Simple Interest
Simple Interest
Terms to remember:
Interest: an amount paid or earned for the use
of money.
Simple interest: interest earned when a loan
or investment is repaid in a lump sum.
Principal: the amount of money borrowed or
invested.
Rate: the percent of the principal paid as
interest per time period.
Time: the number of days, months or years that
the money is borrowed or invested.
I=PxRxT
Principal = P1,200
Interest rate = 8% (or 0.08)
Time = 1 year
Interest = P x R x T
Interest = 1,200 x 0.08 x 1
The interest on the loan is P96.
Examples
The approximate time from July 12 to
September 12 is 60 days.
To find the exact time from July 12 to
September 12, add the following:
Days in July (31 - 12 =)
19
Days in August
31
Days in September
+12
62 days
Examples
1. Find the exact interest and maturity value if
P35, 000 is invested for 90 days at 8%.
2. A loan of P50, 000 at 7% annual interest rate.
The loan was made on March 15, 2013 and due
on May 15, 2014. How much is the ordinary
interest and maturity value?
Simple Interest
Finding Rate
Finding Time
Present Value