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2022FJA Interest
2022FJA Interest
2022FJA Interest
how much is paid for the use of money (as a percent, or an amount)
Example: Borrow $1,000 from the Bank
Doesn’t compound
FORMULA OF SIMPLE INTEREST:
I= Prt
Given: I= Prt
t=2 = (500)(0.04)(2)
I= 40
P=500
r= 0.04
Answer: The interest is $40.
MATURITY VALUE
FORMULA:
M= P + I = P( 1 +rt)
Simple interest is a basic tool to compute for the extra amount every time
money is invented, deposited or borrowed
COMPOUND INTEREST
Is the procedure in which interest is periodically calculated and added to the
principal and this new sum is used as the new principal for a certain number
of periods. The time interval between succeeding interest calculations is called
the conversion period (or compounding period or interval period).
It is when you earn interest on both the money you’ve saved and the interest
you earn.
DIFFERENCE BETWEEN SIMPLE
INTEREST AND COMPOUND INTEREST
Conversion periods: Total number of conversion periods from the whole term:
Daily m= 365
Example: Let the term be 4 years
n= t x m
i= r
m
FORMULA OF COMPOUND INTEREST:
I= compound interest
Example 1:
https://www.idfcfirstbank.com/finfirst-blogs/personal-loan/what-is-simple-interest
https://www.investopedia.com/terms/s/simple_interest.asp#:~:
text=Investopedia%20%2F%20Nez%20Riaz,What%20Is%20Simple%20Interest%3F,da
ys%20that%20elapse%20between%20payments
.https://www.youtube.com/watch?v=Uf56W2r53gs
https://www.consumerfinance.gov/ask-cfpb/i-want-to-teach-my-11-year-old-about-compo
und-interest-is-there-an-easy-way-to-illustrate-it-en-1683/
MMW book by Esmeralda A. Manlulu & Liza Marie M. Hipolito