Simple and Compound Interest: Concepts and Problems, Slides of Law

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SIMPLE AND

COMPOUND INTEREST

INTEREST

AMOUNT PAID OR EARNED FOR THE

USE OF MONEY.

COMPOUND INTEREST

INTEREST IS COMPUTED ON THE

PRINCIPAL AND ALSO ON THE

ACCUMMULATED PAST INTERESTS

PRINCIPAL

AMOUNT OF MONEY BORROWED OR

INVESTED ON THE ORIGIN DATE

TIME

AMOUNT OF TIME THE MONEY IS

BORROWED OR INVESTED

MATURITY VALUE

IS THE AMOUNT TO BE PAID ON THE

DUE DATE OF A LOAN OR THE

AMOUNT TO BE PAID TO AN

INVESTOR AT THE END OF THE

PERIOD FOR WHICH AN

INVESTMENT HAS BEEN MADE.

SIMPLE INTEREST

SAMPLE PROBLEMS

1. You borrowed ₱10,000 at a rate of 5% per year. How much is the interest after 2 years? How about after 6 years? NOTE I = Prt

3. The interest is ₱900 for

3 years at a rate of 6% per

year. How much was

invested?

NOTE

I = Prt

4. An investment of

₱20,000 earned ₱5,

interest at 5% per year.

How long was the money

invested?

NOTE

I = Prt

COMPOUND INTEREST

1. FIND THE MATURITY VALUE AND

THE COMPOUND INTEREST IF

P50,000 IS INVESTED AT 5%

COMPOUNDED ANNUALLY FOR 8

YEARS.

COMPOUND INTEREST

SAMPLE PROBLEMS FOR DIFFERENT NOMINAL RATE

NOMINAL RATE

NOMINAL RATE FREQUENCY OF CONVERSION (m) ANNUALLY 1 SEMI-ANNUALLY 2 QUARTERLY 4 MONTHLY 12 DAILY 365