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# 1 2 discount-interest

## by Pad Batinga, Working at Gawad Kalinga on Sep 21, 2011

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## 1 2 discount-interestPresentation Transcript

• Discount Interest
• Discount interest – a type of interest collected in advance and is taken from the amount of the loan applied for on the origin date
• Formula for discount interest I d :
• The amount of the loan originally applied for would be the maturity value.
• The actual amount received by the borrower on the origin date is called the proceeds .
• Denoted by P , it is the difference between the maturity value and the discount interest.
• Example. Ben borrowed Php10,000 from Mon who charged 4% discount interest. How much did Ben receive if the debt is to be repaid in 10 months?
• Derived formulas:
• 1. Given F = Php 37,500 , d = 8% , t = 5 years, find I d .
• 5. Given F = Php 290,000 , d = 10.35% , t = 40 months, find P .
• 7. Given P = Php 301,500 , d = 8.25% , t = 4 years, find F .
• 9. Given F = Php 4,063.49 , I d = Php 3,200 , t = 9 years, find d .
• 11. Given F = Php 12,000 , I d = Php 3,780 , d = 9% , find t .
• 15. If you borrow Php80,000 from a lender for one year and 2 months at 3% discount interest rate, how much proceeds will you receive?
• 17. Find the term of a loan whose proceeds and maturity value are Php56,225 and Php65,000, respectively. The discount interest rate applied is 6%.
• 21. Find the amount due at the end of 15 months if the present value is Php18,000 and if
• a) the discount interest rate is 5%
• b) the simple interest rate is 5%
• 27. If the discount interest rate is 11 %, how much time is needed for Php54,700 to become Php60,000?