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    Simple Interest: Simple Interest Is An Interest Computed On The Amount The Borrower Received at

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    Hazel-mae Labrada
    Simple interest is interest calculated only on the principal amount of a loan. Compound interest is interest calculated on the principal plus accumulated interest over multiple periods. The document provides formulas for calculating simple and compound interest, along with examples of interest calculations for loans with simple and compound interest terms. Sample problems are shown calculating the interest owed on loans with principal amounts, interest rates, and time periods provided. The answers demonstrate applying the simple and compound interest formulas to determine the interest or total amount due.

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    Simple Interest: Simple Interest Is An Interest Computed On The Amount The Borrower Received at

    Uploaded by

    Hazel-mae Labrada
    5 views4 pages
    Simple interest is interest calculated only on the principal amount of a loan. Compound interest is interest calculated on the principal plus accumulated interest over multiple periods. The document provides formulas for calculating simple and compound interest, along with examples of interest calculations for loans with simple and compound interest terms. Sample problems are shown calculating the interest owed on loans with principal amounts, interest rates, and time periods provided. The answers demonstrate applying the simple and compound interest formulas to determine the interest or total amount due.

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    Simple interest is interest calculated only on the principal amount of a loan. Compound interest is interest calculated on the principal plus accumulated interest over multiple periods. The document provides formulas for calculating simple and compound interest, along with examples of interest calculations for loans with simple and compound interest terms. Sample problems are shown calculating the interest owed on loans with principal amounts, interest rates, and time periods provided. The answers demonstrate applying the simple and compound interest formulas to determine the interest or total amount due.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    5 views4 pages

    Simple Interest: Simple Interest Is An Interest Computed On The Amount The Borrower Received at

    Uploaded by

    Hazel-mae Labrada
    Simple interest is interest calculated only on the principal amount of a loan. Compound interest is interest calculated on the principal plus accumulated interest over multiple periods. The document provides formulas for calculating simple and compound interest, along with examples of interest calculations for loans with simple and compound interest terms. Sample problems are shown calculating the interest owed on loans with principal amounts, interest rates, and time periods provided. The answers demonstrate applying the simple and compound interest formulas to determine the interest or total amount due.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    SIMPLE INTEREST

    Simple interest is an interest computed on the amount the borrower received at


    the time the loan is obtained and is added to that amount when the loan
    becomes due.

    Formula:
    I = PRT
    where:
    I = Interest
    P = Principal
    R = Rate
    T = Time

    Problems:

    1. Liza goes to the bank and borrows P150,000 at 6% for 2 years. How much
    interest will Liza have to pay?

    2. What is the amount of the interest Julia has to pay if she loaned P500,000
    at 12% for 5 years from OCCI Coop?
    Answers:

    1. I = ?
    P = P150,000
    R = 6%
    T = 2 years

    I = PRT
    = 150,000 X 6% X 2
    Interest = P18,000

    2. I = ?
    P = P500,000
    R = 12%
    T = 5 years

    I = PRT
    = 500,000 X 5% X 5
    Interest = P125,000
    COMPOUND INTEREST

    Compound interest means that the interest is computed more than once during
    the time period of the loan.

    Formula:
    Compound Interest = Compound Amount Principal
    A = P (1 +i) n
    where:
    A = Compound Amount
    P = Principal
    i = Interest rate per period
    n = Total compounding periods

    Problems:

    1. Kathryn invested P23,000 at 6% interest compounded semi-annually, for 6


    years. Find the compound amount and compound interest.

    2. On January 1, 2016, Janine borrowed P12,000 at 12% compounded


    quarterly for 2 years. How much interest should she pay?
    Answers:

    1. Compound Interest = ?
    A=?
    P = P23,000
    i = 3%
    n = 12

    A = P (1 + i)n
    = 23,000 (1 + 0.03)12
    = 23,000 (1.425760887)
    A = P32,792.50

    Compound Interest = Compound Amount Principal


    = P32,792.50 P23,000
    Compound Interest = P9,792.50

    2. Compound Interest = ?
    A=?
    P = P12,000
    i = 3%
    n=8

    A = P (1 + i)n
    = 12,000 (1 + 0.03)8
    = 12,000 (1.266770081)
    A = P15,201.25

    Compound Interest = Compound Amount Principal


    = P15,201.25 P12,000
    Compound Interest = P3,201.25

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