The document defines terms related to simple interest such as principal, rate, time, and interest. It then provides examples of calculating simple interest for various scenarios: 1) Calculating the interest on a 3-year, ₱20,000 loan at 8% annual interest. 2) Finding the maturity value of ₱200,000 deposited in a bank for 5 years at 1% annual interest. 3) Determining the maturity value of a ₱2,200,000 loan over 5 years at 6.75% annual interest. 4) Calculating the mortgage amount for a ₱4,000,000 home requiring a 25% down payment.

1. SOLVING PROBLEMS ON
SIMPLE INTEREST

2. Let us define first the following terms:
A deposit is a financial term that means money is held at
a bank. It is a transaction involving a transfer of money to
another party for safekeeping.
A loan is a money (or property) given with the promise
that it will be paid back in the future, usually with interest.
Services are professional support to aid customers. This is
sometimes described as the intangible product.

3. Utilities refer to the basic amenities like electricity
and water.
Mortgage is a loan, secured by a collateral, that the
borrower is obliged to pay at specified terms.
Amortization is the process of reducing a cost or
total in regular small amounts.

4. Interest is described as the money paid regularly at a
particular rate for the use of money lent, or for delaying
the repayment of a debt.
Principal is the original amount invested or borrowed.
Rate is the amount of a charge or payment (usually in
percent) with reference to some basis of calculation.
Time can be defined as the duration or term used in
solving simple interest.

5. Let us have the following examples:
A. Matoy started his small business by borrowing an
amount of ₱20,000.00 payable for 3 years as a simple
interest rate of 8% annually. How much is the interest
that he has to pay?

6. Let us have the following examples:
A. Matoy started his small business by borrowing an
amount of ₱20,000.00 payable for 3 years as a simple
interest rate of 8% annually. How much is the interest
that he has to pay?
Simple Interest (I):
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 × 𝑟𝑎𝑡𝑒 × 𝑡𝑖𝑚𝑒

7. Given:
𝑰=?
𝑷= ₱20,000.00
𝒕 = 3 𝑦𝑒𝑎𝑟𝑠
𝒓= 8%
Solution:
𝑰=𝑷𝒓𝒕 𝑰= (₱20,000) (0.08) (3)
𝑰 = ₱𝟒,𝟖𝟎𝟎.𝟎𝟎

8. B. Meena was given ₱200,000.00 by her parents and
she deposited it in a bank. Find the maturity value of
Meena’s money in five years if the bank offers a simple
interest of 1% per annum.
Maturity Value (F):
𝐹= 𝑃 (1 + 𝑟𝑡)
𝐹= 𝑃 + 𝐼

9. Given:
𝑭 = ? 𝑷 =
₱200,000.00
𝒓 = 1% 𝒕 = 5 𝑦𝑒
𝑎𝑟𝑠
Solution: 𝑭 = 𝑷 (𝟏 + 𝒓𝒕)
𝑭 = ₱200,000 [1 + (0.01) (5)]
𝑭 = ₱𝟐𝟏𝟎,𝟎𝟎𝟎.𝟎𝟎

10. C. Dereck borrowed ₱2,200,000.00 payable for 5
years to purchase a pick-up truck. A bank offered him
a car loan with simple interest rate of 6.75% per year.
What is the maturity value of the loan?
Given:
𝑭 = ? 𝑷 = ₱2,200,000.00
𝒓 = 6.5% 𝒕 = 5 𝑦𝑒𝑎𝑟𝑠
Solution: 𝑭= 𝑷 (𝟏 + 𝒓𝒕) 𝑭= ₱2,200,000
[1+(0.065)(5)] 𝑭= ₱𝟐,𝟗𝟏𝟓,𝟎𝟎𝟎.𝟎𝟎

11. D. If a house and lot is sold for ₱4,000,000.00 and the
bank requires 25% down payment, find the amount
of mortgage.
Mortgage:
Down payment = down payment rate × cash price
Amount of the loan (mortgage) = cash price − down payment

12. Given:
down payment = ? cash price = ₱4,000,000.00
mortgage = ? down payment rate = 25%
Solution:
𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 = 0.25 × ₱4,000,000
 = ₱𝟏,𝟎𝟎𝟎,𝟎𝟎𝟎.𝟎𝟎
𝑀𝑜𝑟𝑡𝑔𝑎𝑔𝑒 = ₱4,000,000 – ₱1,000,000
 = ₱𝟑,𝟎𝟎𝟎,𝟎𝟎𝟎.𝟎𝟎

13. E. Using ordinary interest, what is the amount due
(maturity value) on ₱40,000.00 invested at 10%
simple interest for 6 months. Assume that 1 month is
equal to 30 days.
For Ordinary Interest: I = P × (r/360) × t

14. Given:
I = ? P = ₱40,000
r = 10% t = 6months or 180 days
Solution:
𝑰 = ₱40,000 (0.1/360) (180)
= ₱𝟐,𝟎𝟎𝟎.𝟎𝟎
𝑭 = 𝑃 + 𝐼
= ₱40,000 + ₱2,000 = ₱𝟒𝟐,𝟎𝟎𝟎.𝟎𝟎

15.  Activity : What’s the Problem?
 1. Keith borrowed an amount of ₱50,000.00 from the bank. How much interest will he
have to be pay on the loan for 3 years at a simple interest rate of 7.5% per year?
2. Pedro has been saving his lunch money and it reached an amount of ₱30,000.00 To
secure his money and gain a small interest, he deposited it in the bank. How much is
Pedro’s money after ten years if the bank offers a simple interest of 1.5% per annum.
 3. Popsie started a school bus business using a van worth ₱3.2M. He got a car from a
bank with a simple interest at a rate of 5% per year. What is the maturity value of the
loan after 5 years?
 4. As newlyweds, Mr. And Mrs. Sanchez wanted to purchase their dream house worth
₱5,000,000.00 and the bank requires 15% down payment, find the amount of
mortgage.
 5. Using ordinary interest, what is the future value on a ₱125,000.00 invested at 9%
simple interest for 5 months. Assume that 1 month is equal to 30 days.