1BPS Examples: Accumulating and Discounting

1. Accumulate ₱28,000 at 9% simple interest for 5 years.

SOLUTION:
F=?
F = P(1+rt) = 28,000[1 + (.09)(5)] = ₱40,600
2. If money is worth 12% simple interest, discount ₱50,000 for three years and four months.
Sol’n:
P=?
50 , 000
F 4
P = 1+rt =
1+(0 .12 ) 3
12 ( )= ₱35,714.29
3. If money is worth 13% simple interest, what must be invested now in order to have ₧8,000 at
the end of 3.5 years?
Sol’n: P=?
F 8,000
P = 1+rt = 1+(0.13) ( 3.5 ) = ₱5,498.28
4. What is the present value of ₧68, 000 at 17.8% simple interest at the end of 240 days?
Sol’n: P=?
68 , 000
F 240
P = 1+rt =
1+(0 .178 )
360 ( )
= ₱60,786.65
5. How much must be invested now in order to have ₧56,000 at the end of 10 years if money is
worth 8% simple interest?
Sol’n: P=?
F 56,000
P = 1+rt = 1+(0 .08) (10 ) = ₱31,111.11

Exercises: Exact and Ordinary Interest

1. Joy borrowed P15,000 from Jerome at 15% simple interest. She promised to pay the principal
and the interest on October 27, 2017. If the loan was made on February 12, 2017, how much is
a. exact interest
b. ordinary interest.

Sol’n:

a) Exact Interest
Feb (28 – 12) = 16 Ie=Prt
Mar 31 Ie =15,000(0.15)(257/365)
 Apr 30 Ie = ₱ 1,584.25
May 31
Jun 30
Jul 31
Aug 31
Sep 30
Oct 27
te=257days
b) Ordinary Interest
Io=Prt
Io =15,000(0.15)(257/360)
Io = ₱1,606.25

2. What principal invested on January 15 will amount to P35,700 on March 23, if the interest rate is
16 ¼ % and exact interest for actual time is used?
Sol’n:

Ie=Prt time: 16+28+23 = 67days

Ie=35700(0.1625)(67/365)

Ie=₱1,064.89

F
P=
1+ rt
35700
P= 67
1+(0.1625)( )
365
P = ₱ 34,665.96

a) Exact Time
Jan. 31
Feb. 28
Mar. 31
April 30
May 31
June 30
July 31
Aug. 31
Sep. 30
Oct. 31
Nov. 30
Dec. 31
Total: 365 days
b) Approximate Time
Jan. 30
Feb. 30
Mar. 30
April 30
May 30
June 30
July 30
Aug. 30
Sep. 30
Oct. 30
Nov. 30
Dec. 30
Total: 360 days