GENERAL

MATHEMATICS
Simple
Interest
OBJECTIVES
1. Illustrate simple and compound
interest
2. Distinguish between simple and
compound interests.
What is it
Simple Interest ()
Interest that is computed on the principal. The
interest remains constant throughout the term.
Lender or Creditor
Person (or institution) who invests the money or
makes funds available
Borrower or debtor
Person (or institution) who owes the money or
avails of the funds from the lender
Origin or loan date
Date on which money received by the
borrower.
Repayment date or maturity date
Date on which the money borrowed or
loan is to be completely repaid
Time or term (t)
Amount of time in years the money is borrowed or
invested; length of time between the origin and
maturity dates.
Principal (P)
Amount of money borrowed or invested on the
origin date
Rate (r)
Annual rate, usually in percent, charged by the
lender, or rate of increase of the investment
Interest (I)
Amount paid or earned for the use of
money
Maturity value or future value (F)
Amount after t years that the lender
receives from the borrower on the
maturity date.
Example:
A working student at one of the biggest fast-food
restaurants in Lucena City wants to save for the
upcoming school year. He wants to deposit his money
to a Filipino owned bank so that even in a simple way
he can help his fellow Filipino. Supposed his monthly
salary is ₱10,000, and it was deposited to an account
that earns a simple interest of 2.75% per annum. Find
the simple interest after 6 months, one year, and 18
months.
Solution:
Simple Interest formula

Where:
= Simple Interest
r = simple interest rate
P = Principal or amount invested or borrowed
t = term of time in years
Steps to find the simple interest:
STEP 1: Identify the given and the unknown
P = ₱10,000
r = 2.75% or 0.0275
t = 0.5 or (months), 1 (1 year), 1.5 or (18 months)
STEP 2: Substitute the given to the formula

For 18 months
For 6 months ₱10,000)(0.0275)(1.5)
₱10,000)(0.0275)(0.5)

Notice that the time was divided by 12 if the

For 1 year given is in months. You will also do the same if
₱10,000)(0.0275)(1) the given is in days, the divisor will be 360 for
ordinary interest or 365 of you are looking for
exact interest.
Example 2:
Due to COVID-19 pandemic Miss Dada a female
resident of Brgy. May Pagkakaisa somewhere in
Quezon Province thinks of a business that can provide
for her needs as well as the need of her neighbors so
she can be of help even in this trying time.
Having no money at hand she decided to borrow
from a bank as the start-up capital of ₱50,000 at 7%
simple interest rate payable within 5 years. Compute
for the interest yield.
Solution:
Simple Interest

Simple Interest
Time Principal Interest Amount after (t) years
(t) (P) Rate (r) (Maturity Value)
Solution Answer

1 50,000 7% (50,000)(0.07)(1) 3,500 50,000 + 3,500 = 53,500

2 50,000 7% (50,000)(0.07)(2) 7,000 50,000 + 7,000 = 57,000

3 50,000 7% (50,000)(0.07)(3) 10,500 50,000 + 10,500 = 60,500

4 50,000 7% (50,000)(0.07)(4) 14,000 50,000 + 14,000 = 64,000

5 50,000 7% (50,000)(0.07)(5) 17,500 50,000 + 17,500 = 67,500

Complete the table by finding the maturity value.
Interest Rate Maturity
Principal (P) Time (t)
(r) Value (A)
₱ 35,600 6% 9 mo.
₱ 140,350 10% 15 mo.
₱ 75,800 8 ½% 2 yr.
₱ 340,200 11% 6 yr.

₱ 1,400,500 9% 10 yr.
Compound
Interest
Compound Interest ()
• is the interest computed on the principal
and also on the accumulated past
interest, so compound interest is a way
to earn money because you don’t just
earn using your original money, but also
the interest you earned.
Example 2:
Due to COVID-19 pandemic Miss Dada a female resident
of Brgy. May Pagkakaisa somewhere in Quezon Province
thinks of a business that can provide for her needs as well as
the need of her neighbors so she can be of help even in this
trying time.
Having no money at hand she decided to borrow from a
bank as the start-up capital of ₱50,000 at 7% compound
interest rate payable within 5 years. Compute for the
interest yield.
Solution:
Compound Interest

Compound Interest
Amount at
Time Interest Amount at the end of year (t)
the start
(t) Rate (r) (Maturity Value)
of year Solution Answer

