lesson in simple interest

1. GUESS THE JUMBLED WORD
MISLEP
TESTREIN

2. GUESS THE JUMBLED WORD
MISLEP
TESTREIN
SIMPLE INTEREST

3. GUESS THE JUMBLED WORD
XIATEMROXPPA

4. GUESS THE JUMBLED WORD
APPROXIMATE
XIATEMROXPPA

5. GUESS THE JUMBLED WORD
MITE

6. GUESS THE JUMBLED WORD
TIME
MITE

7. GUESS THE JUMBLED WORD
LUTACA

8. GUESS THE JUMBLED WORD
ACTUAL
LUTACA

9. GUESS THE JUMBLED WORD
DINARORY

10. GUESS THE JUMBLED WORD
ORDINARY
DINARORY

11. GUESS THE JUMBLED WORD
XATEC

12. GUESS THE JUMBLED WORD
EXACT
XATEC

13. LESSON 5:
Simple
Interest
Business Math Lesson
11th
Grade

14. LESSON OBJECTIVES
At the end of the lesson, students should be able to:
1. Explain the role interest plays in a loan transaction;
2. compute the interest due on a loan;
3. find the maturity value on a loan or the future value on invested capital;
4. differentiate ordinary interest and exact interest, and be able to compute for
the same;
5. compute for the actual time and approximate time;
6. use the knowledge in (4) and (5), and compute for the four different types of
simple interest
7. be conversant with the 60-day 6% method of computing simple interest; and
8. explain the concept of promissory note

15. SIMPLE INTEREST
In business, capital is very important. However, not all business
owners always have enough capital to sustain their business.
More often than not, they have to borrow money for use in the
business. It is in this context that interests plays an important
role. Borrowers need to pay interest on the money that they
borrow.

16. REPORTER 1
Athea Keisha G. Geocallo
REPORTER 3
Joshua Gentolia
REPORTER 2
Liezell Joy Patenio
REPORTER 4
Raileyice Cal
MEET THE TEAM!

17. WHAT IS SIMPLE
INTEREST?
01

18. Simple Interest
Simple interest is a quick and easy method of
calculating the interest charge on a loan. Simple interest
is determined by multiplying the daily interest rate by
the principal by the number of days that elapse
between payments.

19. Basic formula to compute
Simple Interest
I=Prt
I - Interest (amount paid for the use of money)
P - Principal (amount borrowed/lent/invested)
r - rate (percent of interest being changed)
t - time (number of periods for which the money will
be borrowed/lent/invested)

20. The rate and the time should always agree, that is, if rate
is per annum, time should be in years, if rate is per
month, time should be in months; and if rate is per day;
time should be in days. In the absence of stipulation to
the contrary, a stated rate of interest is understood to
be on a per annum or annual basis.
Maturity value or value F Formula
F=P+I

21. IF WE SUBSTITUTE OUR BASIC FORMULA
FOR INTEREST IN FORMULA 2, WE WILL
HAVE:
F=P+I
F=P+Prt
F=P(I+rt)

22. EXAMPLE 1
P= 2,000
Tessa borrowed 2,000 at 12% interest rate for 2 years, find the
interest and maturity value.
GIVEN: SOLUTION:
Formula: I=Prt
I=2,000(0.12)(2
)
I=240(2)
I=480
R= 12% OR 0.12
T= 2
Find: I=?

23. EXAMPLE 1
P= 2,000
Tessa borrowed 2,000 at 12 % interest rate for 2 years, find the
interest and maturity value.
GIVEN: SOLUTION:
Formula: F=P+I
F=2,000+480
F=2,480
R= 12% OR 0.12
T= 2
Find: F=?

24. EXAMPLE 2
P= 150,000
If cristina borrowed Php150,000 from wally, if cristina agreed to pay 6% annually interest
rate calculate the amount of interest she must pay if the pay loan period is: One year, 6
months and 21 months
GIVEN: SOLUTION:
Formula: I=Prt
A. I=150,000(0.06)(1)
I=9,000
R= 6% or 0.06
T= 1, 6, 21
Find: I=?

25. EXAMPLE 2
P= 150,000
If cristina borrowed Php150,000 from wally, if cristina agreed to pay 6% annually interest
rate calculate the amount of interest she must pay if the pay loan period is: One year, 6
months and 21 months
GIVEN: SOLUTION:
Formula: I=Prt
B. I=150,000(0.06)(6/12)
I=4,500
R= 6% or 0.06
T= 1, 6, 21
Find: I=?

26. EXAMPLE 2
P= 150,000
If cristina borrowed Php150,000 from wally, if cristina agreed to pay 6% annually interest
rate calculate the amount of interest she must pay if the pay loan period is: One year, 6
months and 21 months
GIVEN: SOLUTION:
Formula: I=Prt
C.
I=150,000(0.06)(21/12)
I=15,750
R= 6% or 0.06
T= 1, 6, 21
Find: I=?

27. EXAMPLE 3
P= 9,000
Chester borrowed 9,000 at 12% interest for 3 years. Find the interest and the
maturity value.
GIVEN: SOLUTION:
Formula: I=Prt
I=9,000(0.12)(3)
I=3,240
R= 12% or 0.12
T= 3
Find: I=?

28. EXAMPLE 3
P= 9,000
Chester borrowed 9,000 at 12% interest for 3 years. Find the interest and the
maturity value.
GIVEN: SOLUTION:
Formula: F=P+I
I=9,000+3,240
I=12,340
R= 12% or 0.12
T= 3
Find: F=?

