Time-Value of

Money
Simple interest
Introduction
When people need to secure funds
for some purposes, one of the ways
they usually resort to is borrowing.
On the other hand, the person or
institution , which lends the money
would also wish to get something in
return for the use of money.
Terminologies T
1. Debtor or maker - the person who
borrows money for any purpose
2. Lender - the person or institution
E
which loans the money
3. Interest - the payment for the use of R
borrowed money
4. Principal - the capital or sum of M
money invested
S
Terminologies T
5. Rate of interest - the fractional part of
the principal that is paid on the loan E
6. Time or term - the number of units of
the time for which the money is
borrowed and for which interest is
R
calculated
M
S
Terminologies T
7. Final amount or maturity value - the
sum of the principal and interest which
is accumulated at a certain time
E
8. Present value - the amount received by
R
the borrower
M
S
Simple Interest
Interest in which only
the original principal
bears interest for the
entire term of the loan
 E
John F borrows P10,000 at the rate X
of 12% per year. If the loan is a
simple interest loan, then the interest A
on P10,000 is P1,200. At the end of
one year, John F should pay the M
lender a total amount of P11, 200.
P
L
E
Formula: 𝑰 = 𝑷 ∙ 𝒓 ∙ 𝒕
𝑭=𝑷+𝑰
𝑰=𝑭−𝑷
where:
𝑰 - simple interest
𝑷 - principal amount
𝒓 - rate or percent of interest
𝒕 – unit of time ( in year)
The term or time may be stated in any of the
following ways:

1. When the time is expressed in number of

year(s), our formula will be:
𝑰 = 𝑷 × 𝒓 × 𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒚𝒆𝒂𝒓𝒔

2. When the time is expressed in number of

month(s):
𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒎𝒐𝒏𝒕𝒉𝒔
𝑰= 𝑷 × 𝒓 ×
𝟏𝟐
1. Find the interest on 𝑷 𝟖, 𝟎𝟎𝟎 at 5
½ % simple interest for 3 years.
2. Find the interest and the final
amount on P 1,300 at 7 ¼%
simple interest for 9 months.
PRACTICE

1. If a principal of P 2,500 earns

interest of P185 in 3 years and 3
months, what interest rate is in
effect?
 𝐴
𝑝
2. A principal earns interest of P 385𝑝
in 2 years and 9 months at a simple𝑙
𝑖
interest rate of 9.5 %. Find the𝑐
principal invested. 𝑎
𝑡
𝑖
𝑜
𝑛
 𝐴
𝑝
𝑝
3. How long will it take for P8,000
𝑙
to earn P2, 400, if it is invested at 𝑖
6½% simple interest? 𝑐
𝑎
𝑡
𝑖
𝑜
𝑛
ORDINARY AND EXACT
INTEREST
Ordinary Interest (𝑰𝒐 )

Assumed that there are 360 days in a

year

𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒅𝒂𝒚𝒔
𝑰𝒐 = 𝑷 × 𝒓 ×
𝟑𝟔𝟎
Exact Interest (𝑰𝒆 )

Assumed that there are 365 days in a

year

𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒅𝒂𝒚𝒔
𝑰𝒆 = 𝑷 × 𝒓 ×
𝟑𝟔𝟓
REMINDER
• Ordinary interest is greater than
exact interest.
• When interest ( 𝑰𝒐 or 𝑰𝒆 ) is not
specified in any problem, it is
assumed as ordinary interest (𝑰𝒐 ).
EXAMPLE
1.) Find the ordinary interest on P 5, 500
for 95 days at 𝟕 𝟒Τ𝟓 % simple interest.
2.) Find the ordinary interest on P6, 600
for 100 days at 𝟖. 𝟏 % simple interest.
EXAMPLE

