Mathematics

of
Investment
Basic Terms
Interest
– is the amount charged for using borrowed
money.
Principal amount
– is the sum money that is originally
borrowed from an individual or financial
institution. It does not include interest.
 Simple Interest
• It is the interest on the amount invested or
borrowed at a given rate and for a given time.
Formula: I = Prt ; F = P + I
Where:
P – Principal amount F – final value/amount
r – rate
t – time (in years)
I - Interest
 Example:
What is the interest charged on a P1500 loan at
10% for 1 year?
What is the total amount of money after 1 year?
SOLUTION:
 Example:
Mina borrowed ₱4,550 for three months with 25%.
Find the interest of the money she borrowed.

SOLUTION:
 Example:
At what rate should ₱43,000 will earn ₱5,160 in 2
years?
SOLUTION:
 Example:
How long was ₱20,000 invested if it earned an
interest of ₱1,200 at 5%?
SOLUTION:
 Example:
Jasper is paying ₱25,000 on his loan per year with
5% simple interest for 5 years. How much money
did Jasper borrowed in the beginning?
SOLUTION:
 Example:
Find the interest and the amount on ₱8,700 at 9%
for 2 months.
SOLUTION:
 Example:
Accumulate ₱9,000 for 30 days at 16 ¾%
SOLUTION:
 Example:
How many years will it take ₱20,000 to earn ₱6,650
at 9 ½% simple interest?
SOLUTION:
 Example:
If ₱12,000 accumulates to ₱13,680 when invested at
simple interest for 2 years, find the interest rate.
SOLUTION:
 Example:
Mr. Troy bought a new car. To pay for the car, which
was prices ₱1,200,000, he gave ₱500,000 as down
payment and agreed to pay the balance in 2 years.
(a) find the amount of interest paid if interest rate is
12% simple interest, and (b) find the total amount
he paid for the car.
SOLUTION:
 Exercise:
Kara takes out a new short-term personal loan. The
loan is ₱20,000 auto loan with 3% interest for 5
years. Find the simple interest of the loan.

Solution:
 Simple Discount
• Discount
• Is a deduction from the maturity amount (F) of an obligation allowed
for paying it currently.
• Formula: To find P:
D = Fdt P = F – D or P = F(1 – dt)
Where: D = discount
F = amount of maturity other formulas
d = discount rate
t = time or term of term
P = Principal amount
Example:
• Find the present value of ₱2,000 which is due
at the end of 90 days at 5% simple discount.
• Solution:
 Example:
•Find the amount due at end of 9 months
which present value is ₱3,000 at 6%
simple discount.
Solution:
Example:
•How long will ₱3,000 accumulate to
₱3,050 if the discount rate is
•Solution:
 Example:
•If a loan of ₱3,500 will be paid with
₱3,750 at the end of one year and 3
months, what is the simple discount?
•Solution:
Example:
•Accumulate ₱4,200 for 2 years and 3
months at simple interest.
•Solution:
Example:
•Discount ₱8,000 for 1 year and 2
months at simple discount.
•Solution: