Simple Interest

Simple Interest
•I = Prt; where P is principal, r is the rate and t is the
time in years.
•Interest – The amount earned or paid for the use of
money.
•Principal – The amount of money borrowed or
deposited.
•Simple Interest – The amount paid only on the
principal
•Annual Interest Rate – The percent of the principal
earned or paid per year.
 Example
1. A Php 1, 000 bond earns 6% simple annual interest.
What is the interest earned after 4 years?

Given:
P= 1,000 r = 6% = 0.06 t=4 I=?
Solution: I = Prt
I = (1,000)(0.06)(4)
I = Php 240
 Example
1. Find the simple interest earned on Php 15 250 after 18
months in a money market account paying 5% annual
interest.

Given:
P= 15,250 r = 5% = 0.05 t = 18 mos = 1.5 years I = ?
Solution: I = Prt
I = (15,250)(0.05)(1.5)

I = Php 1,143.75
Final Amount (F)

• The amount of an account that earns simple interest is the sum of

the interest and the principal.
• F = P + Prt or F = P(1 + rt)
• You can use either formula to get the balance when calculating the
balance after simple interest.
 Example
1. Susan deposits Php 2000 into her savings account. What is
her balance after she earns 12% simple interest for 6 years?

Given:
P= 2,000 r = 12% = 0.12 t =6 F= ?

Solution: F= P(1+rt)
F = (2,000)((1+(.12)(6))

F = Php 3 440
 Find the amount invested if John invested a sum of
money, which earned Php. 750 simple interest at the rate
of 6% annually over 2 years.
Given:
I= 750 r = 6% = 0.06 t =2 P= ?

Solution: I= Prt

P= Php 6,250
 Find the annual rate if Tom earned Php. 540 when he
invested Php. 16 820 for 8 months.

Given:
I= 540 P = 16,820 r= ?
Solution: I= Prt

r= 0.0482 or 4.82%
 How long will an investment of Php. 10 000 at the rate
of 8% simple interest will reach Php. 14 800?

Given:
P= 10,000 r = 8% = 0.08 I =4,800 t= ?

Solution: I= Prt

t=6 years