3.) Find the exact interest on P7, 700

for 150 days at 𝟏𝟎 𝟏Τ𝟒 % simple
interest.
4.) Find the exact interest on P9, 900
for 215 days at 𝟏𝟐% simple interest
PRACTICE
5.) Brian borrowed 𝑷𝟑𝟎, 𝟎𝟎𝟎 from
a financing company charging
𝟒
𝟏𝟏 %
𝟓
simple interest for 180
days. How much did Brian pay
back the company at the end
of the term?
6.) At what simple exact interest
rate should Rainey invest his
P25 500 so that it earns P1 500
in 2 years and 150 days?
7.) Find the amount due if P12,
𝟑
200 was invested at 𝟏𝟐 𝟖 % for
125 days using:
a.) Ordinary Interest
b.) Exact Interest
8.) One hundred twenty five days
after borrowing money, Krizia
pays an interest of P2, 850. How
much did she borrow if the
𝟕
simple interest rate is 𝟖 𝟖 %?
9. Tisha is having difficulty in deciding as to
which investment firm she will choose:
Executive Ventures, which offers 𝟏𝟏 𝟏Τ𝟒 %
simple exact interest; or Elite Financing
Corporation offering 𝟏𝟎 𝟕Τ𝟖 % simple ordinary
interest. If she is to invest P200, 000 for 120
days which investment firm will you
recommend?
10.) Asiong wants to have P80, 000
after 210 days. How much should
𝟏
he invest now at 𝟏𝟐 𝟓 % simple
exact interest?
 ACTUAL AND
APPROXIMATE TIME
Actual and Approximate Time

• Actual time – exact or actual

number of days in any given
month

• Approximate time – all months

within a year contain 30 days
Find the actual and approximate time from March 23
to October 16, 2010.

Actual: 207

Approximate: 203
INTEREST BETWEEN
DATES
When interest is to be computed from a certain date to
another date inclusively, there are four methods of
computations:
1. Ordinary Interest for Actual Time (𝐼𝑜 − 𝐴𝑐𝑡) known
as the banker’s rule
2. Ordinary Interest for Approximate Time (𝐼𝑜 − 𝐴𝑝𝑝)
3. Exact Interest for Actual Time (𝐼𝑒 − 𝐴𝑐𝑡)
4. Exact interest for Approximate Time (𝐼𝑒 − 𝐴𝑝𝑝)

NOTE: Banker’s Rule is the default method of computation to be used

if the interest between dates is not specified.
(used by banks in computing the interest on savings deposits)
ACCUMULATION AND
DISCOUNTING
Accumulation is the process of determining the
amount 𝑭 of a given principal 𝑷 due at a specified time 𝒕.

To accumulate a principal 𝑷 for 𝒕 years, means to solve

for 𝑭 applying the formula:

𝑭=𝑷+𝑰
𝑭 = 𝑷 + 𝑷𝒓𝒕
Discounting is the process of determining the present
value of 𝑷 of any amount due in the future.

To discount the amount 𝑭 for 𝒕 years, means to solve for

𝑷 applying the formula
𝑭
𝑷=
𝟏 + 𝒓𝒕
Accumulation and Discounting

1. Accumulate the amount that the

businessman will pay if he
borrows P 25,500 for 2 years at
9¼% simple interest.
Accumulation and Discounting

𝟏
2. Discount P 160,200 at 𝟏𝟓 %
𝟓

simple interest from August 9 to

December 25 of the same year.
3. In how many years will P28, 000
accumulate to P30, 940 at 9%
simple interest?
4. Discount P 5,500 for 11 months
at 14% simple interest.
5. For a principal loaned at 15.6%
simple interest, the amount of P 14,
925 was paid at the end of 4 years
and 4 months. What is the original
sum borrowed?
6. Find the amount due on Feb
10,2005, if the present value on
Dec.13,2004 is P10,100 at 12.4%
simple interest.
7. Accumulate P 2,150 for 2.5
years using 3.6% simple
interest.
8. Discount P16,700 using
9.55% simple interest in 2 ½
years.
9. Discount P 7,800 for 125
days at 7 7/8% simple
interest.
10. A businessman borrows P
9,900 for 2 years and 3 months at
9% simple interest. What amount
must he repay?
SIMPLE DISCOUNT
1. A discount is a deduction from the final
amount F or maturity value MV of a loan or
obligation.
2. It is often called bank discount or
interest-in-advance.
3. The amount of money that the borrower
receives is called proceeds.
Formula for simple discount

