ORDINARY

AND
EXACT INTEREST
PREPARED BY:
LIANTO, CRISTY M.
WHAT IS ORDINARY & EXACT INTEREST?
- TWO WAYS OF CALCULATING SIMPLE INTEREST

Ordinary Interest Exact Interest

is calculated on the basis of a Is calculated on a 365-day per
360-day year year calendar
Assume 30-days in each month
Formula:
I = principal * rate * Formula:

day/360 I = principal * rate *

days/365
EXAMPLE1:
Assume you have a $2500 loan at 12% interest for 60 days.
Find the ordinary interest and exact ,interest that you
should pay.
ORDINARY INTEREST EXACT INTEREST
I = principal * rate * day/360 I = principal * rate * day/365
P= $2500 P= $2500
R= 12%(0.12) R= 12%(0.12)
T= 60 DAYS T= 60 DAYS

I = $2500 * 12%(0.12) * 60/360 I = $2500 * 12%(0.12) * 60/365

I = $50 I = $49.31
Example2:
Calculate the ordinary interest of $10,000 at 9.5% interest running
from August 8, 2019 to May 4, 2020. Using a). Approximate time &
b). Actual time
Aug. 30-8 = 22
Sep. 30 APPROXIMATE TIME
Oct. 30
Nov. 30
I = principal * rate * day/360
Dec. 30 P= $10,000
Jn. 30
Feb. 30
R= 9.5%(0.095)
Mar. 30 T= 266 DAYS
Apr. 30
May 4
I = $10,000 (0.095) ( 266/360 days)
Total of days 266 I = $701.94
Aug. 31-8 = 23

Sep. 30 ACTUAL TIME

Oct. 31
I = principal * rate * day/360
Nov. 30
P= $10,000
Dec. 31
R= 9.5%(0.095)
Jn. 31
T= 270 DAYS
Feb. 29
I = $10,000 (0.095) ( 270/360 days)
Mar. 31
I = $712.50
Apr. 30

May 4

Total of days 270

 EXAMPLE 3:
What is the ordinary interest on $5,000 for 100 days at 8% interest
rate? Find the exact interest for the $5,000 for also 100 days .

ORDINARY INTEREST EXACT INTEREST

I = principal * rate * day/360 I = principal * rate * day/365
P= $5,000 P= $5,000
R= 8%(0.08)
R= 8%(0.08)
T= 100 DAYS
T= 100 DAYS
I = $5,000 (0.08) (100/360 DAYS)
I = $5,000 (0.08) (100/360 DAYS)
I = $109.59
I = $111.11
THANK YOU !