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Simple Intererest

SIMPLE INTEREST

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Mary Ann Cuares
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7 views

Simple Intererest

SIMPLE INTEREST

Uploaded by

Mary Ann Cuares
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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SIMPLE &

COMPOUND
INTEREST
•interest that is computed
on the principal. The
interest remains
constant throughout the
term.
Lender or creditor – person (or
institution) who invests the money or
makes the funds available.
• Borrower or debtor – person (or
institution) who owes the money or
avails of the funds from the lender
• Origin or loan date – date on
which money is received by the
borrower
Repayment date or maturity date
– date on which the money borrowed or loan
is to be completely repaired

• Time or term (t) – amount of


time in years the money is
borrowed or invested; length of
time between the origin and
maturity dates
Principal (P)
– amount of money borrowed or invested on the origin date

• Rate(r) – annual rate, usually in


percent, charged by the lender, or
rate of increase of the investment
• Interest (I) – amount paid or earned
for the use of money
Maturity value or future value (F) –amount
after t years that the lender receives from the
borrower on the maturity
• FORMULA:
I= Prt
• where:
• Is = Simple Interest
• P = Principal or amount invested or borrowed
• r = simple interest rate
• t = term of time in yeaR
EXAMPLE 1:
• To solve the problem in the Simply Saving
activity which is a common scenario among
Filipino working students wherein many can
relate:
• GIVEN:
P = ₱10,000.00
r = 2.75% or 0.0275
t =0.5 or 6 /12 (6 months), 1 (1 year), 1.5 or 18 /12
(18 months)
Find the Is = ?
Substitute the given to the formula Is
= Prt
For 6 months
Is = Prt
Is = (₱10,000.00) (.0275)
(0.5)
Is= ₱137.50
For 1 yr
Is = Prt
Is = (₱10,000.00)
(.0275) (1)
Is =₱275.00
For 18 months
Is = Prt
Is = (₱10,000.00) (.0275)
(1.5)
Is = ₱412.50
• EXAMPLE 2:
Due to COVID-19 pandemic Miss Dada a female
resident of Brgy. May Pagkakaisa somewhere in
Quezon Province thinks of a business that can
provide for her needs as well as the need of her
neighbors so she can be of help even in this trying
time. Since she doesn’t have money on hand, she
decided to borrow from a bank as the start-up capital
of ₱50,000.00 at 7% simple interest rate payable
within 5 years. Compute for the interest yield.
Notice the simple interest remains
constant throughout the year and you
only multiply with the term that you
are computing. Therefore, if you are a
borrower make sure that the interest
on your loan is not too high. Try to
compute it first before you apply for a
loan. Compare first the interest and the
term of the different lending
ASSIGNMENT

• A typhoon severely damaged a certain place in


Quezon Province. The wealthiest family in that area
who happened to have large businesses have
thought of a way to help SME’s or the small
business enterprises to recover, as well as those
poor families affected by the said typhoon. The
family then decided to allot funds to lend to those
who are victims of calamity by giving a simple
interest loan for only 10% per annum. If the family
was able to lend ₱1,500,000.00, how much interest
would be earned after 5 years? Use a model table
discussed in this lesson to show the simple interest
earned. What do you think about Filipino values

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