What is the difference between simple interest and

compound interest?

Simple interest is something you can calculate

immediately based on the original amount of money
you invested or borrowed. While compound
interest is paid not only on the principal of a loan or
deposit but also on the accumulated interest from
previous periods of the loan or deposit.

Remember:
If your rate is in percent convert it to decimal
Formula: Divide by 100
If your time is in months convert it to years
Formula: x/12
a. These are the only variables that we can
find in the problem (I, P, r, t, F).

a. EARN yung hinahanap. So, we are looking for

the Interest
b. TOTAL AMOUNT yung hinahanap. So, we are
looking for the Final Amount (F).
Make sure to use as many decimal
places as possible to have a more
accurate answer.

≈ 6.41667

If you want it to be exact use this

( )

Given:
P = ₱ 820,000
F = ₱ 962,816.67

r=?

One way to get the interest is to

subtract the principal from the Final
Amount.
This is the formula for the Final Amount
F = P + I. Although we don’t need F, we
need I. Unfortunately, we have both F
and P. And so, we can solve for I by just
subtracting our principal from the final
amount. The formula is:
I=F–P
= 962, 816.67 – 820, 000
= 142, 816.6667
 Given:
P = ₱ 500, 000
I = ₱ 250, 000
r = 0.085
t=?

Advice: Words such as Earn or an Increase in

money are usually referring to interest.

≈ 5.88
Note: Round up if ‘t’ is missing.
If ang decimal kay 5 up, then you round it off, if
5 below, then you just write the number lang
without the decimals
5.1, write 5 lang since it's below 5, pero kato kay 5.88 man, e round off nimo
siya into 6 yrs since nilampas siyag 5.

Given:
F = ₱ 324, 268
t = 11/12 months
r = 0.054
P=?

We’re going to use this alternative

formula: F = P (1 + rt)

Remember:
Use only "two" decimal places for the
final answer. When solving as much as
possible, use the original fraction if the
calculator can handle it; otherwise, use as
many decimal places as possible.

If we’re looking for the rate. Usually, we

use “four” decimal places para
pagconvert sa percent, two decimal
places.

For the time, it depends.

Reminder:
Compounded every 4 months
n=3
How many 4 months is possible in a
year? The answer is 3.

Every 6 months? The answer is 2.

Compounded Monthly: The answer is 12.
Compounded every 2 months: The
answer is 6.
 Simple Interest:
Compound Interest
 Given:
i = 0.0861
n=4 (compounded quarterly)
FV = ₱ 540, 000
t=5
P=?

Given:
FV = ₱ 1,000,000
t=
P = ₱ 250,000
n = 12
I=?

Given:
P = ₱ 250, 000
FV = 500, 000
r = 0.0982
n=6
t=?

.11(12) = 1.32 months

t = 7 years and 1.32 months