What do you know about INTEREST

in business?

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charge of borrowing money

3
 1 Year

12 months

52 weeks

365 days
 Amount of money
Principal borrowed

Percentage charged
INTEREST Rate by lender

Borrowing period
Time

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 I=Pxrxt
Where P = principal
r = interest rate
t = time in year

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 Sum of principal and interest

F= P+I
where F = final amount
P = Principal
I = Simple Interest

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But most of the time, we deduce the simple
amount formula to compute for the final
amount to be paid

F= P+I
F= P+Prt
F = P ( 1+ r t )

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F= P+I or F = P ( 1+ r t )

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 Example #1
Ray has Php 750.00 in a savings account
that pays 3% simple interest. How much
interest will he earn in 4 years?
I = Prt Thus, Ray will
earn Php 90.00
I = (750)(0.03)(4)
interest in 4
I = Php 90.00 years.
 Example #2
Cory borrows Php 1,200 from the bank for a
riding lawn mower. The interest rate is 8% per
year. How much simple interest will he pay if
she takes 2 years to repay the loan?
I = Prt
Cory will pay ₱192.00
I = (1,200)(0.08)(2) interest in 2 years.
I = Php 192.00
 Example #3
Kate’s bank offered 4% simple interest on her
deposit. She has ₱1,500 to invest. How much
interest will she earn in 30 months?
30 months is how many years? 30/12 = 2.5 years
I = Prt
Kate will earn ₱150.00
I = (1,500) (0.04) (2.5) interest in 30 months.
I = ₱150.00
 Example #4
Marivic paid a total of ₱192,696 to settle her
loan after 9 months. If the simple interest rate
is 4.8%, how much did Marivic originally
borrow?
Solving for principal amount
F=P+I
𝐹
F = P(1 + rt) P=
1+𝑟𝑡
𝐹
P=
1+𝑟𝑡
Given: 𝐹
P=
1+𝑟𝑡
F = 192, 696
192,696
r = 4.8% P=
1+(0.048)(0.75)
t = 9 months
P = ₱ 186,000
Therefore, Marivic borrowed ₱ 186,000.
 Example #5
How long will it take a principal of ₱300,000
to earn ₱148,500 if invested at a simple
interest rate at 8.25%?
I = Prt Solving for time

𝐼
𝐼
t= t=
𝑃𝑟 𝑃𝑟
Given: 𝐼
t=
𝑃𝑟
P = 300,000
148,500
I = 148, 500 t=
300,000 (.0825)
r = 8.25%
t = 6 years
Thus, it will take 6 years to earn ₱148,500.
 Example #6
Stephanie borrowed ₱648,000 and paid a total
of ₱772, 200 after 3 years and 4 months. What
was the simple interest rate applied in this term
of loan?
Solving for rate
I = Prt
𝐼
r=
𝐼 r=
𝑃𝑡 𝑃𝑡
Given: F=P+I I=F-P
P = 648,000
I = 772,200 – 648,000
F = 772, 200
I = ₱124, 200
t = 3 yrs and 4 mo. 𝐼 124,200
r= r= 4
𝑃𝑡 (648,000)(3 )
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Thus, Stephanie invested at
r = 0.0575
a simple interest rate of
5.75%. r = 5.75%
 BY PAIR
Answer FIGURE IT OUT!
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