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Simple and Compound Interest Activity.
Simple and Compound Interest Activity.
Simple and Compound Interest Activity.
Instructions: Read and analyze the scenario. Solve and answer the given question.
Due to the Covid-19 pandemic Ms. Dela Cruz a female resident of Brgy. May Pag-asa somewhere in Quezon
Province thinks of a business that can provide for her needs as well as the needs of her neighbors so she can be
of help even in this trying time.
Since she didn’t have money on hand, she decided to borrow from a bank as the start-up capital of ₱50, 000.00
for 3 years. 2 banks offered her. Bank A offers a 3% simple interest rate per year and Bank B offers 3%
compounded annually. On what bank will Ms. Dela Cruz choose and why?
Table 1. Bank A: Simple Interest
Time Principal (P) Cooperative Group Amount after t years
(t) Solution Answer (Maturity Value)
1 ₱50, 000.00 (₱50, 000.00)(0.03)(1) ₱1,500 ₱51, 500.00
2 ₱50, 000.00 (₱50, 000.00)(0.03)(2) ₱3,000 ₱53, 000.00
3 ₱50, 000.00 (₱50, 000.00)(0.03)(3) ₱4,500 ₱54, 500.00
Solution: 54, 500.00 - 50, 000.00 = 4,500
What bank will Ms. Dela Cruz choose, Bank A or Bank B? Why?
Ms. Dela Cruz should choose Bank A since its interest is ₱54, 500.00 compared to Bank B which has a interest of
₱54, 636.35. Ms. Dela Cruz would be able to save ₱136.35 by choosing Bank A so it is the better option.