Grade 6 Unit 2 Lesson 3 -Simple Interest

Simple Interest

1. Simple Interest 03

2. Solve percent problem such as percent of increase/decrease (discount, original price, rate of discount, sale price, marked-up price), commission sales tax, and simple interest. Learning Objective

3. Banks and other lenders offer a number of loan products with simple interest , including some car loans. In a simple interest car loan – often called “ financing ” – your interest is calculated in your principal periodically. Have Fun as you Learn Interest earned by a sum of money can be classifies into Simple Interest or Compound Interest . As an application of percentage, you shall consider only the computation of simple interest ( I ), the money earned for the use of another’s money.

4. The following three concepts are related to the computation of simple interest: Principal (P) – the amount of money borrowed, invested, or deposited Rate of Interest (R) – the percent that will be applied to the principal Time (T) – the length of time (expressed in years) that the money will borrowed or invested

5. Simple Interest Simple Interest can be computed as follows: Interest = Principal x Rate x Time = P x R x T Amount = Principal + Interest = P + I

6. Example Ariel invested PhP 500 000.00 in lending a house, which gives an annual rate of interest of How much interest will Ariel receive after 2 years? What is the amount of his investment after 2 years?   Solution: Given: P = PhP 500 000.00 R = = 5.5%   T = 2 years

7. Find : A = amount of Ariel’s investment after 2 years I = interest after 2 years Solution : I = PhP 500 000.00 X 0.055 x 2 = PhP 55 000.00 A = PhP 500 000.00 + PhP 55 000.00 = PhP 555 000.00 Therefore , Ariel will receive an interest of PhP 55 000.00 , and his investment will reach PhP 555 000.00 after 2 years.

8. Example A man borrowed the amount of PhP 120 000.00 with a 3.5% annual rate of interest that is payable years. How much will he pay for simple interest on his loan?   Solution: Given: P = PhP 120 000.00 R = 3.5% T = years  

9. Find : Solution: I = interest of his loan I = P X R X T I = 120 000 X 0.035 X 1.5 years I = PhP 6 300.00 Therefore , the man will pay an interest of PhP 6 300.00 for his loan

10. Rate of Interest (R) The Rate of Interest (R) can be derived from the equation of simple interest. That is from I = P X R X T, divide both sides by P X T to give: I = P X R X T P X T P X T R =  

11. Example The interest was PhP 450.00 when the amount PhP 69 000.00 was invested for 2 years. What was the annual rate of interest? Given : P = PhP 69 000.00 I = PhP 3 450.00 T = 2 years Find : R = rate of interest

12. Solution:     = 2.5% Therefore, the rate of interest was 2.5%

13. Period or Time (T) The Period or Time (T) of the loan investment can be computed from the equation, I = P x R x T by dividing both sides of the equation by P x R. Thus, I = P X R X T P X R P X R T =  

14. Example PhP 3 500.00 was paid as simple interest on a sum of money worth PhP 14 000.00. If the money was borrowed at the rate of 5% per annum, how many years was the period of the loan? Given : P = PhP 14 000.00 I = PhP 3 500.00 R = 5% Find : T = period of the loan

15. Solution:     = 5 years Therefore, the loan was borrowed in 5 years.

16. Princi pal To find the Principal (P) when I, R, and T are known, solve for P in the equation that is, I = P X R X T R X T R X T P =  

17. Example If PhP 210.00 was earned as simple interest on the money invested at 5% for 2 years, what amount if money was invested? Given : I = PhP 210 R = 5% T = 2 years Find : P = amount invested

18. Solution:     = PhP 2 100.00 Therefore, the money invested was PhP 2 100.00.

19. Seatwork Answer Solve on Your Own A, B and C on page 133

20. Bookwork Answer More Practice A, B, C, and D on pages 133 - 134

21. Thanks! Thanks!