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Module 13 Math 152

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16 views

Module 13 Math 152

Uploaded by

rhusselmaedamayo
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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SIMPLE INTEREST AND

MATURITY VALUE
MODULE 13
OBJECTIVES
At the end of this module the student should be
able to:
 Apply the concept of simple interest to real-
world financial scenarios, such as loans,
investments, or savings accounts.
 Solve problems involving simple interest to loans
commonly available to the community.
SIMPLE INTEREST

Simple interest is a type of interest that is


calculated only on the original principal amount
of a loan or investment.

P = is the principal or initial amount of money borrowed


or invested
r is the annual interest rate, expressed as a decimal.

t is the time or duration for which the money is borrowed or


invested, usually in years
Maturity Value

what the lender or investor gets back at the end of the loan or
investment time. It's the total amount that includes the money
originally borrowed or invested plus the extra money earned as
interest during the loan or investment period.

P = is the principal or initial amount of money borrowed


or invested
r is the annual interest rate, expressed as a decimal.

t is the time or duration for which the money is borrowed or


invested, usually in years
EXAMPLE 1

COMPLETE THE TABLE BELOW

PRINCIPAL RATE TIME INTEREST FUTURE


VALUE
75,000 1.3 % 3 years 1. 2.
35,000 3. 2 years 16,100 4.
23,685 19% 5. 18,000.6 6
7. 27% 6 months 1,737.315 8.
EXAMPLE 2

Sarah borrows 120,000 pesos from a bank at an annual simple interest


rate of 5% for 3 years. How much interest will she pay, and what will
be the total amount (maturity value) she needs to repay at the end of
the loan term?
EXAMPLE 3

Lisa is planning to save for her college education. She wants to invest
125,000 peso in a savings account that pays simple interest rate of 15% per
year. How long will it take for her to grow to 200,000 peso ?
SEATWORK

1.John invests 300,000 peso in a savings account that offers a simple


interest rate of 4% per year. How much interest will he earn after 5
years, and what is the maturity value of his investment?

2.A small business takes out a loan of $20,000 at a simple interest


rate of 7% per year. How much total interest will the business pay if
they plan to repay the loan in 4 years?

3.A family wants to save $5,000 for a vacation in 3 years. If their


investment account earns a simple interest rate of 4% per year,
how much principal do they need to invest today?

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