𝑫 =𝑭∙𝒅∙𝒕
where:
D – simple discount
F - final amount
d - discount rate
t - time or term of discount
PROCEEDS:
𝑷𝒓𝒐𝒄𝒆𝒆𝒅𝒔 = 𝑭 − 𝑫
𝑷 = 𝑭 ( 𝟏 − 𝒅𝒕)
Final Amount:

𝑷
𝑭 =
(𝟏 − 𝒅𝒕)
1. Mr. Parras borrowed P15,800 for 9
months from Ms. Jane who charged
𝟏𝟏 % simple discount. How much
money is the proceeds?
2. How long will it take for P 8,800 to

amount to P 10,300, if the discount

rate is 11.25%?

t= 1.29 years or 1 year 3 months 14 days

3. If the proceeds of a loan of P12, 450 will
be paid with P12, 840 at the end of 1 year
and 9 months. What is the simple discount
rate?
Solution:
𝐷 = 𝐹−𝑃
𝐷 = 12,840 − 12, 450
𝐷 = 390
𝐷 390
𝑑= =
𝐹𝑡 9
12840 1
12
𝑑 = 0.0174 = 1.74 %
4. If you received P1,480,500 for borrowing
P1.5 M payable for two years and six
months, what is the discount rate?
5. How much should Ella borrow if she
needs a cash of P15,200 which will
be repaid in two years with 7.5%
simple discount?
6. Mico wants to borrow P 18, 500 from
Laguna’s Investment House payable in 3
years and 3 months. If the investment
house charges 13% interest-in-advance
what size of a loan would Mico apply
for?
7. If you borrowed P250,000 from a bank
payable for two years and 6 months at
𝟒
𝟏𝟎 % simple discount rate, how
𝟓

much will you receive from the bank?

8. Carmen borrows P 18,000 due in 5
months from a lender who charged a
discount rate of 9.2%. How much was
the discount and the money the
borrower gets?
EQUIVALENT RATES
• An interest rate and a discount rate are said
to be equivalent if the two rates result in the
same present value for an amount due in the
future.
• The formulas to be applied on discount and
interest rates are:
𝒅
𝒓= × 𝟏𝟎𝟎%
(𝟏 − 𝒅𝒕)
𝒓
𝒅= × 𝟏𝟎𝟎%
(𝟏 + 𝒓𝒕)
1. A lender charges a discount rate of
𝟏𝟏 ¾ % for discounting a note due in 4
months. What is the equivalent interest
rate?
2. What discount rate should a lender
charge to earn an interest of 𝟏𝟎 𝟒/
𝟓 % on one-hundred twenty days loan?
3. What simple interest rate is equivalent to
simple discount rate 15 ½ % in discounting
an amount for 9 months?
4. If P250, 000 accumulates to P267, 000 in
two and a half years, find:
a.) Interest rate (r)
b.) Discount rate (d)
PRACTICE
5. What discount rate should a lender
charge to earn an interest rate of
𝟕
𝟗 % for 1 year and 6 months loan?
𝟖

6. Find the simple interest rate

𝟏
equivalent to 𝟏𝟑 % simple
𝟐
discount in discounting money for 6
months?
COMPOUND INTEREST

Objectives:
 Solve problems involving compound interest
 Compute nominal and effective rate
 Compare different varieties of compound interest

http://www.youtube.com/watch?v=1j0bAIdBJrU
Compound Interest
– the interest resulting from the periodic
addition of simple interest to the principal
Compound Amount
– the resulting value when the interest is
periodically added to the principal and this new
sum is used as the new principal for a certain
number of periods
Compounding or Conversion Period
– the time between the successive interest
computations
Notations:
m – the number of conversion periods for one year
n – the total number of conversion periods for the
whole investment term
conversion periods:
Annually m=1
Semi-annually m=2
Quarterly m=4
Monthly m = 12
Total number of conversion periods form the
whole term:
n = time x number of conversion periods m
n= txm
• TERM: 𝟓 𝒚𝒆𝒂𝒓𝒔

