SIMPLE
INTEREST
What do you think is common
among the images below?
Simple
Interest
INTEREST
the fee or rent that lenders
charge to borrowers for the
temporary use of borrowed
money
the money paid for the use
of money
has three(3) components:
PRINCIPAL, RATE and TERM
Simple
Interest
PRINCIPAL
the amount borrowed or
invested
RATE of INTEREST
the percentage of the
principal that will be charged
for specified period of time
(e.g. daily, monthly, yearly,
etc.)
TERM (TIME PERIOD)
Simple
Interest
ACCUMULATED VALUE /
MATURITY VALUE / FUTURE
VALUE
the total amount a
borrower would need to
pay back
total amount earned in an
investment
Simple interest is calculated
Simple
Interest
PRESENT VALUE
The present value of an
amount A is the amount that
has to be invested now to
accumulate A in t years.
Simple
Interest
The following variables will be used in
our mathematical treatment of simple
interest:
P = Principal amount of the loan
or
investment
(amount borrowed or
invested)
r = annual rate of simple
interest
t = term period (term) of the
loan or
investment (expressed in
Simple
Interest
From the following word problems,
identify the given information and
what is required:
1. To purchase two new industrial ovens,
PT Bake Shop paid ₱13500 interest on a
9% simple interest rate, two-year loan.
How much did PT Bake Shop borrow to
purchase the ovens?
2. Jun issued a check for ₱4950 to settle
a 1-year obligation of ₱4500. What
interest rate was he charged?
3. How long will it take ₱4000 to grow to
₱14000, if the simple interest rate is
121/2% per year?
Simple
Interest
From the following word problems,
identify the given information and
what is required:
4. Chloe invested ₱150000 in a bank at
5.3% simple interest for 5years and 3
months. How much interest did she
earn?
5. On January 31 2013 Hailey borrowed
₱275000 from ABC Finance and was
charged a simple interest rate of 14.7%.
Hailey agreed to pay exactly 3 years
later. How much must be repaid then?
Simple
Interest
From the following word problems,
identify the given information and what
is required:
6. How much should be invested now in
order to have ₱50000 in 3 1/4 years if it
is to be invested at 6% simple interest
rate?
7. At what simple interest rate will a
sum of money double itself in 5 years?
Simple
Interest
From the following word problems,
identify the given information and what
is required:
8. Aloha Car Service borrowed ₱86500 at
6.8% simple interest to cover the
increasing cost of auto insurance. Find
the term of the loan if the interest
expense was ₱29410.
9. A new model of Iphone will be
released after 3 years. Its market price is
estimated to be ₱45000. If money is
worth 5.5% simple interest, how much
should you save now to be able to afford
the Iphone in 3 years?
Simple
Interest Formulas
(1) I = Prt (4)
(2) (5) A = P + I
(3) (6) A = P(1 + rt)
Seatwork:
Determine the missing items in each
PRINCIPAL of the ff:
RATE INTEREST MATURITY
(P) (R) TIME (T) (I) VALUE (A)
P12,000 3.5% 3.5 yrs. _______ _______
5 yrs. and
P4,625 4.25% 9 mos. _______ _______
_______ 6.0% 9 mos. P650 _______
4 yrs. & 5
_______ 8.5% mos. P1,280.21 _______
P14,218.7
P12,500 5.5% _______ _______ 5
P22,658 _______ 6 yrs. _______ P33,260
P5,688 _______ 3 mos. _______ P6,612.30
Simple
InterestExercises
1. A loan of P1,500 at 3% was
repaid at the end of 2 years.
How much interest was paid?
2. An interest of P720 was paid
on a P3,000 simple interest
loan at the end of 2 years.
What was the rate of interest
3. charged?
P17,000 is in an account
paying 2 ½ % simple interest.
How much is in the account
Simple
Interest Exercises
4. A mother has received a P150,000
loan from a relative in order to
finance her daughter’s 4-year
college program. The terms are
that the mother is to repay her
relative in full at the end of 5
years with simple interest at 2%
per year. How much should she
5. repay
Whatafter 5 years
principal ? yield
will
P12,000 interest in 3 years at
16%?
Simple
Interest Exercises
6. What principal will accumulate
to P188,800 in 1 ½ years at
12% simple interest?
7. How many years are needed
for P5,700 to grow to P6,555
at 10% simple interest?
8. How long will it take for a
money to double itself at 10%
simple interest?
Assignment
1 What is the time in months to earn
P218.75 if P2,500 is invested at
15%.
2. Find the maturity value on a
P150,000 loan at 14 ½% for 9
months.
3. Find the interest on a P6,000 loan
at 17% for 4 months.
4. A man projected that he will need
P350,000 12 years from now. How
much shall be invested today if
money is worth 8.5% simple
