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1 2 discount-interest

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1 2 discount-interest

1. 1. Discount Interest
2. 2. <ul><li>Discount interest – a type of interest collected in advance and is taken from the amount of the loan applied for on the origin date </li></ul><ul><li>Formula for discount interest I d : </li></ul>
3. 3. <ul><li>The amount of the loan originally applied for would be the maturity value. </li></ul><ul><li>The actual amount received by the borrower on the origin date is called the proceeds . </li></ul><ul><li>Denoted by P , it is the difference between the maturity value and the discount interest. </li></ul>
4. 4. <ul><li>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? </li></ul>
5. 5. <ul><li>Derived formulas: </li></ul>
6. 6. <ul><li>1. Given F = Php 37,500 , d = 8% , t = 5 years, find I d . </li></ul>
7. 7. <ul><li>5. Given F = Php 290,000 , d = 10.35% , t = 40 months, find P . </li></ul>
8. 8. <ul><li>7. Given P = Php 301,500 , d = 8.25% , t = 4 years, find F . </li></ul>
9. 9. <ul><li>9. Given F = Php 4,063.49 , I d = Php 3,200 , t = 9 years, find d . </li></ul>
10. 10. <ul><li>11. Given F = Php 12,000 , I d = Php 3,780 , d = 9% , find t . </li></ul>
11. 11. <ul><li>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? </li></ul>
12. 12. <ul><li>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%. </li></ul>
13. 13. <ul><li>21. Find the amount due at the end of 15 months if the present value is Php18,000 and if </li></ul><ul><li>a) the discount interest rate is 5% </li></ul><ul><li>b) the simple interest rate is 5% </li></ul>
14. 14. <ul><li>27. If the discount interest rate is 11 %, how much time is needed for Php54,700 to become Php60,000? </li></ul>