2 1,000.00 60.00 1,120.00
3 1,000.00 60.00
4 1,000.00 60.00
5 1,000.00 60.00
6 1,000.00 60.00
7 1,000.00 60.00
8 1,000.00 60.00
9 1,000.00 60.00
10 1,000.00 60.00 1,600.00
Compound Interest
t Principal Annual Balance at End Year
Interest
1 1,000.00 60.00 1,060.00
2 1,060.00 63.60 1,123.60
3 1,123.60 67.42 1,191.02
4 1,191.02 71.46 1,262.48
5 1,262.48 75.75 1,338.23
6 1,338.23 80.29 1,418.52
7 1,418.52 85.11 1,503.63
8 1,503.63 90.22 1,593.85
9 1,593.85 95.63 1,689.48
10 1,689.48 101.37 1,790.85
1. How did you find the activity? Did you
enjoy?
2. Compare the two tables, which type of
interest give the greater balance?
3. How did you find the balance in the first
table? In the second table?
4. How can you define simple interest based
on the first table?
5. How can you define compound interest?
1. What is simple interest?
2. How can you illustrate simple
interest?
3. What is compound interest?
4. How can you illustrate compound
interest?
• Cite an example of real life
situation that illustrates a simple
interest and a compound interest.
Make a problem that you can
illustrate simple and compound
interest. You can make it using a
table. Present your answer on
the board.
1. If you deposited 800 pesos in an account
paying 6% simple interest for 4 years,
determine the amount of the interest
earned on the given interest.
2. If you deposited 5,000 in an account
paying 5% interest, how much money
will you receive in 8 years
if the account is
compounded annually?
Assignment:
Formulate a formula for
simple and compound
interest.
THANK YOU FOR YOUR
COOPERATION & PARTICIPATION!!!
GODBLESS US ALL!
Given: Principal (P ) = P 800.00
Rate of Interest ( r ) = 6% or 0.06
Time ( t ) = 4 years
Principal Interest Balance at
end of year
1 800.00 48 848.00
2 800.00 48 896.00
3 800.00 48 944.00
4 800.00 48 992.00
Formula:
Simple Interest: I = Prt
where I = interest, P = Principal,
r = rate of interest , t = time
P = I/rt, r = I/Pt, t = I/Pr
Compound Interest
A = P(1 + r)t
semi-annually: A = P(1 + r/2)t,
quarterly: A = P(1 + r/4)t
Problems:
• 1. Irene invested P 25, 000.00 at 16%
simple interest for 6 years.
• A. How much interest will be earned?
• B. What is the future value of the
investment at the end of 6 years?
• 2. Jun is investing an amount at 15%
simple interest for 3 years. If he intends
to have P48, 200.00 at the end of the
term, what must be his principal?
Problems:
• 3. Find the future value of the principal
P30,000.00 at 8% compounded annually
for 10 years.
• 4. Lauro deposited P64, 600.00 in a
savings account which pays 8% interest
compounded semi-annually. What will his
balance be in 4 years?
Evaluation:
• 1. Ana borrows P20,000.00
from her uncle and agrees
to pay him P 22, 000.00 in
months. What interest rate
was she paying?
2. Twenty thousand pesos is
deposited in an account that pays
8% interest. Find the account
balance after 8 years if the interest
is calculated as follows:
A. Compounded semi-annually
B. Compounded quarterly
C. Simple interest

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