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Simple and Compound Interest

This document provides examples of simple interest rate calculations. It gives the formulas and step-by-step workings for 5 problems involving calculating interest earned, required payment amounts, principal amounts, and time periods. The problems cover scenarios such as interest earned on a loan over 3 years at 11%, payment due on a loan after 90 days at 8% interest, and determining the principal or time period for a given interest amount.

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Princess Salvador
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241 views

Simple and Compound Interest

This document provides examples of simple interest rate calculations. It gives the formulas and step-by-step workings for 5 problems involving calculating interest earned, required payment amounts, principal amounts, and time periods. The problems cover scenarios such as interest earned on a loan over 3 years at 11%, payment due on a loan after 90 days at 8% interest, and determining the principal or time period for a given interest amount.

Uploaded by

Princess Salvador
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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SIMPLE AND

COMPOUND
INTEREST
SIMPLE INTEREST (PROBLEM
SOLVING)
 Problem 1. Find the
interest on P6,800.00 for 3
years at 11% simple
interest.
SIMPLE INTEREST (PROBLEM
SOLVING)
GIVEN
P = P6,800.00
r = 11%
t = 3 years
SIMPLE INTEREST (PROBLEM
SOLVING)
SOLUTION
I = Prt
I = P6,800.00 (11%)(3)
I = P2,244.00
SIMPLE INTEREST (PROBLEM
SOLVING)
A man borrowed
P10,000.00 from his friend
and agrees to pay at the
end of 90 days under 8%
simple interest rate. What
is the required amount?
SIMPLE INTEREST (PROBLEM
SOLVING)
GIVEN
P = P10,000.00
r = 8%
t = 90 days / 360 days = ¼
SIMPLE INTEREST (PROBLEM
SOLVING)
SOLUTION
F = P (1 + rt)
= P10,000 (1 + 0.08(0.25))
= P10,200.00
SIMPLE INTEREST (PROBLEM
SOLVING)
 Problem 3. Annie buys television
set from a merchant who offers
P25,000.00 at the end of 60 days.
Annie wishes to pay immediately
and the merchant offers to
compute the required amount on
the assumption that money is
worth 14% simple interest. What is
the required amount?
SIMPLE INTEREST (PROBLEM
SOLVING)
GIVEN
F = P25,000.00
r = 14%
t = 60 days / 360 days = 1/6
SIMPLE INTEREST (PROBLEM
SOLVING)
SOLUTION
P25,000.00 = P (1 + rt)
P25,000.00 = P (1 +
0.14(1/6))
P = P24,429.97
SIMPLE INTEREST (PROBLEM
SOLVING)
 Problem 4. What is the
principal amount if the
amount of interest at the end
of 2 ½ year of P4,500.00 for
a simple interest of 6% per
annum?
SIMPLE INTEREST (PROBLEM
SOLVING)
GIVEN
F = P4,500.00
r = 6%
t = 2.5 years
SIMPLE INTEREST (PROBLEM
SOLVING)
SOLUTION
P4,500.00 = Prt
P4,500.00 = P (0.06)(2.5)
P = P30,000.00
SIMPLE INTEREST (PROBLEM
SOLVING)
 Problem 5. How long must a
P40,000.00 note bearing 4%
simple interest run to
amount to P41,350.00?
SIMPLE INTEREST (PROBLEM
SOLVING)
GIVEN
P = P40,000.00
F = P41,350.00
r = 4%
SIMPLE INTEREST (PROBLEM
SOLVING)
SOLUTION
P41,350.00 = P40,000.00 (1
+ 0.04t)
t = 0.844 = 303.75 days or
304 days

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