INTEREST

LESSON OBJECTIVES

 define simple interest

To solve problems
involving simple interest
and maturity value
Simple
Interest
 WHAT
IS
SIMPLE
Simple interest
is earned when only the original
principal earns interest for the duration
of the term. .
Simple interest
is earned when only the original
principal earns interest for the duration
of the term. .
 PRINCIP
AL
is the amount of
money borrowed
Simple interest
is earned when only the original
principal earns interest for the duration
of the term. .
 Rate
percentage;
interest rate per
year
Simple interest
is earned when only the original
principal earns interest for the duration
of the term. .
Term/time
is the length of the
transaction period.
It is expressed in
years
EXAM
PLE
Find the interest earned after 5 years if
P200,000 is deposited in a savings
account which earns 5% simple
interest.
EXAM
PLE
Find the interest earned after 5 years if P200,000 is
deposited in a savings account which earns 5% simple
interest.

P = P200,000
EXAM
PLE
Find the interest earned after 5 years if P200,000 is
deposited in a savings account which earns 5% simple
interest.

r = 5% or 0.05
EXAM
PLE
Find the interest earned after 5 years if P200,000
is deposited in a savings account which earns 5%
simple interest.

t = 5 years
 I = Prt
where;
P = P200,000
r = 5% or 0.05
t = 5 years

I = Prt
= (200,000) (0.05) (5)
= 50,000
EXAM
PLE
Find the interest earned after 5 years if P200,000 is
deposited in a savings account which earns 5% simple
interest.

Hence, the interest earned in 5

years is P50,000.
MATURI
TY
 is the amount of money,
which lender receives from
the borrower at the end of
the term
 P200,000 for 5 years with
5% simple interest

P50,000 Charles
Sally
 P50,000

P200,000 Charles
Sally
 P250,000
Charles
Sally
F=P+I
= P + Prt
F = P (1+ rt)
EXAM
PLE
What is the maturity value of a
400,000-peso debt payable in 2
years at 8 1/4 % ?
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?

P = 400,000-peso
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?

r = 8 ¼% or 0.0825
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?

t = 2 years
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?

F = P(1 + rt)
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
F = P(1 + rt)
F = 400,000 (1 + rt)
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
F = P(1 + rt)
F = 400,000 (1 + (0.0825)(t))
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
F = P(1 + rt)
F = 400,000 (1 + (0.0825) (2))
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
F = P(1 + rt)
F = 400,000 (1 + 0.165)
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
F = P(1 + rt)
F = 400,000 (1.165)
EXAM
PLE
What is the maturity value of a 400,000-
peso debt payable in 2 years at 8 1/4 % ?
F = P(1 + rt)

F (MATURITY VALUE) = 466,000

All about
time
 If t is given in months, then t= number of months
12 .

For example ,
if the term is 39 months, then t =
All about
time
MONTHS DAYS
January 31
February 28
March 31  If t is given in days,
April 30
May 31 then t =
June 30
July 31
August 31
September 30
October 31
November 30
December 31
All about
time
 If the time given is between two dates, for
example, March 21, 2016 and July 14, 2016 we
count each day, excluding the original date,
within the term. (Add an extra day to
February if it falls on leap year.)
All about
time
 If the dates coincide, we count by months.
For example, the time between July 20, 2015
and March 20, 2016 is 8 months. Hence, in
this case, .
EXA
MPLE
Find the maturity value of a P850,000
investment from May 25, 2016 to January
10, 2017 at 7.25% simple interest.
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
Given:
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
Given:
P = 850,000
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
Given:
P = 850,000
r = 7.25% or 0.0725
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
Given:
P = 850,000
r = 7.25% or 0.0725
t=?
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
MONTHS DAYS
May 6
June 30
July 31
August 31
September 30
October 31
November 30
December 31
January 10
TOTAL 230
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
MONTHS DAYS
May 6

Given: June
July
30
31

P = 850,000 August 31
September 30
r = 7.25% or 0.0725 October 31

t = 230 days November

December
30
31
January 10
TOTAL 230
Find the maturity value of a P850,000 investment
from May 25, 2016 to January 10, 2017 at 7.25%
simple interest.
Given: Solution:
P = 850,000 F = P ( 1 + rt)
r = 7.25% or 0.0725
t = 230 days

Hence, the maturity value is P

derived
formulas
There are other formulas that you have to be
familiar with. These formulas were all derived
from I = Prt and F = P(1+rt).

𝑰 t r
𝑷=
𝒓𝒕
derived
formulas
There are other formulas that you have to be
familiar with. These formulas were all derived
from I = Prt and F = P(1+rt).

𝐹
𝑃=
1 +𝑟𝑡
1 2 3 4 5

6 7 8 9 10
activity
1. Given: P = 12,500, r = 10%, t = 3.5 years, find simple interest.
2. Given: P = 1.5M, r = 5.2%, t = 3.5 years, find maturity value
3. How long will it take Php 24,000 to increase to Php 30,000 if
the simple interest rate is 6.5%?
4. Find the maturity value if Php 25,000 is invested from
October 15, 2016 to December 15, 2017 at simple interest os
14%.
5. At what simple interest rate will P415,000 increase to
P500,000 in 3 years?
 What is
PRINCIP
AL?
 PRINCIP
AL
is the amount of
money borrowed
On March 20, 2016, Jen borrowed P36,500
from Tom. She promised to pay the
principal and 11.75% simple interest on
November 15, 2016. How much will Tom
receive on the said date?
On March 20, 2016, Jen borrowed P36,500
from Tom. She promised to pay the
principal and 11.75% simple interest on
November 15, 2016. How much will Tom
receive on the said date?

What is the principal in the given problem?

On March 20, 2016, Jen borrowed P36,500
from Tom. She promised to pay the
principal and 11.75% simple interest on
November 15, 2016. How much will Tom
receive on the said date?

What is the principal in the given problem?

In the formula, I = Prt
what does Prt stands for?
What do you called the amount of
money which the lender receives from
the borrower at the end of the term?
What do you called the amount of
money which the lender receives from
the borrower at the end of the term?

MATURITY
VALUE
The length of transaction
period is called __________.
The length of transaction
TERM
period is called __________.
On March 20, 2016, Jen borrowed P36,500
from Tom. She promised to pay the
principal and 11.75% simple interest on
November 15, 2016. How much will Tom
receive on the said date?
On March 20, 2016, Jen borrowed P36,500
from Tom. She promised to pay the
principal and 11.75% simple interest on
November 15, 2016. How much will Tom
receive on the said date?

WHAT IS THE INTEREST

RATE?
On March 20, 2016, Jen borrowed P36,500
from Tom. She promised to pay the
principal and 11.75% simple interest on
November 15, 2016. How much will Tom
receive on the said date?

WHAT IS THE INTEREST

RATE?
If t is given in months,
then t= .
If t is given in months,
number of months
then t= 12 .
What is the formula to get
the maturity value?
F = P (1 + rt)
Solve :

Given P = P275,000, r = 8.75%,

t = 12 years, find I.
I = (275,000)(0.0875)(12)
= 288,750
It is earned when only the original
principal earns interest for the
duration of the term. .
Simple interest