1 50,000 7% (50,000)(0.07)(1) 3,500 50,000 + 3,500 = 53,500

2 53,500 7% (53,500)(0.07)(1) 3,745 53,500 + 3,745 = 57,245

3 57,245 7% (57,245)(0.07)(1) 4,007.15 57,245 + 4,007.15 = 61,252.15

4 61,252.15 7% (61,252.15)(0.07)(1) 4,827.65 61,252.15 + 4,827.65 = 66,079.80

4,827.65
5 66,079.80 7% (66,079.80)(0.07)(1) 4,625.59 66,079.80 + 4,625.59 = 70,705.39
where:
F = Future Value
P = Principal Amount
r = rate of interest
n = number of times interest is
compounded per year
t = term or time in years
1. Lauro deposited ₱64 600.00 in a savings
account which pays 8% interest compounded
semi-annually. What will his balance be in 4 years?
2. Glenda deposits ₱5 000.00 in a savings account
which pays 5% compounded annually. The money
is left for 3 years. Find the account balance at the
end of 3 years
Performance Task
WHAT I CAN DO (page 16 – 17)
(Submit before end of the second quarter)
Interest, Maturity,
Future, and Present
Values in Simple
Interest
OBJECTIVES
1. Compute interest, maturity value, future
value, and present value in simple interest
environment
2. Compute interest, maturity value, future
value, and present value in compound interest
environment
3. Derive the formula of simple and compound
interest to compute the maturity, future, and
present value.
 Simple Interest Future Value Formula
Future Value = P(1 + rt)
where:
Future Value (F) = sum of the principal amount and simple interest
P = Principal Amount
R = interest rate
T = time or loan period

Example: Unit Investment Trust Fund

You are planning to invest in a low-risk unit investment trust
fund (UITF) of Bank E which will give you 5% per annum in 5 years.
You target to earn a total future value of ₱320,00. How much
should you invest in UITF now?
 In computing the simple interest and other related components, the
formula is
For finding the time

where:
= simple interest
P = principal or the amount invested or borrowed or present
value
r = simple interest rate
t = time or term in years
The formula can be manipulated to obtain the following
relationships:
For finding the principal amount For finding the rate
Example: Security Deposit Account (SDA)
You are planning to invest in a security deposit
account with your money amounting ₱100,000 in 7
years. You target to earn a total future value of
₱200,000. What should be the annual interest rate so
you can achieve your investment goal?
Solve the following problems. Write your solutions and
complete answers on a separate sheet of paper.
1.You are ready to invest in a security deposit account with
your funds amounting to ₱500,000 in 5 years. You target to
earn a total future value of ₱800,000. What should be the
annual interest rate so you can achieve your investment
goal?
2. Your mother wants to invest in a high-risk UITF or Bank L
which will give her 20% per annum in 5 years. She targets to
earn a total future value of ₱2,000,000. How much should
she invest now in high-risk UITF?
Interest, Maturity , Future,
and Present Values in
Compound Interest
The formula to find the maturity value is:

where:
F = maturity (future) value
P = principal or present value
r = interest rate
n = number of times interest is compounded per year
t = term or time in years
To find the compound interest use the formula:
where:
= compound interest
P = principal or present value
F = maturity (future) value
To find the present value or principal of the maturity value F due in t years the
formulas are:

Example 1: Given: P = ₱18,500, r = 3% and compounded annually for 3 years, find

the maturity value (F) and the compound interest ().
Solution:
( )
𝒏𝒕
𝒓
Use the formula of maturity value 𝑭 = 𝑷 𝟏+
𝒏
𝟑
Substitute the given to the formula 𝑭 =𝟏𝟖 , 𝟓𝟎𝟎 ( 𝟏+ 𝟎 .𝟎𝟑 )
Performing the operations 𝑭 =₱ 𝟐𝟎 , 𝟐𝟏𝟓 . 𝟒𝟓
Apply the formula of compound interest 𝑰 𝒄=𝑭 − 𝑷
Substitute the value of F that you get and P 𝑰 𝒄 =𝟐𝟎, 𝟐𝟏𝟓. 𝟒𝟓−𝟏𝟖 ,𝟓𝟎𝟎
Substitute the value of F that you get and P 𝑰 𝒄 =𝟐𝟎, 𝟐𝟏𝟓. 𝟒𝟓−𝟏𝟖 ,𝟓𝟎𝟎
Performing the operations 𝑰 𝒄 =𝟏 , 𝟕𝟏𝟓 . 𝟒𝟓
Therefore, the maturity value is ₱20,215.45 and the compound interest
₱1,715.45

