Mathematics Investment

1. Chapter 3
Simple Discount
Principal and Discount
Prepared by: Mary Joy C. Cabangisan
BSE-II Mathematics
1

2. Objectives
This section aims to:
1. Define discount and relate it to interest; and
2. Compute discounts on amount of F.
2

3. Principal and Discount
The discount D on a given amount F at a discount rate d due at the
end of t years is given by :
D = Fdt
where d is used in place of the rate r and D for I.
the discount denoted by I on the amount F is defined as the
difference between the future value F and its present value P, that is ,
I= F-P
I = { interest on P ; discount on F}
3

4. Remember:
To discount P for t years means to find the present value P which
is t years before F is due. Thus P is said to be the discounted value of F.
4

5. Example #1:
How much must Ms. Santos get in pawning her jewelry at 5% simple
interest per month if she needs to pay ₱ 5000 after a month?
Given : F= ₱ 5000 t= 1 month r= 0.05
Formula: D= Fdt
Interest= 5000(0.05)(1)
I= ₱ 250
The amount that Ms. Santos get is:
P= F-D
= 5000- 250
P= ₱ 4750
5

6. Example #2:
Find the amount of discount that Mr. Cruz borrowed on February 6, 2006 if he
needs to pay ₱20,000 at 17% simple discount on May 20, 2006 ?
Given :
F= ₱20,000 r= 0.17 ; to compute the time from February 6,2006 to
May 20,2006, we have :
February 6-28 22
March 31
April 30
May 1-20 20
103 days
Thus the amount of discount at t = 103 is:
360
D= 20,000(0.17)(103)
(360)
D= ₱972.78
6

7. 7