29. Actual Time and
Approximate Time
02

30. Actual Time
Number of days in a calendar for a month and February
is 28 days.
1 year = 365 days
Approximate Time
Number of days in a calendar assumes that each month
has 30 days.
1 year = 360 days

31. How To Find Actual Time and Approximate Time?
ACTUAL TIME
Get the actual time and approximate time from May 19, 2020 to
December 25, 2020
APPROXIMATE
TIME
Months
Year Days
12
2020 25
19
5
2020
May 31-19=12
June=30
July=31
Aug=31
Sept=30
Oct=31
Nov=30
Dec=25
7 6
x30
0
=210
+ 6 }216 days +
Actual Time
=220 days

32. How To Find Actual Time and Approximate Time?
Get the actual time and approximate time from October 20, 2018 to April
19, 2020
APPROXIMATE
TIME
Months
Year Days
4
2020 19
20
10
2018
1 month=30 days
1 year=12 months
19+30
49
20
3
3+12
2019
15
10
2019
2018
5 29
1
x30
=150
+ 29
1year
=360 days
}179+360
Approximate
Time
=539 days

33. How To Find Actual Time and Approximate Time?
ACTUAL TIME
Oct=31-20=11
Nov=30
Dec=30
Jan=31
Feb=28
Mar=31
Apr=30
May=31
June=30 April=19 +
Actual Time
=545 days
Get the actual time and approximate time from October 20, 2018 to April
19, 2020
July=31
August=31
Sept=30
Oct=31
Nov=30
Dec=31
Jan=31
Feb=28
Mar=31

34. Ordinary Interest
and
Exact Interest
03

35. Ordinary Interest
Ordinary simple interest is a simple interest that uses
360 days as the equivalent number of days in a year.
Exact Interest
Exact simple interest is a simple interest that uses exact
number of days in a year which is 365 (or 366 for leap
year).

36. FORMULA FOR ORDINARY INTEREST
Io= P × r × D/360
FORMULA FOR EXACT INTEREST
Ie= P × r × D/365
P-Principal
r- rate or the percentage
D- time expressed in days

37. EXAMPLE 1
P= 8,000
Find the exact interest and ordinary interest given the following
values, P8,000 for 120 days at 5%
GIVEN: SOLUTION:
Formula: P × r × D/360
Io=8,000(0.05)(120/360)
R= 5% or 0.05
T= 120
Find: Io=?
Io=4,000(⅓)
Io=1,333

38. EXAMPLE 1
P= 8,000
Find the exact interest and ordinary interest given the following
values, P8,000 for 120 days at 5%
GIVEN: SOLUTION:
Formula: P × r × D/365
Ie=8,000(0.05)(120/365)
R= 5% or 0.05
T= 120
Find: Ie=?
Ie=4,000(24/73)
Ie=1,315

39. Example 2
ACTUAL TIME
A loan of php 6,700 was made last march 10, 2020 and is to be paid in oct 13, 2020 if the interest
rate is 6% compute the following
a)ordinary interest using approximate and actual time
b)exact interest using approximate and actual time
APPROXIMATE
TIME
Months
Year Days
10
2020 13
10
3
2020
Mar 31-10=21
Apr=30
May=31
June=30
July=31
Aug=31
Sept=30
Oct=13
7 3
x30
0
=210
+ 3 }213 days +
Actual Time
=217 days

40. EXAMPLE 2
P= 6,700
GIVEN: SOLUTION:
Formula: P × r × D/360
Io=6,700(0.06)(213/360)
R= 6% or 0.06
Approximate=213 days
Find:
Io=?(approximate)
Io=402(213/360)
Io=237.85
A loan of php 6,700 was made last march 10, 2020 and is to be paid in oct 13, 2020 if the interest
rate is 6% compute the following
a)ordinary interest using approximate and actual time
b)exact interest using approximate and actual time
Actual=217 days

41. EXAMPLE 2
P= 6,700
GIVEN: SOLUTION:
Formula: P × r × D/360
Io=6,700(0.06)(217/360)
R= 6% or 0.06
Approximate=213 days
Find: Io=?(actual)
Io=402(217/360)
Io=242.31
A loan of php 6,700 was made last march 10, 2020 and is to be paid in oct 13, 2020 if the interest
rate is 6% compute the following
a)ordinary interest using approximate and actual time
b)exact interest using approximate and actual time
Actual=217 days

42. EXAMPLE 2
P= 6,700
GIVEN: SOLUTION:
Formula: P × r × D/365
Ie=6,700(0.06)(213/365)
R= 6% or 0.06
Approximate=213 days
Find:
Ie=?(approximate)
Ie=402(213/365)
Ie=234.59
A loan of php 6,700 was made last march 10, 2020 and is to be paid in oct 13, 2020 if the interest
rate is 6% compute the following
a)ordinary interest using approximate and actual time
b)exact interest using approximate and actual time
Actual=217 days

43. EXAMPLE 2
P= 6,700
GIVEN: SOLUTION:
Formula: P × r × D/365
Ie=6,700(0.06)(217/365)
R= 6% or 0.06
Approximate=213 days
Find: Ie=?(actual)
Ie=402(217/365)
Ie=238.99 or 239
A loan of php 6,700 was made last march 10, 2020 and is to be paid in oct 13, 2020 if the interest
rate is 6% compute the following
a)ordinary interest using approximate and actual time
b)exact interest using approximate and actual time
Actual=217 days

44. THANKYOU
FOR
LISTENING!
Any questions?