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LECTURE 5_SIMPLE INTEREST_PART 1

This document covers the concept of simple interest, defining key terms such as principal, time, and maturity value, and provides the formula for calculating simple interest (I = Prt). It includes examples for finding interest, amount, time, rate, and principal, as well as additional problems for further practice. The document serves as an educational resource for understanding and applying simple interest calculations.

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8 views

LECTURE 5_SIMPLE INTEREST_PART 1

This document covers the concept of simple interest, defining key terms such as principal, time, and maturity value, and provides the formula for calculating simple interest (I = Prt). It includes examples for finding interest, amount, time, rate, and principal, as well as additional problems for further practice. The document serves as an educational resource for understanding and applying simple interest calculations.

Uploaded by

gabriela.cabuyadao.shs
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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LECTURE 5

SIMPLE INTEREST

For classroom discussion only


5.1. SIMPLE INTEREST
Words to know:
Simple Interest(𝑰𝒔 )- the amount paid or earned
for the use of money.

Principal (𝑷) - the amount of money borrowed or


invested.

Time (𝒕) – the number of years for which the


money is invested or borrowed. Also known as
term of the loan.
Words to know:
Maturity Value/Future Value/Final Amount (F) –
sum of the principal and interest. It is also the
amount of an investment after t years or the amount
at the end of the term.

Rate of interest (r ) = interest rate, written in decimal.


SIMPLE INTEREST FORMULA
To find the simple interest, we use the following
formula:
𝐼! = 𝑃𝑟𝑡
time (in years)
Interest rate
Interest written as a
decimal
Principal

Now, it will be easier to find the formula for 𝑃, 𝑟, and 𝑡


if you use the simple interest triangle.
SIMPLE INTEREST TRIANGLE
To solve for the principal
(P), based on the triangle,

𝐼$
𝑃=
𝑟𝑡
SIMPLE INTEREST TRIANGLE
To solve for the rate (r),
based on the triangle,

𝐼$
𝑟 =
𝑃𝑡
SIMPLE INTEREST TRIANGLE
To solve for the time (t),
based on the triangle,

𝐼$
𝑡=
𝑃𝑟
FORMULA FOR THE AMOUNT

Maturity Value/Future Value/Amount(𝐹)


= Principal (𝑃) + Interest (𝐼" )

𝐹 = 𝑃 + 𝐼$
since 𝐼$ = 𝑃𝑟𝑡 then
𝐹 = 𝑃 + 𝑃𝑟𝑡
𝐹 = 𝑃(1 + 𝑟𝑡)
FINDING THE SIMPLE INTEREST AND AMOUNT

Example 1. If ₱ 4, 000 is borrowed at an annual


interest rate of 16% has to be repaid in 3 years,
find the interest and the amount due.

Copyright Ó by Island Publishing House, Inc.


FINDING THE SIMPLE INTEREST AND AMOUNT

Example 2. Suppose you have ₱ 10,000


deposited in bank that gives 10% simple
interest. How much is the interest you will
receive if you hold your deposit for nine (9)
months?

Copyright Ó by ABIVA PUBLISHING HOUSE INC..


FINDING THE SIMPLE INTEREST AND AMOUNT

Example 3. Determine the simple interest paid


for a month on a ₱ 35,000 deposit at 5% annual
interest.

Copyright Ó by ABIVA PUBLISHING HOUSE INC..


FINDING THE TIME

Example 4. If ₱ 5,000 is lent out at 18% ,


annual interest earned ₱ 450 interest, how
long had it been lent?

Copyright Ó by Island Publishing House, Inc.


FINDING THE TIME

Example 5. Jane borrowed ₱ 160,000 from a


bank. The borrowed amount earned ₱ 8,400
at 6% simple interest. How long did it take her
to repay the loan?

Copyright Ó by ABIVA PUBLISHING HOUSE INC..


DETERMINING THE RATE

Example 6. Determine the simple interest


rate if an investment of ₱ 37, 500 accumulates
to ₱ 45,937.50 in 18 months.

Copyright Ó by Island Publishing House, Inc.


FINDING THE PRINCIPAL

Example 7. How much should be invested today


to realize an amount of ₱ 121,000 in 1.25 years if
the simple interest rate is 16.8%?

Copyright Ó by Island Publishing House, Inc.


FINDING THE PRINCIPAL

Example 8. A deposit in one account in the


bank was made at 0.45% simple interest
earned ₱ 11,200 in 2 years. How much money
was originally invested?
9. Kirara invested a certain amount of money for five years and got back
an amount ₱ 10,500.00. If the bank offered a simple interest rate of 3%,
find the amount invested.
Solution:
10. Maricris deposits ₱ 5,400.00 and gets back an amount of
₱ 6,000.00 after 2 years. Find the interest rate.
Solution:
ADDITIONAL PROBLEM

SPECIAL PROBLEM
11. Suppose ₱ 50,000 is divided into 2 bank accounts.
One pays 6% simple interest per year and the other pays
8%. After 3 years, there is a total of ₱ 10, 363.25 in
interest in the 2 accounts. How much was invested into
each account(rounded to the nearest centavo)?
ADDITIONAL PROBLEM

SPECIAL PROBLEM
12. Mrs. Santos deposits in two saving accounts.
₱ 180,000 in the first and ₱ 120,000 in the second.
The simple interest rate on the first account is 1.5%
more than the rate of the second. If the total yearly
interest on the two accounts is ₱ 11,700, find the
interest rate on each account.

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