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Lesson 1.simple Interest

The document defines key terms related to simple interest calculations: principal amount, interest rate, time or loan period, and simple interest. It provides the simple interest formula: Interest = Principal x Rate x Time. Several examples are given to demonstrate how to calculate interest earned, interest paid, interest rate, time period, and future value using the simple interest formula. Finally, practice exercises are provided for the reader to apply the simple interest concepts.

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Mac Gabriel Villafranca
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© © All Rights Reserved
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Download as PPTX, PDF, TXT or read online on Scribd
322 views

Lesson 1.simple Interest

The document defines key terms related to simple interest calculations: principal amount, interest rate, time or loan period, and simple interest. It provides the simple interest formula: Interest = Principal x Rate x Time. Several examples are given to demonstrate how to calculate interest earned, interest paid, interest rate, time period, and future value using the simple interest formula. Finally, practice exercises are provided for the reader to apply the simple interest concepts.

Uploaded by

Mac Gabriel Villafranca
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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SIMPLE INTERESTS

Interest

Amount paid or earned


for the use of money.
Principal amount

Amount of money
borrowed or invested
on the origin date.
Interest Rate

 Annual rate, usually in


percent, charged by the
lender or rate of increase
of the investment.
Time or Loan Period

Is the agreed date or


time when the loan
will be paid in full.
Simple Interest

Interest that is
computed on the
principal and then
added to it.
Simple Interest

I=Pxrxt
Interest
Time/loan
Principal Interest
period
amount rate
*NOTE: Rate(r) is expressed in percent and Time(t)
can be expressed monthly, quarterly, semi - annually,
and annually (always express it in no. of years)
Derived Formulas

I I
P r t P r t

I=Pxrxt
Example:

1. Jaira deposited Php5,000 in a


bank at 6.5% simple interest for
2 years. How much will she
earn after 2 years?
Derived Formulas

I 𝑰
P=
P r t 𝒓𝒕
Example:

1. Manny paid Php7,400 interest at


14.5% for four year loan. What
was the original loan?
Derived Formulas

I 𝑰
r=
P r t 𝑷𝒕
Example:

1. Nestor invested Php30,000 in


the stock market which
guaranteed an interest of
Php5,600 after 3 years. At what
rate would his investment earn?
Derived Formulas

I 𝑰
t=
P r t 𝑷𝒓
Example:

1. Aileen borrowed Php10,000 from a


bank charging 12% simple interest with
a promise that she would pay the
principal and interest at the end of
agreed term. If she paid Php4,500 at the
end of the specific term, how long did
she use the money?
Future value/Total amount

The sum of the principal


and the interest at the
end of stipulated length
of time.
Future value/Total amount

A=P+I
Future Interest
Value Principal
amount
Example:

1. Ellen borrowed Php35,000


from a bank at 12.5% simple
interest for 5 years. How
much will she pay the bank
after 5 years?
Example:

2. Determine the principal


amount that you need to
invest at a simple annual
interest of 8% to have a total
amount of 446,400 at the end
of 3 years?
Exercise:

1. How much interest is charged


when Php50,000 is borrowed
for 9 months at an annual
simple interest rate of 10%?
Exercise:

2. If Ben borrowed php42,000


from a bank at 10.5% simple
interest, how much will he
pay at the end of 12 months?
Exercise:

3. The total amount paid on a


loan is Php84,000. If the
loan was for 2 years at 9%
simple interest, what was the
original loan?
Exercise:

Future Value (A)


Exercise:

Future Value (A)


36,000 96,000
25,000 40,000
9.5% 9,500
300,000 5 yrs.
16,250 1,016,250
STEPHANIE P. DIASNES

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