SIMPLE INTEREST week1.pptx

Simple Interest

1. Simple Interest Week 1

2. OBJECTIVE: At the end of the lesson, the learner is able to compute interest, maturity value, and present value in simple interest environment, and solve problems involving simple interest.

3. Compute simple interest Compute maturity value Compute unknown principal, rate, or time Outline:

4. FORMULA

5. When invested at an annual interest rate of 7%, the amount earned P11,200 of simple interest in two years. How much money was originally invested? Question 1

6. When invested at an annual interest rate of 7%, the amount earned P11,200 of simple interest in two years. How much money was originally invested? Sol: Given: r = 7% = 0.07 t = 2 years = 11,200 Find: Amount invested or principal P         Answer: The amount invested is P 80,000.

7. If an entrepreneur applies for a loan amounting to P500,000 in a bank, the simple interest of which is P157,500 for 3 years, what interest rate is being charged? Question 2

8. If an entrepreneur applies for a loan amounting to P500,000 in a bank, the simple interest of which is P157,500 for 3 years, what interest rate is being charged? Sol: Given: P = 500,000 t = 3 years = 157,500 Find: interest rate (r)   r     r   Answer: The bank charged an annual simple interest rate of 10.5%.

9. How long will a principal earn an interest equal to half of it at 5% simple interest? Question 3

10. How long will a principal earn an interest equal to half of it at 5% simple interest? Sol: Given: P r = 5% = 0.05 = P = 0.5P Find: t   t     t   Answer: It will take 10 years for a principal to earn half of its value at 5% simple annual interest rate.

11. MATURITY (Future) VALUE

12. MATURITY (Future) VALUE

13. MATURITY (Future) VALUE

14. Find the maturity value if 1 million pesos is deposited in a bank at an annual simple interest rate of 0.25% after (a) 1 year (b) 5 years? Example 1

15. Find the maturity value if 1 million pesos is deposited in a bank at an annual simple interest rate of 0.25% after (a) 1 year (b) 5 years? Sol 1: Given: P = 1,000,000 r = 0.25% = 0.0025 Find: (a) maturity or future value F after 1 year (b) maturity or future value F after 5 years Method 1   (a) When t = 1 , the simple interest is given by     Maturity Value      

16. Find the maturity value if 1 million pesos is deposited in a bank at an annual simple interest rate of 0.25% after (a) 1 year (b) 5 years? Sol 1: Given: P = 1,000,000 r = 0.25% = 0.0025 Find: (a) maturity or future value F after 1 year (b) maturity or future value F after 5 years Method 2   (a) When t = 1 , the simple interest is given by Maturity Value      

17. Find the maturity value if 1 million pesos is deposited in a bank at an annual simple interest rate of 0.25% after (a) 1 year (b) 5 years? Sol 1: Given: P = 1,000,000 r = 0.25% = 0.0025 Find: (a) maturity or future value F after 1 year (b) maturity or future value F after 5 years Method 1   (b) When t = 5 , the simple interest is given by     Maturity Value      

18. Find the maturity value if 1 million pesos is deposited in a bank at an annual simple interest rate of 0.25% after (a) 1 year (b) 5 years? Sol 1: Given: P = 1,000,000 r = 0.25% = 0.0025 Find: (a) maturity or future value F after 1 year (b) maturity or future value F after 5 years Method 2   (b) When t = 5 , the simple interest is given by Maturity Value      

19. What are the amount of interest and maturity value of loan for P25,000 at 12% simple interest for 5 years? Example 2

20. What are the amount of interest and maturity value of loan for P25,000 at 12% simple interest for 5 years? Solution: Given: P = 25,000 r = 12% = 0.12 t = 5 years Find: (a) (b) F     (a)     Maturity Value       (b)

21. How much money will you have after 4 years and 3 months if you deposited P10,000 in a bank that pays 0.5% simple interest? Example 3

22. How much money will you have after 4 years and 3 months if you deposited P10,000 in a bank that pays 0.5% simple interest? Solution: Given: P = 10,000 r = 0.5% = 0.005 t = 4.25 years Find: F      

23. Example 4 At what simple interest rate per annum will P 1 become P 2 in 2 years?

24. At what simple interest rate per annum will P1 become P2 in 2 years? Solution: Given: P = 1 F = 2 t = 2 years Find: r          

25. How long will 1 million pesos earn a simple interest of 100,000 at 1% per annum? Example 5

26. How long will 1 million pesos earn a simple interest of 100,000 at 1% per annum? Solution: Given: P = 1,000,000 r = 1% = 0.01 Find: t       t  

27. How much should you invest at the simple interest is 7.5% in order to have P300,000 in 2 years? Example 6

28. How much should you invest at the simple interest is 7.5% in order to have P300,000 in 2 years? Solution: Given: r = 7.5% = 0.075 t = 2 Find: P       P    

29. Seatwork: Complete the table by finding the unknown. Present Value (P) Rate (r) Time (t) Interest (I) Maturity Value (F) 8,000 8% 6 years (1) (2) 5,000 (3) 1 month (4) 6,000 (5) 12% 5 years and 3 months 400,000

30. Solve the following problems. Written Work 1

31. Find the simple interest on a loan of P65,000 if the loan is given at a rate of 20% and is due in 3 years. Amparo invested a certain amount at 10% simple interest per year. After 2 years, the interest she received amounted to P3,000. How much did she invest? Miko borrowed P25,000 at 10% annual simple interest rate. How much should he pay after 3 years and 6 months?

32. How long will an amount of money triple at a simple interest rate of 1% per annum? How long will an amount of P50,000 gain a simple interest of P10,000 at 4% per annum? At what simple interest rate will an amount of money gain 50% of the principal in 4 years? At what simple interest rate per annum will P20,000 accumulate to P25,000 in 3 years?

33. If you deposit P5,500 in a bank at an annual simple interest rate of 0.5% , how much money will you have after 12 years? How much money should you deposit in a bank so that it will accumulate to P100,000 at 1% simple annual interest for 10 years? How much should you invest at 6% annual interest rate to obtain a simple interest of P72,000 in 3 years?

34. Thank you!