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Simple Interest

Notes in Grade 11 Simple Interest

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17 views

Simple Interest

Notes in Grade 11 Simple Interest

Uploaded by

hydro flask
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DEFINITION OF TERMS DEFINITION OF TERMS

 Principal – amount of money borrowed or  Principal – amount of money borrowed or


invested on the origin date. invested on the origin date.
 Rate – annual rate usually in percent, or rate of  Rate – annual rate usually in percent, or rate of
increase of the investment on loan. increase of the investment on loan.
 Term or Time – amount of time in years the  Term or Time – amount of time in years the
money is borrowed or invested length of time money is borrowed or invested length of time
between the origin and maturity dates. between the origin and maturity dates.
 Maturity Date – a date on which the money  Maturity Date – a date on which the money
borrowed or loan is to be completely repaid. borrowed or loan is to be completely repaid.
 Maturity Value or Future Value – amount after  Maturity Value or Future Value – amount after
a number of years that the lender receives from a number of years that the lender receives from
the borrower on the maturity date. the borrower on the maturity date.
 Interest – a paid premium for the use of capital.  Interest – a paid premium for the use of capital.
 Simple Interest – interest calculated on  Simple Interest – interest calculated on
principal principal

SIMPLE INTEREST SIMPLE INTEREST


 Interest, I  Interest, I
I=Pr I=Pr
 Simple Interest, I  Simple Interest, I
I = Prt I = Prt
 Maturity Value or Future Value, F  Maturity Value or Future Value, F
F = P(1+rt) F = P(1+rt)
 Present Value, P  Present Value, P
F F
P= P=
(1+rt ) (1+rt )

Bear in mind: Bear in mind:


o The future value at a simple interest rate is o The future value at a simple interest rate is
a linear function of time. a linear function of time.
o The future value is increasing. This implies o The future value is increasing. This implies
that through time, the amount borrowed that through time, the amount borrowed
(or invested) is growing. (or invested) is growing.
o The present value is decreasing. This implies o The present value is decreasing. This implies
that to accumulate a certain amount, the that to accumulate a certain amount, the
longer you are willing to wait, the smaller longer you are willing to wait, the smaller
the principal you need. the principal you need.
SAMPLE PROBLEMS: SAMPLE PROBLEMS:

1. Find the amount of simple interest for the following: 1. Find the amount of simple interest for the following:

a) Php 2,500 at 3.5% annual simple interest rate for 2 a) Php 2,500 at 3.5% annual simple interest rate for 2
years years
b) Php 5,300 at 2% annual simple interest rate for 3.5 b) Php 5,300 at 2% annual simple interest rate for 3.5
years years
c) Php 10,000 at 4% annual simple interest rate for 6 c) Php 10,000 at 4% annual simple interest rate for 6
months months

2. Find the present value of the following at the given 2. Find the present value of the following at the given
annual simple interest rate: annual simple interest rate:

a) Php 1,000 after 2 years at 3% interest a) Php 1,000 after 2 years at 3% interest
b) Php 2,500 after 5 years at 1.5% interest b) Php 2,500 after 5 years at 1.5% interest
c) Php 10,000 after 10 years at 5% interest c) Php 10,000 after 10 years at 5% interest

3. Orley invested Php 100,000.00 to an account that 3. Orley invested Php 100,000.00 to an account that
pays a simple interest of 3% annually. Find the (a) pays a simple interest of 3% annually. Find the (a)
interest earned and (b) the future value after 2 years. interest earned and (b) the future value after 2 years.

4. Teresa borrowed Php 120,000.00 from her uncle. If 4. Teresa borrowed Php 120,000.00 from her uncle. If
Teresa agreed to pay an 8% annual interest rate, Teresa agreed to pay an 8% annual interest rate,
calculate the amount of interest she must pay if the loan calculate the amount of interest she must pay if the loan
period is period is

(a) 1 year (b) 9 months (c) 18 months. (a) 1 year (b) 9 months (c) 18 months.

5. If Php 10,000.00 is invested at 4.5% simple interest, 5. If Php 10,000.00 is invested at 4.5% simple interest,
how long will it take to grow to Php 11,800.00? how long will it take to grow to Php 11,800.00?

6. You decided to purchase a Php 50,000.00 LED TV 6. You decided to purchase a Php 50,000.00 LED TV
through credit card. After a month, you discovered from through credit card. After a month, you discovered from
your statement of account that you were charged with your statement of account that you were charged with
Php 1,000.00 interest. How much was the monthly Php 1,000.00 interest. How much was the monthly
interest rate applied to your credit card purchase? interest rate applied to your credit card purchase?

7. Find the present value of Php 86,000.00 at 8% simple 7. Find the present value of Php 86,000.00 at 8% simple
interest for 3 years. interest for 3 years.

8. Find the maturity value or future value of the 8. Find the maturity value or future value of the
following loans: following loans:

a) Php 50,000 borrowed at 9% for 2 years. a) Php 50,000 borrowed at 9% for 2 years.
b) Php 120,000 borrowed at 10% for 8 months. b) Php 120,000 borrowed at 10% for 8 months.

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