Engineering Economy – ME 005

EE31S1
Exercise 1: Simple Interest

Submitted by:
Nagum, Carl Joseph, B.

Submitted to:
Engr. Zhierwinjay Mezona Bautista

October 15, 2020

Solve the problem with proper formula:
Liam borrowed money from a bank worth P15,000.00 on January 11, 2020. They agreed on a simple
interest scheme with an interest rate of [r] % per annum, he promised to pay his loaned amount on March 10,
2021. How much will the bank earned from this transaction?
Given: P = ₱ 15,000
i = r%
n =?
Required: How much will the bank earned from this transaction?
Equation: I = Pin
Solution:
STEP 1: Calculate for the value of n.
➔ For the year of 2020

Month No. of days

January 20
February 29
March 31
April 30
May 31
June 30
July 31
August 31
September 30
October 31
November 30
December 31
TOTAL 355
➔ For the year of 2021

Month No. of days Add the total number of days in 2020 and 2021 then divide by 36.
January 31
355 + 69
February 28 𝑛= = 1.158469945
366
March 10
TOTAL 69
➔ Using the equation, I = Pin to determine the amount that the bank will earn from Liam’s transaction.
I = (₱ 15,000) (r%) (1.158469945)
Answer: I = ₱ 17,377.04918 r%