GENERAL MATHEMATICS

SIMPLE INTERESTS

 Good day Mathesians! This is Coach ______________

from Mother Theresa Colegio, Inc.

 Today, you will learn about INTEREST and its two

common types: simple and compound interest.

 What is INTEREST?
The sum of the money paid for the use of many is called
interest.

 The interest earned on a deposit or charged against a

loan depends on three factors.

 The rate of interest (r) which is given by the bank or

charged by the lender.
 The length of time (t) for which money is deposited or
borrowed.
 The sum of money deposited or borrowed which is called the
principal (P)

 Let us tackle about simple interests

 When interest on a deposit or loan is computed once for

the full term of the loan, it is called simple interest.

 The simple interest (I) is computed by multiplying the

principal (P) by the rate of the interest (r) and the length of
time (t) of the deposit or loan. In symbol, we write
I =Prt

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GENERAL MATHEMATICS
SIMPLE INTERESTS

 Based on this formula, other formulas may be derived as

given.
I I I
r = t= P=
Pt Pr rt

 To further understand simple interest, let us have an

example.

 A bank offers 0.25 % annual simple interest rate for a

particular deposit. How much interest will be earned if 1
million pesos is deposited in this savings account for 1
year?

 0.25% is the rate

 1 million pesos is the principal

 Lastly, 1 year is the term

 SOLUTION:
Given: P = 1, 000, 000
r = 0.25% = 0.0025
t = 1 year
Find: I

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GENERAL MATHEMATICS
SIMPLE INTERESTS
 The formula in getting the simple interest is I =Prt , we
have
I =Prt

 I =(1, 000 , 000)(0.0025)(1)

 I =2 , 500

 Therefore, the interest earned is Php 2, 500

 Let’s proceed to MATURITY (FUTURE VALUE) AT

SIMPLE INTEREST

 In getting the Maturity (Future) Value, we will use this

formula
F=P(1+rt )
where F = maturity (future) value
P = principal amount
I = simple interest
r = interest
t = term/time in years

 Let us have an example.

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GENERAL MATHEMATICS
SIMPLE INTERESTS

 If a person borrowed Php 35, 000 from a bank charging

12% simple interest, how much would he pay at the end
of 18 months?

 Php 35, 000 is the principal amount

 12% is the rate

 And 18 months is the term

 SOLUTIONS:
Given: P = 35, 000
r = 12% = 0.12
t = 18 months or 1.5 years
Find: F

 The formula in getting the maturity (future) value is

F=P(1+rt ), we have
F=P(1+rt )

 F=35 , 000 ¿

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GENERAL MATHEMATICS
SIMPLE INTERESTS

 F=41 , 300

 Therefore, the future or maturity value after 18 months is

Php 41, 300.

 I am 100% sure that you already understand our topic this

day. Kindly, challenge yourself by answering these 2
questions.

1. How much interest is charged when Php 50,000 is

borrowed for 9 months at an annual simple interest
rate of 10%?
2. Justin borrowed Php 5, 000 at 6% annual simple
interest rate. If he decided to pay after 1 year and 3
months, how much should he pay by then?

1. The simple interest charged is Php 3,750.

2. He will pay Php 5,375 after 1 year and 3 months.

 Thanks for watching. I am hoping that you learned a lot.

See you Mathesians on our next discussion. Have a good
day!

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