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    Simple Interest and Compound Interest

    Uploaded by

    Christine Joy Maapoy
    This document defines key terms related to simple and compound interest such as principal, interest rate, time period, and future value. It provides the formulas for calculating simple interest as interest = principal x rate x time and compound interest using the compound interest formula. Examples are given to demonstrate calculating simple interest on loans and determining an original investment amount based on interest earned. The document concludes with an assignment asking students to solve simple and compound interest word problems.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Simple Interest and Compound Interest

    Uploaded by

    Christine Joy Maapoy
    84 views23 pages
    This document defines key terms related to simple and compound interest such as principal, interest rate, time period, and future value. It provides the formulas for calculating simple interest as interest = principal x rate x time and compound interest using the compound interest formula. Examples are given to demonstrate calculating simple interest on loans and determining an original investment amount based on interest earned. The document concludes with an assignment asking students to solve simple and compound interest word problems.

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    simple interest and compound interest

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    This document defines key terms related to simple and compound interest such as principal, interest rate, time period, and future value. It provides the formulas for calculating simple interest as interest = principal x rate x time and compound interest using the compound interest formula. Examples are given to demonstrate calculating simple interest on loans and determining an original investment amount based on interest earned. The document concludes with an assignment asking students to solve simple and compound interest word problems.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    84 views23 pages

    Simple Interest and Compound Interest

    Uploaded by

    Christine Joy Maapoy
    This document defines key terms related to simple and compound interest such as principal, interest rate, time period, and future value. It provides the formulas for calculating simple interest as interest = principal x rate x time and compound interest using the compound interest formula. Examples are given to demonstrate calculating simple interest on loans and determining an original investment amount based on interest earned. The document concludes with an assignment asking students to solve simple and compound interest word problems.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 23

    Simple and

    Compound
    Interest
    Lesson
    Objectives
    A. Illustrate simple and compound
    interest
    B. Distinguish between simple and
    compound interest
    C. Computes interest, present value and
    future value in simple and compound
    interest environment
    D. Solves problems involving simple and
    compound interest
    2
    1
    Terminologies
    ￮ Interest: A charge for borrowed money
    generally a percentage of the amount
    borrowed
    ￮ Principal (Present Value): The sum of money
    lent or borrowed.
    ￮ Rate of Interest: The percentage that is paid
    by the borrower to the lender for a loan of
    money.
    ￮ Time: This is the time period for which the
    money is lent or the time period in which the
    money has to be returned with interest. 4
    ￮ Future value(Amount): the value of a
    current asset at a future date based on an
    assumed rate of growth.
    ￮ Simple interest paid or received over a
    certain period is a fixed percentage of the
    principal amount that was borrowed or lent.
    ￮ Compound interest accrues and is added
    to the accumulated interest of previous
    periods; it includes interest on interest, in
    other words.
    5
    6
    7
    8
    2
    Simple
    Interest
    Simple Interest Formula
    I = PrT
    Where:
    I = Interest
    P = Principal
    R = Rate of Interest (should be expressed
    in decimal form)
    T = Time 10
    Simple Interest Formula
    I = PRT

    I P = I/rT
    r = I/PT
    T = I/Pr
    P r T FV = P+I
    11
    Example 1
    Raymond bought a car for Php 40, 000. He took a Php 20,000 loan from a
    bank at an interest rate of 15% per year for a 3-year period. What is the
    total amount (interest and loan) that he would have to pay the bank at the
    end of 3 years?

    12
    Example 2
    Bunny made a 3 year investment. The interest rate was 4.5%. After 3 years,
    he earned Php 675 in interest. How much was his original investment?

    13
    3
    Compound
    Interest
    Compound Interest Formula

    15
    Compounding Periods
    Compounding Number of Interest
    Frequency Periods per year

    Annually n=1

    Semi - Annually n=2

    Quarterly n=4

    Monthly n = 12
    16
    Compound Interest Formula

    17
    Compound Interest Formula

    18
    Example 1
    How much money would you need to deposit today at 9% annual interest
    compounded monthly to have Php 12,000 in the account after 6 years?

    19
    Example 2
    If you deposit Php 6,500 into an account paying 8% annual interest
    compounded monthly, how much money will be in the account after 7
    years?

    20
    4
    Assignment
    Assignment
    Directions: Solve the following simple and compound interest problems. Write your
    complete solutions, answers, and signature of your Parent/Guardian in a clean piece of
    paper and turn - in the photo of your work in the Google Classroom. Round off your final
    answer to the nearest hundredths.
    1. Wanda borrowed Php3,000 from a bank at an interest rate of 12% per year for a
    2-year period. How much interest does she have to pay the bank at the end of 2 years?
    2. Archie bought a car for Php 40, 000. He took a Php 20,000 loan from a bank at an
    interest rate of 15% per year for a 3-year period. What is the total amount (interest and
    loan) that he would have to pay the bank at the end of 5 years?
    3. Josie buys a new home using an interest only loan where he pays only the interest
    on the value of the home each month. The home is valued at $200,000 and Joesph pays
    5% interest per year on the home. How much is his monthly interest payment?
    4. If you deposit $6500 into an account paying 8% annual interest compounded
    monthly, how much money will be in the account after 7 years?
    5. If you deposit $4000 into an account paying 6% annual interest compounded
    quarterly, how much money will be in the account after 5 years?
    22
    Thanks!
    23

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