SIMPLE INTEREST

PRINCIPAL is the amount borrowed. RATE is the

cost of using money expressed as a percentage of
the principal for a given period of time. TIME is the
term of period of the loan.
 SIMPLE INTEREST FORMULA
I = Prt
I - interest (amount paid for the use of money)
P - principal (amount borrowed/lent/invested)
r - rate (percent of interest being charged)
t - time (number of periods for which the money will be

borrowed/lent/invested
 MATURITY/FUTURE VALUE
total amount due upon maturity

F=P+I
F = P + Prt
When we deposit money in the bank, we are
in effect, lending our money to the bank. The
bank usually uses our money to grant loans to
borrowers. The bank pays the depositor
interest on money deposited. Similarly, when
we go to the bank and borrow money, we are
the ones paying interest to the bank for the
money that we borrow.
1. Tessa borrowed ₱ 2 000 at 12% interest for 2
years.Find the interest and the maturity value.

a. I = Prt = ₱ 2 000 x 0.12 x 2 = ₱ 480

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b. F = P + I = ₱ 2 000 + ₱480 = ₱2 480
2. Eunice lent ₱3 000 at 14% for 6 months. How
much will she get at the end of the term? How
much interest did she earn?

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a. F = P + I
F = ₱3000 + ₱3000 x 0.14 x 6/12
F = ₱3000 + ₱210
F = ₱3 210
2. Eunice lent ₱3 000 at 14% for 6 months. How
much will she get at the end₱₱ of the term?
How much interest did she earn?

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b. I = F - P
I = ₱3210 - ₱3000
I = ₱210
3. Nora invested ₱1800 for 9 months at 1% per
month. How much will she get upon maturity?
How much interest did she earn?

2 00
a. F = P + I I=F-P
F = ₱1800 + ₱1800 x .01 x 9 1692 - 1800
F = ₱1800 + ₱ 162 I = ₱ 162
F = ₱1962
Compute for I and F.
P r t I F
a. ₱ 1000 10% 3 yrs ______ _______
b. ₱ 2000 2%/mo 2 yrs ______ _______

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c. ₱2 550 8% 2 qtr ______ _______
d. ₱3 160 6% semi-annual 4 yrs ______ _______
e. ₱720 1%/mo 2 yrs ______ _______
 ACTIVITY
Find the interest.

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2 00
 MORTGAGES

A mortgages is probably the biggest loan one can

have. It is usually obtained for a house, a house and

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lot, or for a machinery or equipment.
Mortgage loan is when you use your property as
collateral for a loan from a financial institution.
 The DOWN PAYMENT is usually a certain
percent of the purchase price of the
property. This is generally called the buyer's

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equity.
 Assume that you wish to purchase a
secondhand car worth ₱312 500.00 and the
seller requires a 20% down payment

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Downpayment = Purchase price x Down Payment %
= ₱ 312 500.00 x 20%
= ₱ 62 500
 Assume that you wish to purchase a
secondhand car worth ₱312 500.00 and the
seller requiresa 20% down payment

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Mortgage Loan = Purchase price x Down Payment
= ₱ 312 500 - ₱ 62 500
= ₱ 250 000
The installment payment on the loan is
termed amortization.Assume that 30 years is
the term of the loan. 30 x 12 months per

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year = 360, meaning you have to make 360
monthly payments to be able to fully pay
your loan.
ACTIVITY: A. Compute for I and F.
P r t I F
a. ₱ 1000 10% 3 yrs ______ _______
b. ₱ 2000 ₱2%/mo 2 yrs ______ _______

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c. ₱2 550 8% 2 qtr ______ _______
d. ₱3 160 6% semi-annual 4 yrs ______ _______
e. ₱720 1%/mo 2 yrs ______ _______
ACTIVITY: A. Compute for I and F.
P r t I F
a. ₱ 1000 10% 3 yrs ₱300 P 1300
b. ₱ 2000 ₱2%/mo 2 yrs P960 2960

2 00
c. ₱2 550 8% 2 qtr P102 2652
d. ₱3 160 6% semi-annual 4 yrs P1516.8 4676.8
e. ₱720 1%/mo 2 yrs 172.8 892.8
ACTIVITY B
1. My product costs 15 dollars and 7 are sold
this week. My fixed cost for the week are

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94.50 dollars, and my variable cost to produce
my product are 1.50 dollars per unit. How
much profit would I have made?
ACTIVITY
2 00 B
Profit = total revenue – total costs
P   SP  Q   FC  VC  Q 
P=
ACTIVITY
2. Calculate the break even point in sales
units and sales in pesos from the
following information:

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Sale Price/Unit - Php 20
Variable Cost - Php 8
Fixed Cost - Php 12 000
ACTIVITY
3. Anna borrowedPhp 500 for a year at
16%. How much will she need to pay for
the loan when it matures? How much

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interest will she have to pay?
ACTIVITY
4. Tych lent Gene Php 4 500 at 6% for 6
months.
a. How much should Gene have to pay

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back the loan with interest?
b. How much interest will he pay for the
loan?