• Compounded annually: 𝟓×𝟏 𝒏=𝟓

• Compounded semi - annually: 𝟓×𝟐 𝒏 = 𝟏𝟎

• Compounded quarterly: 𝟓×𝟒 𝒏 = 𝟐𝟎

• Compounded monthly: 𝟓 × 𝟏𝟐 𝒏 = 𝟔𝟎
Interest rate (r) – usually expressed as an
annual or yearly rate, and must be changed to
the interest rate per conversion period (periodic
rate: i) and can be found from the relation:

𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 (𝑟)

𝑖=
𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟 (𝑚)
𝑟
𝑖=
𝑚
Formula
𝑛
•𝐹 = 𝑃(1 + 𝑖)
•𝐼 = 𝐹 − 𝑃
• F – final or compound amount
• P – original principal
𝒓
• i – periodic rate 𝒊 =
𝒎
• n – total number of conversion periods for the whole term
𝒏 = 𝒕𝒎
• I – compound interest
Compute the amount (F) or maturity
value of a note at the end of 3 years, if
the principal (P) or face value is
P80,000 and the interest rate (r) is 6%
compounded semi-annually.
On January 23, 2013, a man borrowed
P150, 000 and promised to pay the
principal and interest at 9%
compounded semi-annually on October
23, 2016. How much will he pay?
Find the compound amount and
interest if P5,500 is invested at
8% compounded quarterly for 5
years and 6 months.
Accumulate P 8,400 for 2 years at
7% converted monthly.
What sum of money will be required
to settle a loan of P25,000 on April 1,
2013, if the loan is made on October
1, 2012 at a rate of 9% compounded
quarterly?
Lou-Anne borrowed P3,000,000 on August
19,2009 from a bank. If she promised to
pay the principal plus the interest at 14%
compounded semi-annually, how much
must she pay on February 19, 2018?
Present Value is defined as the principal P which, if invested for
the given time t at a given interest rate r, will amount to F on the
date F is due.
𝐹
𝑃 =
(1 + 𝑖)𝑛
1. If money is invested at 9% compounded
quarterly, find the present value of
P150,000 due at the end of 2 years and 9
months.
2. Discount P260,400 for 5 years and 3
months at 6% compounded monthly.

3. A financial obligation of P56,500 is due on

January 6, 2017. What is the value of this
obligation last July 6, 2011 at 12%
compounded semi-annually?
How much should you invest today to
provide your only son a brand new car
worth P850,000 as a graduation gift 7
years from now if money is worth
10½ % compounded quarterly?
On a boy’s seventh birthday, his parents
deposited P 30,000 in his name in an
investment house paying an interest rate
1
of 2 % compounded every three months.
2

Find the value of his savings when he

reaches 18.
Finding the Time

Time refers to the term of an investment or

how long will it take a certain sum of money
to amount to a certain other sum if it is
invested at a certain interest rate.

𝐹
log
𝑡= 𝑃 ÷𝑚
log(1 + 𝑖)
1.How long will it take P 4, 500 to
amount to P 6,100 if the interest
rate is 5% compounded quarterly?
2. How long will it take for P 7,700
to amount to P 21,100 if invested
at 16% compounded semi-
annually?
3. Rafael receives a loan of P 18,790 with
interest at 7% compounded quarterly. He
promises to pay his creditor in full on the
day when P 26,275 will be due. How long
did it take Rafael to pay the debt?
4. When is P 15, 250 due if its present value is
P 12,650 which is worth 5½%
compounded semi-annually?
5. Edward deposits P 100,000 in a savings
account that pays 13% interest
converted semi-annually. How long
will his money accumulate to
P150,000?
Finding the Rate

1
𝐹 𝑛
𝑟=𝑚 − 1 × 100%
𝑃
1. If P 3, 050 accumulates to P 8,660 in 5
years. What is the interest rate if it is
compounded monthly?

2. Find the rate compounded quarterly if

P745,000 accumulates to P786,000 in 3
years and 9 months.
3. For an amount of P 80,000 to double in 3
years and 9 months, what must be the rate of
interest compounded quarterly?

