SIMPLE INTEREST

Simple Interest
- amount earned for one year
calculated by multiplying the principal
by the interest rate
- directly proportional to the principal,
interest rate and the term
FORMULA:
Interest = Principal x Interest rate x Time
 
Is = P r t

Is = simple interest
P = Principal amount, or the amount
invested or borrowed
r = interest rate
t = time of invest/ time of loan expressed
in years or fractional part of a year
 
Example
An amount of for 3 years at a
simple interest of 12% per annum.
Find the interest and the maturity
value.
 Solution:
Given: P= ₱7,300 r= 12 % or 0.12 t= 3 years
Formula: Is = Prt
A. Interest
Is =Prt
Is =₱7,300(0.12)(3)
Is =₱2,628
The principal will earn an interest of ₱2,628.00
B. Maturity value or the Amount(A)
Formula: A= P + I
Solution: A=P+I
A= ₱ 7,300 + ₱ 2,628
A= ₱9,928
The maturity value is ₱ 9,928.00
Solution:
Given:P=₱10,000 r=6%=0.06 t=5 mos.= yr.
Formula: Is = Prt
A. Interest
Is =Prt
Is =₱10,000(0.06)( )
Is =₱250
The principal will earn an interest of ₱250.00
Example
An investment of ₱ 10,000 is
transacted for 5 months at 6 %.
Find the interest and the
maturity value.
B. Maturity Value
Formula: A= P + I
Solution: A=P+I
A= ₱ 10,000 + ₱ 250
A= ₱10,250
The maturity value is ₱ 10,250.00