w1d4 Simple Interest

PDMHS-
SENIOR G E N M AT H
DEPARTME
NT BUSINESS
MATHEMAT
ICS
SIMPLE
INTEREST
AMIE D. CANDELARIA
-solve problem involving simple
interest.
Q2_LESSON 4
SIMPLE INTEREST
AMIE D. CANDELARIA
DEFINITION OF SIMPLE
INTEREST
SIMPLE INTEREST (Is) is

the interest charged on the
principal alone for the entire
duration or period t of the loan or
invest, at a particular rate r. After
the term of the loan or investment,
the maturity value or future value
F is computed by getting the sum
of the principal and the interest
due.
AMIE D. CANDELARIA
GENMATH-BUSINESS MATH
SIMPLE INTEREST
AMIE D. CANDELARIA
GENMATH-BUSINESS MATH
SIMPLE INTEREST
REVIEW
Ramil deposited P20 000 at

4% simple interest for 5
years. At the end of 5 years,
his accounts contains P24
000. Give the term for each
value in relation to the
problem.
1. P20 000.
2. P24 000
3. 4%.
4. 5 years
AMIE D. CANDELARIA
GENMATH-BUSINESS
MATH
SIMPLE INTEREST
Annually – 1 year
once a year
Semi annually – 6 months

twice a year
Quarterly – 3 months
4 times a year
Monthly – 1 month
12 times a year
AMIE D. CANDELARIA
GENMATH-BUSINESS
MATH
SIMPLE INTEREST
FYI: simple interest is
often calculated on a daily
basis, it mostly benefits
consumers who pay their
bills or loans on time or
early each month. Loans
including student loans and
auto loans, and home
mortgages.
AMIE D. CANDELARIA
Example 1.
A bank offers 0.25% annual simple interest
rate for a particular deposit. How much
interest will be earned if 1 million pesos is
deposited in this savings account for 1 year?
Is = ?
Given:
P = 1 000 000
r = 0.25% = 0.0025
t=1
I= P
=
Is = P2 500
The interest earned is 2 500
AMIE D. CANDELARIA
Example 2.
How much interest is charged when 50 000 is

borrowed for 9 months at annual simple
interest rate of 10%?
Is = ?
Given:
P = 50 000
r = 10% = 0.10
t = 9 months = = or 0.75
I=
=
Is = P3
570The interest earned is 3, 750
AMIE D. CANDELARIA
Example 3.
When invested at annual interest rate of 7%,
the amount earned P11, 200 of simple interest
in two years. How much was originally
invested?
P=?
Given:
I = 11 200
r = 7% = 0.07
t = 2 years
P=
P = P80 000
The amount invested is P80 000

AMIE D. CANDELARIA
Example 4.
Find the present value of P86 000 at
8% simple interest for 3 years.
P=?
Given:
F = 86 000
r = 8% = 0.08
t = 3 years
P=
=
P = P69 354. 84
The amount invested is 69, 354.84
AMIE D. CANDELARIA
Example 5.
If entrepreneur applies for a loan amounting to
P500 000 in a bank., the simple interest of which is
P157 000 for 3 years, what interest rate is being
charged?
r=?
Given:
P = 500 00
t = 3 years
I = 157 000
r=
=
r = 0.105 = 10.5%
The bank charged an annual simple interest rate of 10.5%
AMIE D. CANDELARIA
Example 6.
Find the maturity value if 1 million pesos
is deposited in a bank at annual simple
interest rate of 0.25% after 5 years?
F=? I=?
Given:
P = 1 000 000
t = 5 years
r = 0.25% or 0.0025
I= P
I = 1 000 000 (0.0025)(5)
I = P12, 500
F= P+I=
= 1 000 000 + 12 500
F = P1 012 500
The future value after 5 years is P1 012 500. AMIE D. CANDELARIA
Example 7.
Fid the maturity value if 1 million pesos is
deposited in a bank at annual simple
interest rate of 0.25% after 5 years?
F=? I=?
Given:
P = 1 000 000
t = 5 years
r = 0.25% or 0.0025
F = P(1 + rt)
= 1 000 000 (1 + (0.0025)(5))
= 1 000 000 (1.0125)
F = P1 012 500
The future value after 5 years is P1 012 500.
AMIE D. CANDELARIA
Evaluate:
1. Lucas invest P25 000 into an account paying 8%
annual interest. How many years will it take for his
account to reach P 43 000?
2. Therese borrowed P120 000 from her uncle. If

Therese agreed to pay an 8% annual interest rate ,
calculate the amount of interest she must pay if
the loan period is 9 mos.?
3. To buy the school supplies for the coming year,

you get a summer job at a resort. Suppose you save
P4 200 of your salary and deposit it into an account
that earns simple interest. After 9 months, the
balance is P4 263. What is the annual interest
rate?
4. Find the present value of P86 000 at 8% simple

interest for 3 years.
5. A loan institution charges 12% simple interest

for a 3-yeear, P60 000 loan. Find the total amount
that must be paid to the loan institution at the end
of 3 years.
AMIE D. CANDELARIA
PDMHS-
SENIOR G E N M AT H
B U S I N E S S M AT H
DEPARTME
NT
THANK
YOU
AMIE D. CANDELARIA
Example 6.
How long will a principal earn an
interest equal to half of it at 5% simple
interest?
t=?
Given:
P=
I = or 0.5P
r = 5% or 0.05
t= =
t = 10 years
It will take 10 years for a principal to earn
half of its value at 5% simple annual interest.
AMIE D. CANDELARIA

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PDMHS-

SIMPLE INTEREST (Is) is

Ramil deposited P20 000 at

Semi annually – 6 months

How much interest is charged when 50 000 is

The amount invested is P80 000

The future value after 5 years is P1 012 500.

2. Therese borrowed P120 000 from her uncle. If

3. To buy the school supplies for the coming year,

4. Find the present value of P86 000 at 8% simple

5. A loan institution charges 12% simple interest

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