4. Sonny, who invested P 15,500 had P 19,900

returned to him 4 years and 4 months later.
At what rate of interest converted monthly
did his money earn?
Three Kinds of Rates

1. Periodic rate (i) - it is the rate used to compute

compound interest factors, and it is equal to
interest rate divided by the conversion period.

2. Nominal rate (J) - the stated annual rate of

interest when the conversion period is other than
a year.

3. Effective rate ( e) - the annual rate of interest

when the conversion period is one year.
Nominal rate ( J)
- the rate quoted when interest is compounded
more than once a year.
- In any investment problem, if the rate is not
specified as nominal or effective, it is assumed the
given rate is nominal.
1
𝐽 =𝑚 1+𝑒 𝑚 − 1 × 100%
where:
J - nominal rate
m - conversion period per year
e - effective rate
1. What nominal rate compounded
monthly, will yield an effective rate of
5.5%?

2. When interest is compounded monthly,

find the nominal rate if the effective
rate is:
a. 6.5%
b. 5/12%
c. 1 ¾%
Effective rate ( e)
𝑚
𝐽
𝑒= 1+ − 1 × 100%
𝑚
where: e - effective rate
J - nominal rate
m - conversion period per year

 When interest is compounded annually, 𝑒 = 𝐽.

 When it is compounded more than once a year, 𝑒 > 𝐽.
 In comparing two different rates at different conversion
periods per year (m), their respective effective rates are
computed.
NOMINAL AND EFFECTIVE RATE

1. What nominal rate compounded monthly, will

yield an effective rate of 5 ½%?

2. What effective rate can give you the same

final amount as when you place your money at

15% compounded monthly?

NOMINAL AND EFFECTIVE RATE

3. If interest is compounded quarterly, find the

nominal rate, which will yield an effective rate

of 6.5 %?
4. Berong has P100,000 to invest. Will he deposit the

amount in the bank paying 8% compounded semi-annually or

invest the money in an investment firm paying 7%

compounded quarterly?

5. If you have P150,000 to invest, what would be the

difference in interest rate in one year, if you invest at

10% compounded quarterly and 10% converted monthly?

6. Should I invest in a savings and loan association

paying 7% converted quarterly or in bonds yielding 7.5%

effective?

7. XYZ savings is paying 9% interest rate compounded

semi-annually while ABC savings is paying 9.5%

effective. With whom should I invest my money?

Equivalent Rates
Equivalent Rates ( eq)

If two rates produce equal interests on the same principal amount in

the same period of time.

Case 1
• To determine the compound interest rate equivalent to another
compound interest rate.
𝑚
𝐺 𝑚𝑒
Formula: 𝑒𝑞 = 𝑚𝑒 1+ −1
𝑚

where
eq - the unknown rate
me - the conversion period of the missing rate
G - the given compound interest rate
m - the conversion period of the given rate
1. What rate compounded semi-annually is
equivalent to 6% compounded monthly?

2. What rate converted monthly is equivalent to

9.2% compounded quarterly?

3. If you are to invest P500 000 at 14%

converted semi-annually for 7 years, what
rate compounded quarterly could you just as
well invest your money?
Case 2
• To determine the simple interest rate equivalent to
compound interest rate.

1+𝑖 𝑛 −1
Formula: 𝑟𝑠 =
𝑡

where: rs - the unknown simple interest

i - the periodic rate
n - the total number of conversion
periods for the whole term
t - the term or time of the
investment
1. What simple interest rate is
equivalent to 5 ½ % compounded
semi-annually, if money is invested
for 5.5 years?

2. Find the simple interest rate

equivalent to 10% compounded
quarterly for 3 years and 4 months.
Case 3
• To determine the compound interest rate
equivalent to a given simple interest rate.
1
Formula: 𝑟𝑐 = 𝑚 1 + 𝑟𝑠 𝑡 𝑛 −1

where: rc - the unknown compound interest

m - conversion period of the missing
rate
rs - the given simple interest
t - the term or time of the investment
n - the number of conversion period
for the whole term
1. What rate compounded quarterly is
equivalent to simple interest rate:
1
a.) 7 % for 7 years
2
b.) 13.5% for 8 years and 6 months
2. Ms. Castro plans to invest P100,000 at
1
12 % simple interest for three years.
2
At what rate compounded semi-
annually could she just as well invest for
the same period of time?
• If term is 15 months, what rate
compounded quarterly is
equivalent to 12%
• a.) simple interest?
• b.) compounded semi annually?
Continuous compounding

• interest that is computed and added to the balance of an

account every instant.

