Chapter 1

Module 1
Simple Interest and Simple Discount

Mr. Leandro S. Estadilla

Terms

Debt

Principal (P)

Interest (I)

Accumulated or Maturity Value (F)

Rate (r)

Time (t)
Simple Interest – amount invested or borrowed
at a given rate and for a given time.

I = Prt
where:
I = interest
P = principal
r = rate ( usually in a year)
t = time in years between d loan is made and
the date it matures.
Maturity Value – amount that needs to be paid after the
use of the money.

F=P+I
Using equation 1:
F = P (1 + rt)
Where:
F = maturity value
P = principal
r = rate
t = time
1 = constant term
 Exercises:
1. Find the interest on the loan of P1,000 for 1 year
if the interest rate is 12%.

2. A credit union issued a 3-yr loan of P50,000 at a

rate of 10%. What amount will be repaid at the
end of 3 yrs?

3. A P5,000 savings account earned P700 interest in

2 years. What was the rate of interest given?
4. At the end of 2 years, P36,000 in interest was paid
on an 18% simple interest loan. How much was
borrowed?

5. Edward needs P20,000 to buy office furniture for his

new office in Las Pinas. He wants to limit the interest
he will pay when he borrows the amount in a bank to
P1,100 only. If the bank charges 11% interest, after
how long must Edward pay his obligation.

6. Find the interest on a loan of P5,000 at 18% simple

interest and which was paid after 6 months?