GUNGON, Rena Marie C.

(A-116)
(TTh 10:10AM – 11:40AM)

YMATHBUSFIN – 6219
Prelim Assignment #1: Simple Interest and Discount

1. Determine the principal that would have to be invested to provide P750 simple interest at the
end of 21 months if the interest rate is 8%

Given:

I = P750 t = 21 months or 1.75 years r = 8%

Solution:

P = I / rt

P = 750 / (0.08) (1.75)

P = P5,357.14

2. Shan deposits P50,000 in a savings account that pays interest at the rate of 10% per year.
How much is the interest and what will be the total amount after three years?

Given:

P = P50,000 r = 10% t = 3 years

Solution: Solution:

I = Prt F=P+I

I = (50,000) (0.10) (3) F = 50,000 + 15,000

I = P15,000 F = P65,000

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3. Block Company deposited P200,000 in a bank account on Oct 12 and withdraws a total of
P225,000 exactly on October 12 of the next year. What is the annual interest rate at which the
company was paid?

Given:

F = P225,000 P = P200,000 I = 25,000 t = 1 year

Solution:

r = I / Pt

r = 25,000 / (200,000) (1)

r = 12.5% or 0.125

4. At what annual interest rate is P600 one year ago equivalent to P800 today?

Given:

F = 800 P = P600 I = 200 r = 1 year

Solution:

r = I / Pt

r = 200 / (600) (1)

r = 33.33% or 0.33

5. How long will it take for an investment of P5,000 to grow to P9,500 if it earns 12% simple
interest per year?

Given:

F = P9,500 P = P5,000 I = P4,500 r = 12%

Solution:

t = I / Pr

t = 4,500 / (5,000) (0.12) = 7.5 years

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6. Determine the simple interest earned if P4,500 is invested at 12% interest rate in 255 days, a)
using exact interest b) using ordinary interest.

Given:

P = P4,500 r = 12% t = 255 days

Solution:

a) Using exact interest b) Using ordinary interest

Ie = 4,500 (0.12) (255/365) Io = 4,500 (0.12) (255/360)

Ie = P377.26 I = P382.50

7. Find the exact interest on a 150-day loan of P50,000 if the interest rate is 10%?

Given:

P = P50,000 r = 10% t = 150/365 (exact)

Solution:

I = (50,000) (0.10) (150/365)

I = P2,054.79

8. Determine the exact number of days from March 15, 2011 to December 20, 2012.

March – 16 October – 31

April – 30 November – 30

May – 31 December – 20

June – 30 280 + 365 = 645 days

July – 31

August – 31

September – 30

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9. Find the ordinary interest on a 160-day loan of P500,000 if the interest rate is 8%?

Given:

P = P500,000 r = 8% t = 160/360 (ordinary)

Solution:

I = (500,000) (0.08) (160/360)

I = P17,777.78

10. Determine the approximate number of days from Dec. 15, 2018 to Oct. 10, 2019.

December – 15

January to September 2019 – 270

October = 10 days

Total = 295 days

11. Discount P7,500 at 10% simple discount for 6 months.

Given:

F = P7,500 d = 10% or 0.10 t = 6/12

Solution: Solution:

D = Fdt P=F-D

D = (7,500) (0.10) (6/12) P = 7,500 - 375

D = P375 P = P7,125

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12. How much interest will be deducted from a loan worth P30,000 after 2 years with a discount
rate of 5%? How much will the proceeds of the loan be?

Given:

F = P30,000

d = 5% or 0.05

t = 2 years

Solution: Solution:

D = FdT P=F-D

D = (30,000) (0.05) (2) P = 30,000 – 3,000

D = P3,000 P = P27,000

13. Discount P15,500 at a 12% simple discount for 9 months.

Given:

F = P15,500

d = 12% or 0.12

t = 9/12

Solution: Solution:

D = Fdt P=F-D

D = (15,500) (0.12) (9/12) P = 15,500 – 1,395

D = P1,395 P = P14,105

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14. How much interest will be deducted from a loan worth P50,000 after 3 years with a discount
rate of 7.5%? How much will the proceeds of the loan be?

Given:

F = P50,000

d = 7.5% or 0.75

t = 3 years

Solution: Solution:

D = Fdt P=F-D

D = (50,000) (0.075) (3) P = 50,000 – 11,250

D = P11,250 P = P38,750

15. Dominic wants to borrow P15,000 payable in two years at a 10% discount rate. How much
will Dominic receive on the origin date? How much will he pay on the maturity date?

Given:

F = P15,000

d = 10% or 0.10

t = 2 years

Solution:

P = F (1 – dt)

P = 15,000 [1 – (0.10) (2)]

P = P12,000

Sam will receive P12,000 on the origin date. However, he would pay P12,000 on the maturity
date since the interest has already been deducted.