• Continuously compounded interest means that

your principal is constantly earning interest and the

interest keeps earning on the interest earned.

Continuous compounding
• Formula:
𝒓𝒕 −𝒓𝒕
•𝑭 = 𝑷𝒆 𝑷 = 𝑭𝒆
• Where: 𝑭 - Final Amount
• 𝑷 - Principal
• 𝒓 - rate
• 𝒕 - term of investment (years)
• 𝒆 - constant (approximately 2.71828)
1. If interest is compounded
continuously at 4.5% for 7 years, how
much will a $2,000 investment be
worth at the end of 7 years?
2. An amount of $2,340.00 is deposited
in a bank paying an annual interest rate
of 3.1%, compounded continuously.
Find the balance after 3 years.
3. If you invest $1,000 at an annual interest
rate of 5% compounded continuously,
calculate the final amount you will have in
the account after five years.
4. At what interest rate
compounded continuously would
$3,000 grow to $300,000 in 25
years?
5. How much would you have to invest
in an account earning 8% interest
compounded continuously for it to be
worth one million dollars in 30 years?
Practice
1.If P 8, 000 is invested in an account that
pays 4% interest compounded
continuously, how much is in the account
at the end of 10 years?
2.How long will it take P 4,000 to triple if it
is invested at 5% compounded
continuously?
End of compound interest
 Cash Flows
Conventions:
1. The horizontal line is the time scale, with the
progression of time moving from left to right. The
period labels can be applied to intervals of time
rather than to points on the time scale.
2. The arrows signify cash flows and are placed at the
end of the period. A downward arrow represents
expenses and upward arrows represent receipts.
3. The cash-flow diagram is depended on the point of
view.
Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130
 Single Cash Flows
Example 3.6: An investor has an option to purchase a
tract of land that will be worth $10,000 in six years. If
the value of the land increases at 8% each year, how
much should the investor be willing to pay now for the
property? Draw the appropriate cash flow diagram.
Example 3.7: You borrowed $8,000 now, promising to
repay the loan principal plus the accumulated interest
in four years at i = 10% per year. Draw the cash flow
diagram. How much will you repay at the end of four
years?

Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130
 Uniform Series Cash flows
Example 3.8 ABC Corporation had an
investment of $10,000 produces an annual
revenue of $5,310 for five years and then have
a market value of $2,000 at the end of year five.
Annual expenses will be $3,000 at the end of
each year for operating and maintaining the
project. Draw a cash flow diagram for the five-
year life of the project. Use the corporation’s
viewpoint.

Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130
 Uniform Series Cash flows
Example 3.9 If a certain machine undergoes a
major overhaul now, its output can be
increased by 20%- which translates into
additional cash flow of $20,000 at the end of
each year for five years. Draw a cash flow
diagram for the five-year life of the project.

Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130
 Uniform Series Cash flows

Example 3.10 You borrowed $15,000 from your

credit union to purchase a used car. The
interest rate on your loan is 0.25% per month
and you will make a total of 18 monthly
payments. Draw the cash flow diagram.

Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130
 Homework #2
Problem 1: What is the future equivalent of $1,000
invested at 8% simple interest per year of 2.5 years?

Problem 2: An investment earns 20% compounded semi-

annually. After how many years will it triple?

Problem 3: A man is required to pay P57,500 at the end

of 15 days for P60,000 at the end of 60 days. Determine
the rate of interest.

Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130
 Homework #2
Problem 4: How much should you deposit in an
account 5% interest semi-annually if you want to
have $25,000 after 10 years?

Problem 5: How much should Jane return at the end

of 60 days if she loaned P10,000 from a friend at a
simple interest of 10%?

Source: Sullivan, William G., Elin M. Wicks and James T. Luxhoj. (2006). ENGINEERING ECONOMY, 13TH ED.
Pearson-Prentice Hall. P104-130