CREDIT AND COLLECTION

Finman 6
Simple
Interest Is interest on the
amount invested or
I = Prt
borrowed at a given
rate and for a given
time.
Simple Interest
I = Prt
Simple Interest (interpolation)

I I I
I = Prt r= P= t=
Pr
Pt rt
Maturity Value
F=P+I

Also,

F = P + Prt
F = P (1 + rt)
Ordinary & Exact Interest

I = Pr (D/360)
I = Pr (D/365)
I = interest
P = principal
D = days
APPROXIMATE Time & Exact Time
 What would you do if the Time for computing the
Simple Interest is not in years but in dates?
Problem:
On May 4, 2021, Edward borrowed ₱ 22,000 at 10%
interest. Interest and principal were due on September
6, 2021. What was the total amount he paid on that
date?
APPROXIMATE Time & Exact Time

 There are two ways of finding time between the two

dates given.
 One method is to find approximate time and the other is
to find actual time.
2 Methods of Finding Time

1) Approximate = estimate
2) Actual = verifiable, realistic, literal
Approximate Time
Example

1. On May 4, 2021, Edward borrowed ₱ 22,000 at 10%

interest. Interest and principal were due on September
6, 2021. What was the total amount he paid on that
date?

P = ₱ 22,000
r = 10% = .10
t = May 4 to September 6, 2021
Solution
To find the interest due on September 6, 2021, we will first find the time
between May 4 and September 6, 2021.

a. Approximate Time

Year Month Day SUBTRACT

2021 9 (Sept.) 6 6-4 = 2
2021 5 (May) 4
4 2
This means 4 months and 2 days.
To find the number of days:
(4 x 30 days) + 2 days = 120 + 2 days = 122 days.
[Note: We consider 1 month = 30 days].
Example

1. On May 4, 2021, Edward borrowed ₱ 22,000 at 10%

interest. Interest and principal were due on September
6, 2021. What was the total amount he paid on that
date?

P = ₱ 22,000
r = 10% = .10
t = May 4 to September 6, 2021
APPROXIMATE TIME

Using approximate time, the total amount paid by Edward on

September 6, 2021 can be obtained by the following solution:
Compute:
F=P[1+r D ]
360
122
= 22,000 [ 1+ (.10) ]
360

= 22,000 (1.033888889)

= 22,745.56
ACTUAL TIME
ACTUAL TIME

The actual number of days between May 4 and September 6, 2021

can be obtained by the following solution:

May (31-4) 27 (How many days from May 5 to May 31?)

June 30
July 31
August 31
September 06
125 days
Illustrative examples

“Number of Days of the Year” may also be used to find actual

number of days, especially when the two given dates involve longer
time.

September 249 F=P[1+r D ]

365
May 124
125 days = 22,000 [ 1+ .10 125
365
= 22,000 (1.342465753)

= 22,753.42
Illustrative examples

2. Find the number of days from February 24, 2001 to June 14,
2001.

a. Approximate time? Solution:

Year Month Day Year Month Day
2001 6 14 2001 5 44
2001 2 24 2001 2 24
3 months 20 days
We can’t subtract 24 from 14, so x 30
borrow “1 month” from 6 months. 90 days + 20 days = 110 days
1 month = 30 days, so we add 30 to
14.
Solution
b. Actual time?

1. February (28-24) = 4
March 31
April 30
May 31
June 14
110 days
2. June 14 165 = is the 165th day of the year
February 24 55 = is the 55th day of the year
110 days
Illustrative examples

3. Find the number of days from April 12, 2002 to October 25, 2003.

Solution a. Approximate time?

Year Month Day

2003 10 25
2002 4 12
1 yr 6 months 13 days
x 360 days x 30 days
360 + 180 + 13 = 553 days
Illustrative examples from April 12, 2002 to October 25, 2003

Solution: a. Actual time?

1. April (30 - 12) 2002 18 Jan (2003) 31
May 31 Feb 28
June 30 Mar 31
July 31 Apr 30
August 31 May 31
Sept 30 June 30
October 31 July 31
November 30 August 31
December 31 September 30
263 October 25
298

263 + 298 = 561 days

Illustrative examples

4. Find the actual time between November 10, 2015 to March 15, 2016.
Solution
March (2016) 15
Feb 29
Jan 31
Dec (2015) 31
Nov 20
126 days

2016 = leap year