BUSINESS MATHEMATICS

Exercise Sheet 5
Interest

Directions: Supply the answer and solution. Treat each item independently unless otherwise stated.

1. Erwan invests in a company that returns 8.5% simple interest every year. He invested PhP 300,000 for 5 years.
a. How much did he earn?
b. How much is the total amount of his investment after 5 years?

2. Drake borrowed PhP 480,000 from a bank that charges 5.6% simple interest every year. How much will Drake pay
after:
a. 3 years?
b. 4.5 years?
c. 8 months?
d. 2 years and 5 months?

3. Jo paid a total of PhP 192,696 to settle her loan after 9 months. If the simple interest rate is 4.8%, how much
did Jo originally borrow?

4. How long will it take a principal of PhP 300,000 to earn PhP 148,500 if invested at a simple interest rate of
8.25%?

5. Steph borrowed PhP 648,000 and paid a total of PhP 772,200 after 3 years and 4 months. What was the
simple interest rate applied in this term of loan?

6. On May 5, 2019, Josh borrowed PhP 575,000 at a simple interest rate of 6.15%. If Josh must pay on February
21, 2020, how much should he pay using:
a. Exact interest method
b. Banker’s rule or ordinary interest method

7. Complete the table below:

Simple
Principal Time Interest Final Amount
Interest Rate
A PhP 42,000 8.35% 5 years (a) (b)
B PhP 1,340,000 1% per month 4 years & 11 months (c) (d)
C PhP 64,000 (e) 5 months (f) PhP 70,000
2.5% per
D (g) 7 years (h) PhP 350,000
semi-annual
E (i) 1.45% 1 year & 4 months PhP 345 (j)
F PhP 250,000 5.05% (k) PhP 41,031.25 (l)
G PhP 164,000 (m) 65 months (n) PhP 200,000

8. Mike settled a total of PhP 93,968 as payment for his loan. If the simple interest rate applied is 3.88% and the term
of the loan is 4 and a half years, how much did he originally borrow?

9. How many months does Robert have if he borrowed PhP 420,000 and does not want to pay more than PhP 31,500
for the interest? The simple interest rate applied is 4.5%.

10. Baste needs PhP 1,000,000 in 10 months. If he has PhP 820,000 now, at what least simple interest rate must he
invest his money to get the desired money in 10 months?

11. Berns borrowed from Pagkakaisa cooperative PhP 180,000 to be paid in full in 2 and a half years. If the
interest rate is 6% compounded monthly, how much should she pay at the end of the term of loan?

12. Bea wants to borrow money from a bank. Two banks are offering to lend her money: ABM Bank at 8.25%
interest compounded annually and DEF at 8.35% interest compounded quarterly. From which bank should Bea
borrow money? Justify your answer.

13. Carl wants to know how much should he invest today in a bank that returns 5.15% interest compounded
quarterly so that he can have PhP 400,000 in 5 years.

14. How much money should the parents of an eight-year-old child deposit in a savings account paying 8% compounded
quarterly in order to provide the child with PhP 1,000,000 at the age of 25?

15. Where will be wiser to invest:

a. JBC Company at 5.66% semiannual compound interest; or
b. FSM Company at 5.57% monthly compound interest