Example 2: Given F = ₱15,000, r = 2% compounded annually for 4 years, find the

present value (P).
Solution: 𝑷=
𝑭

( )
𝒏𝒕
Use the formula in finding the present value 𝟏+
𝒓
𝒏
𝟏𝟓 , 𝟎𝟎𝟎
𝑷=
Substitute the given to the formula ( 𝟏+𝟎 . 𝟎𝟐 )𝟒
𝟏𝟓 , 𝟎𝟎𝟎
𝑷=
( 𝟏. 𝟎𝟐 )𝟒
P = ₱13,857.68
Annually = 1
Semi-Annually = 2
Quarterly = 4
Daily = 365 for exact interest
Daily = 360 for ordinary interest
Example 3: Given 𝑃 = ₱50,000.00, r , n = 4,
𝑡 = 4, find F and .
Example 4: Given F = ₱45,000.00, r = 0.02, n = 2,
𝑡 = 4, find:
Example 5. Find the compound interest and maturity
value if P = ₱43,000, with a rate of 5% is
compounded semi-annually for 6 years.
Example 6. Find the compound interest and present
value if F = ₱105,000 with a rate of 2.5% is
compounded quarterly for 3 years
Activity: A. Find the unknown principal P, rate r, time t, and compound
interest by completing the table.
Compound Maturity
Principal (P) Rate (r) Time (t)
Interest Value (F)
6,000 8% 12 (1) (2)
6 years and 9
12,000 5.5% (3) (4)
months
60,000 9.75% 10 months (5) (6)

(7) 1% 6 years (8) 25,000

4 years and 6
(9) 7.5% (10) 400,000
months
B. Complete the table by finding the unknown.
Present Simple Maturity
Rate (r) Time (t)
Value (P) Interest Value (F)

8000 8% 6 years (1) (2)

5,000 (3) 1 month (4) 6000

5 years
(5) 12% and 3 (6) 400,000
months
C. Solve the following problems on compound interest.
11. Peter borrowed P100,000 at 8% compounded annually? How much will he be
paying after 2 years?

12. A time deposit account in a bank yields 5.5% compound interest annually.
Jennifer invested P450,000 for 4 years in this savings account. How much
interest will she gain?

13. In order to have P250,000 in 5 years, how much should you invest if the
compound interest is 12%?

14. How much money must be invested to obtain an amount of P150,000 in 2

years if money earns at 10.5% compounded annually?

15. What amount must be deposited by a student in a bank that pays 2%

compounded annually so that after 12 years he will have P100,000?
Performance Task
WHAT I CAN DO (page 21 – 22)
(Submit before end of the second quarter)
Solving Problems Involving
Simple and Compound
Interest
OBJECTIVES
1. Solve problems involving simple and
compound interest
2. Apply the different formulas involved in a
simple and compound interest environment in
solving problems
Solving Problems Involving
Simple Interest
Example 1: Mariel deposited ₱ 16,000.00 in a bank that offers a simple interest
rate of 1.75%. If she placed the money for 7 years, how much interest will she
earn?
Solution:
P = ₱16,000.00 r = 1.75% t= 7 years
Use the formula of simple interest 𝑰 𝒔 =𝑷𝒓𝒕
Substitute the given values in the formula 𝑰 𝒔 =𝟏𝟔, 𝟎𝟎𝟎(𝟎 . 𝟎𝟏𝟕𝟓)(𝟕)
𝑰 𝒔 =𝟏 , 𝟗𝟔𝟎 . 𝟎𝟎
Example 2: Janice has a loan with an interest rate of 1.5%. The amount of
interest is ₱ 2,250.00 for a period of 3 years. How much is her loan?
Solution:
= ₱ 2,250.00 r = 1.5% or 0.015 t = 3 years
Use the formula in finding the principal amount or present value
Solving Problems Involving
Compound Interest
Example 1: Jasmin borrowed money from a bank at the rate of 1.89%
compounded semi – annually. If the amount she borrowed is ₱ 13,000.00, how
much interest will she need to pay at the end of 6 years?
Solution:
P = ₱13,000.00 r = 0.0189 n = 2 t=6

and
Example 2: Arthur wants to set aside an amount to be invested in a fund
earning 1.02% compounded quarterly, if he wants to accumulate ₱ 250,000.00
in 4 years, how much must he set aside?
Solution:
F = ₱250,000.00 r = 0.0102 n=4 t=4
THANK YOU
God bless you all!