Topic 6

TOPIC 6
SIMPLE INTEREST
CONTENTS OF THIS TOPIC
6.1 Introduction
6.2 Simple Interest Formula
6.3 Simple Amount Formula
6.4 Term
6.5 Present Value.
Learning Outcome
At the end of this topic, student should be able to:
● Explain the concepts of interest

● Use the simple interest formula to calculate interest,
interest rate, time and dates with data provided.
● Use the simple amount formula to calculate the
present value and future value of some investments.
● Identify four concepts of exact simple interest,
ordinary simple interest and exact time.
6.1 Introduction
Money earn when money
invested
-deposit RM1000 in abank.
After 1 year have RM1050
in the account.
INTEREST
Money charged when
loan/credit is obtained.
-borrow RM1000 from a
bank for a year. After that
has to pay back RM1080.
6.2 Simple Interest Formula
I  Pr t time(in year)
Interest Principal Interest rate
Example 1
RM5000 is invested for three years at 3% simple interest per
annum. How much interest is earned?
Example 2
Anwar invested RM8000 for eight years in Amanah
Saham 1 Malaysia, earning a simple interest rate of
8.8% per annum. Find the simple interest earned.
Example 3
a. Diana invests RM200 for 3 year in a bank account. The
account pays simple interest at a rate of 3% per year. Calculate
the total interest earned at the end of 3 year.
b. Diana invests RM200 for 3 months in a bank account. The
the total interest earned at the end of 3 months.
c. Diana invests RM200 for 3 weeks in a bank account. The

the total interest earned at the end of 3 weeks.
d. Diana invests RM200 for 3 days in a bank account. The account
pays simple interest at a rate of 3% per year. Calculate the total
interest earned at the end of 3 days.
Example 4
Isma invested RM2000 in a saving account for 2 years, after 2
years the amount of her money is RM2250. Find the interest
received.
Example 5
Aqil borrowed RM6000 from a bank that charges r%
simple interest per annum. Find the value of r if the
amount of interest paid to the bank three months later
was RM120.
Example 6
Nizar invested some money for 4 years into an account that pays
2% per year simple interest. He earned RM720 interest in total.
How much money did Nizar originally invest?
Example 7
Danial took a personal loan of RM21000 from a bank. The bank
charges interest of 11%. If the bank calculates that the interest is
RM16170, how long is the duration of the loan?
6.3 Simple Amount Formula
Simple amount – the sum of the original principal and the
interest earned.
Also known as accumulated amount, future value, total
amount
S  P1  rt 
Example 8
RM5000 is invested for three years at 3% simple interest per
annum. Find the amount at the end of three years.

Example 9
Aina invests RM3000 in a bank account that pays 5% simple
interest per year. She invests the money for 7 months. Calculate
the amount of money at the end of 7 months.
Example 10
Nina invested RM1500 for 4 years at 2.5% per annum simple
interest. Calculate the total amount of money in the account at the
end of 4 years.
Example 11
Julia invests RM2000 in an investment fund for 2 years 3 months.
At the end of the investment period, her investment will be worth
RM3125. Find the simple interest rate that is offered.
Example 12
How long does it take for RM10000 to accumulate to RM15000 at
a simple interest rate of 5% per annum?
6.4 Present Value
• The present value is the value in today’s money of a sum of
money to be received in the future.
• Use the formula that have been discussed in the previous
section.
I  Pr t S  P1  rt 
Example 13
Find a present value for a debt due in 9 months from today.
The simple amount is RM1500 at 6% simple interest.
Example 14
How much money should be invested today if the sum
is RM1000 in 8 months at 5% simple interest.
Example 15
Find the present value at 8% simple interest of a debt
RM3000 due in ten months.
Example 16
A loan was given out on 20th Aug 2013 at 7% simple
interest. It was paid up on 31st Dec 2013 with a
payment of RM9299.25. Find the loan amount.
6.5 Term
Basic concepts
Exact time
Exact simple interest
-the exact no. of days
- 365 / 366 days in a
between two given
year
dates
Example 17
Find exact time from 15 May to 29 September of the same year.
Example 18
RM6900 was invested on 15 May 2022. If the simple interest
rate offered was 7% per annum, find the interest received on 29
September 2022 using exact time and exact simple interest.
Example 19
Mr. Aiman wants to borrow RM7700 for 90 days. If Bank A gives
a loan based on 365 days per year and the simple interest is
7%, how much Mr. Aiman needs to pay back to the bank?
Example 20
Ariana borrowed RM7500 from a bank for 50 days. The interest
rate charged was 5.5% per annum. By using exact time and exact
simple interest, find
A. the repayment date if she borrowed on 17th Feb 2022.
B. the amount she has to pay on the repayment date.
06
THANK YOU

Topic 6 - Simple Interest

Uploaded by

Copyright:

Available Formats

Topic 6 - Simple Interest

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Topic 6 - Simple Interest

Uploaded by

Copyright:

Available Formats

● Explain the concepts of interest

c. Diana invests RM200 for 3 weeks in a bank account. The

annum. Find the amount at the end of three years.

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.