SIMPLE INTERESTS

Interest

Amount paid or earned

for the use of money.
Principal amount

Amount of money
borrowed or invested
on the origin date.
Interest Rate

 Annual rate, usually in

percent, charged by the
lender or rate of increase
of the investment.
Time or Loan Period

Is the agreed date or

time when the loan
will be paid in full.
Simple Interest

Interest that is
computed on the
principal and then
added to it.
 Simple Interest

I=Pxrxt
Interest
Time/loan
Principal Interest
period
amount rate
*NOTE: Rate(r) is expressed in percent and Time(t)
can be expressed monthly, quarterly, semi - annually,
and annually (always express it in no. of years)
Derived Formulas

I I
P r t P r t

I=Pxrxt
 Example:

1. Jaira deposited Php5,000 in a

bank at 6.5% simple interest for
2 years. How much will she
earn after 2 years?
Derived Formulas

I 𝑰
P=
P r t 𝒓𝒕
 Example:

1. Manny paid Php7,400 interest at

14.5% for four year loan. What
was the original loan?
Derived Formulas

I 𝑰
r=
P r t 𝑷𝒕
 Example:

1. Nestor invested Php30,000 in

the stock market which
guaranteed an interest of
Php5,600 after 3 years. At what
rate would his investment earn?
Derived Formulas

I 𝑰
t=
P r t 𝑷𝒓
 Example:

1. Aileen borrowed Php10,000 from a

bank charging 12% simple interest with
a promise that she would pay the
principal and interest at the end of
agreed term. If she paid Php4,500 at the
end of the specific term, how long did
she use the money?
Future value/Total amount

The sum of the principal

and the interest at the
end of stipulated length
of time.
Future value/Total amount

A=P+I
Future Interest
Value Principal
amount
 Example:

1. Ellen borrowed Php35,000

from a bank at 12.5% simple
interest for 5 years. How
much will she pay the bank
after 5 years?
 Example:

2. Determine the principal

amount that you need to
invest at a simple annual
interest of 8% to have a total
amount of 446,400 at the end
of 3 years?
Exercise:

1. How much interest is charged

when Php50,000 is borrowed
for 9 months at an annual
simple interest rate of 10%?
Exercise:

2. If Ben borrowed php42,000

from a bank at 10.5% simple
interest, how much will he
pay at the end of 12 months?
Exercise:

3. The total amount paid on a

loan is Php84,000. If the
loan was for 2 years at 9%
simple interest, what was the
original loan?
Exercise:

Future Value (A)

Exercise:

Future Value (A)

36,000 96,000
25,000 40,000
9.5% 9,500
300,000 5 yrs.
16,250 1,016,250
STEPHANIE P. DIASNES