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DLP 2 Simple Interest

The document is a concept note on simple interest from Arellano University. It defines simple interest and the formulas used to calculate interest, maturity value, future value, and present value. It provides examples of simple interest problems and calculations. It gives exercises for students to complete calculating interest, rate, time, and principal values using the simple interest formulas.

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andrea balabat
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190 views4 pages

DLP 2 Simple Interest

The document is a concept note on simple interest from Arellano University. It defines simple interest and the formulas used to calculate interest, maturity value, future value, and present value. It provides examples of simple interest problems and calculations. It gives exercises for students to complete calculating interest, rate, time, and principal values using the simple interest formulas.

Uploaded by

andrea balabat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ARELLANO UNIVERSITY

Juan Sumulong Campus


2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School 2021-2022

NAME: _____________________________ DATE:________________________


GRADE & SECTION:___________________ TEACHER:_____________________

CONCEPT NOTES 1

I. TOPIC: BASIC BUSINESS MATHEMATICS: Simple Interest

II. LEARNING GOAL: The students should be able to:

a. Define simple interest.


b. Illustrates simple interest.
c. Compute interest, maturity value, future value, and
present value in simple interest environment.
d. Solve problems involving simple interest.

III. CONCEPTS

Simple Interest

I = Prt

Where:

I = simple interest

P = principal or the amount invested or borrowed

r = simple interest rate

t = term or time in years

Maturity(future) value

F=P+I

F = P(1 + rt)
Example 1: A bank offers 0.25% annual simple interest rate for a particular deposit. How much interest
will be earned if 1 million pesos is deposited in this savings account for 1 year?

Given:

P = 1,000,0000

r = 0.25%=0.0025

t=1

FIND:= Is

I=Prt

= (1,000,000)(0.0025)(1)

=2500

EXAMPLE 2: HOW MUCH INTEREST IS CHARGED WHEN P50,000 IS BORROWED FOR 9MONS. AT AN
ANNUAL RATE OF 10%

Given:

P= 50,000

r=10%=0.1

t=9mons. =9/12=0.75

I=Prt

I=(50,000)(0.1)(0.75)

I= 3,750

Example 3: When invested at an annual interest rate of 7%, the amount earned P11,200 of simple
interest in two years. How much money was originally invested?

Given:

I = 11,200

r = 7% = 0.07

t=2

Solution:

I = Prt
P = 𝐼/𝑟𝑡

= 11,200/(0.07(2))

= 11,200/0.14

= 80,000

Example 4: If an entrepreneur applies for a loan amounting to P500,000 in a bank, the simple interest of
which is P 157,000 for 3 years, what interest rate is being charged?

Given:

P= 500,000

I= 157,000

t=3

Find: rate

Solution: I = Prt

r = 𝐼/𝑃𝑡

r= 157,000/((500,000)(3))

=157,000/1500000

= 0.105= 10.5%

Example 5: Find the maturity value if 1 million pesos is deposited in a bank at an annual simple interest
rate of 0.25% after (a) 1 year (b) 5 years?

Given: P = 1,000,000

r = 0.25% = 0.0025

Find:(a) maturity or future value F after 1 year

(b) maturity or future value F after 5 years

Solution: F=P+I F=P(1+rt)


a. Find the maturity value after 1yr

F= P(1+rt)

= 1,000,000(1+(0.0025)(1))

=1,000,000(1.0025)

1,002,500

b. Find the maturity value after 5yrs

F=P(1+rt)

=1,000,000(1+0.0025(5))

=1, 012,500

IV. EXERCISES

Complete the table below by finding unknown. (show your solution)

PRINCIPAL RATE TIME INTEREST


(P) (r) (t) (Is)
(a) 2% 3 1000
25,000 (b) 2 3000
250,000 1% (c) 500
500,000 12.5% 10 (d)

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