An Annual simple interest is based on the 3 factors:

a. Principal which is
the amount of
money
invested/borrowed.
b. Simple Interest
Rate, usually
expressed as
percent.
c. Time or term of In
loan, in years. 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 1 year?
Solution

Answer: The interest earned is P 2,500.00

Example # 2

How much interest is charged

when P 10,000.00 is borrowed
for 9 months at monthly
simple interest rate of 5%?
 Note: When the
Solution term is expressed
Given: in months (M), it
should be
P = 10,000 converted to
r = 0.05 x 12 = 0.60 𝑴
years by t = .
𝟏𝟐
t = 9/12 yr. = 0.75 yr.
Find: Is Answer: The
Is = Prt interest
Is = (10,000)(0.60)(0.75) earned is
Is = 4,500 P 4,500.00
Example # 3
Complete the table below by finding the unknown.
Example # 3
Complete the table below by finding the unknown.
15,000
15,000
9%
15,000
9%
0.22
Many persons or institutions are
interested to know the amount that a
creditor will give to the debtor on the
maturity date. For instance, you may be
interested to know the total amount of
money in a savings account after t years
at an interest rate r. This amount is
called the maturity value or future
value (F).
Example:

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 and(b) 5 years?
Note:
There are two ways to solve the problem.
Method 1: Solve the simple interest 𝐼𝑠 first
and then add it to P, that is, F = P + 𝑰𝒔 .
Method 2: Use the derived formula
F = P(1 + rt).
Solution:

a. When t = 1, the simple interest is

given by
Method 1:
𝐼𝑠 = Prt = (1,000,000)(0.0025)(1) = 2,500

F = P + Is = 1,000,000 + 2,500 = 1,002,500

Solution:
Method 2: To directly solve the future
value F,
F = P(1 + rt)
= (1,000,000)(1 + 0.0025(1)
= 1,002,500
Solution:

b. When t = 5, the simple interest is

given by
Method 1:
𝐼𝑠 = Prt = (1,000,000)(0.0025)(5) = 12,500

F = P + Is = 1,000,000 + 12,500 = 1,012,500

Solution:
Method 2: To directly solve the future
value F,
F = P(1 + rt)
= (1,000,000)(1 + 0.0025(5)
= 1,012,500
1. Find the unknown P, rate
r, time t, and interest I by
completing the table.(5
points each)
2. What are the amounts of
interest and maturity value of a
1
loan for P150,000 at 6 % simple
2
interest for 3 years? (10 points)
1
(1)12,000
(2)100,000
(3) 0.5%
(4) 3.34
(5) 203,500
2

I = P29,250
F = P179,250
1. Match the terms in column
A with the correct definitions
in Column B. You may choose
more than one answer from
Column B.
2. Complete the table by
finding the unknown.
1
(1) D
(2) A
(3) B, E
(4) F
(5) C
2
(1) I = 36,000 (6) I = 9,500
(2) F = 96,000 (7) P = 300,000
(3)P = 25,000 (8) t = 5
(4) F = 40,000 (9) I = 16,250
(5) r = 9.5% (10)F = 1,016,250