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Simple Interest Calculations Guide

This document discusses simple interest, including how to calculate simple interest, maturity value, and solving for unknown principal, rate, or time. Simple interest is calculated as Interest = Principal x Rate x Time. Maturity value is the future value and is calculated as Maturity Value = Principal + Interest. Several examples are provided to demonstrate calculating simple interest, maturity value, and solving for unknown variables in simple interest problems.

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Jerry Mae Ranes
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350 views14 pages

Simple Interest Calculations Guide

This document discusses simple interest, including how to calculate simple interest, maturity value, and solving for unknown principal, rate, or time. Simple interest is calculated as Interest = Principal x Rate x Time. Maturity value is the future value and is calculated as Maturity Value = Principal + Interest. Several examples are provided to demonstrate calculating simple interest, maturity value, and solving for unknown variables in simple interest problems.

Uploaded by

Jerry Mae Ranes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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SIMPLE INTEREST

PREPARED BY: MR. JERRY MAE A. RANES


LEARNING OUTLINE:
1. Compute simple interest
2. Compute maturity value
3. Compute unknown principal, rate, or time
ANNUAL SIMPLE INTEREST
𝐼𝑠 = 𝑃𝑟𝑡

where: 𝐼𝑠 = simple interest


𝑃 = principal
𝑟 = simple interest rate
𝑡 = term or time in years
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 one year?

Answer: The interest earned is P2,500.


EXAMPLE #2
How much interest is charged when P50,000 is
borrowed for 9 months at an annual interest rate of
10%?

Answer: The simple interest charged is P3,750.


EXAMPLE #3
Complete the table below by finding the unknown.
Principal (P) Rate (r) Time (t) Interest
(a) 2.5% 4 1,500
36,000 (b) 1.5 4,860
250,000 0.5% (c) 275
500,000 12.5% 10 (d)
EXAMPLE #3
Complete the table below by finding the unknown.
Principal (P) Rate (r) Time (t) Interest
15,000 2.5% 4 1,500
36,000 9% 1.5 4,860
250,000 0.5% 0.22 275
500,000 12.5% 10 625,000
EXAMPLE #4
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?

Answer: The amount invested is P80,000.


EXAMPLE #5
If an entrepreneur applies for a loan amounting to
P500,000 in a bank, the simple interest of which is
P157,500 for 3 years, what interest rate is being
charged?

Answer: The bank charged an annual simple interest


rate of 10.5%.
EXAMPLE #6
How long will a principal earn an interest equal to half
of it at 5% simple interest?

Answer: It will take 10 years for a principal to earn


half of its value at 5% simple annual interest rate.
MATURITY (FUTURE) VALUE
𝐹 = 𝑃 + 𝐼𝑠

where: 𝐹 = maturity (future) value


𝑃 = principal
𝐼𝑠 = simple interest
MATURITY (FUTURE) VALUE
𝐹 = 𝑃 1 + 𝑟𝑡

where: 𝐹 = maturity (future) value


𝑃 = principal
𝑟 = simple interest rate
𝑡 = term or time in years
EXAMPLE #7.1
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?

Answer: (a) The future or maturity value after 1 year


is P1,002,500.
EXAMPLE #7.2
Find the maturity value if 1 million pesos is deposited
in a bank at an annual simple interest rate of 0.25%
after: (b) 5 years?

Answer: (b) The future or maturity value after 5


years is P1,012,500.

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