Reviewer for General Mathematics 𝐼𝑜=𝑃𝑟 𝑡

360
489 𝑑𝑎𝑦𝑠
Simple Interest- is an interest which is computed entirely at 𝐼𝑜 = (𝑃50,000)(3.5%)
365
once from the moment the money is borrowed
𝑰𝒐 = P2,377.08
Interest- is the amount paid by the borrower
Principal- borrowed or invested amount Exact Time and Approximate Time
Interest Rate- percentage of the principal paid for the use of Exact Time- The actual numbers of days in each month
money on a certain length of time in an investment.
included in the period from the day the loan was made up.
Formulas: Approximate Time- it is assumed that there are only 30 days
𝑰 𝑰 𝑰
𝑰 = 𝑷𝒓𝒕 or 𝑷 = or 𝒓 = or 𝒕 = per month.
𝒓𝒕 𝒓𝒕 𝑷𝒓

Maturity Value- it is the end of the term; the principal will be Example:
paid together with the interest. Find the exact and approximate time between April 22, 2020
M = P + Prt or M = P + I to January 25, 2021.
Month Exact Time Approximate Time
Example: April 8 8
An amount of P12800 was invested by Mr. Rohan, May 31 30
June 30 30
with a simple interest rate of 14%. What will be the maturity July 31 30
value after 5 years? August 31 30
September 30 30
October 31 30
Given:
November 30 30
P= 128,000 t= 5 years r= 14 % December 31 30
Solution January 25 25
Total 278 273
M = P + Prt
M = P128,000 + (P128,000 x 14% x 5) Classification of Interest
M= P128,000 + P89,600
a. ordinary interest using exact time.
M= P217, 600 𝒆𝒙𝒂𝒄𝒕 𝒕𝒊𝒎𝒆
𝑰𝒐𝒆 = 𝑷𝒓
𝟑𝟔𝟎
Exact Interest- denoted by 𝐼𝑒 is computed and settled on the
basis of 365 days. 𝐼𝑒=𝑃𝑟 𝑡
365 b. ordinary interest using approximate time.
𝒂𝒑𝒑𝒓𝒐𝒙𝒊𝒎𝒂𝒕𝒆 𝒕𝒊𝒎𝒆
𝑰𝒐𝒆 = 𝑷𝒓
𝟑𝟔𝟎
Ordinary Interest- denoted by 𝐼𝑜 is computed and settled on
the basis of 360 days. 𝐼𝑜=𝑃𝑟 𝑡 c. exact interest using exact time.
360

Example: 𝒆𝒙𝒂𝒄𝒕 𝒕𝒊𝒎𝒆

𝑰𝒆𝒆 = 𝑷𝒓
𝟑𝟔𝟓
Namita borrowed P50,000 for 489 days at the rate of
3.5% . Compute and compare using the ordinary and exact
d. exact interest using approximate time
method offer the higher interest rate. 𝒂𝒑𝒑𝒓𝒐𝒙𝒊𝒎𝒂𝒕𝒆 𝒕𝒊𝒎𝒆
𝑰𝒆𝒂 = 𝑷𝒓
𝟑𝟔𝟓
Given: P = P50,000 t = 489 days r = 3.5%

Solution: Example:
𝐼𝑒=𝑃𝑟 𝑡 Mr. Yu loan a money worth P18,600 at 8.9%
365
489 𝑑𝑎𝑦𝑠 rate on March 12, 2023 and payable on April 23,
𝐼𝑒= (𝑃50,000)(3.5%)
365
2024. Compute for the simple interest using the four
𝑰𝒆= P2,344.52
forms and identify which of them has the highest
interest.
Solution:
Month Exact Time Approximate Time Formula:
𝐹
March 19 18 𝐹 = 𝑃(1 + 𝑖)𝑛 𝑃=
(1+𝑖)𝑛
April 30 30
𝐹 1 log 𝐹−log 𝑃
May 30 30 𝑖 = ( )𝑛 − 1 𝑡=
𝑃 𝑓𝑙𝑜𝑔 (1+𝑖)
June 30 30 𝐹 1
𝑗 = 𝑓[( ) − 1]𝑛 𝐼 = 𝑃(1 + 𝑖)𝑛 − 𝑃
July 31 30 𝑃
August 31 30 Example:
September 30 30 If you deposit P40,000 into an
October 31 30 account paying 6% annual interest
November 30 30 compounded quarterly, how much money will be in
December 31 30 the account after 5 years?
January 31 30 6%
Given: P= P40,000 𝑖=
February 29 30 4
March 31 30 f= 4 (Quarterly) j= 6% t= 5 years n=20
April 23 23
Total 407 401 Solution:
𝐹 = 𝑃(1 + 𝑖)𝑛
6% 20
𝐹 = 𝑃40,000(1 + )
4
a. ordinary interest using exact time. F= P53,874.20
𝒆𝒙𝒂𝒄𝒕 𝒕𝒊𝒎𝒆
𝑰𝒐𝒆 = 𝑷𝒓 2. How long will it take for P20,000 to grow P24,000 if it is
𝟑𝟔𝟎
invested at 8.5% compounded monthly?
407 Given:
𝐼𝑜𝑒 = 𝑃18,600 (8.9%)( )
360 P= P20,000 F= P24,0000 j= 8.5%
𝑰𝒐𝒆 = P1,871.52 8.5%
f=12 (monthly) 𝑖=
12

b. ordinary interest using approximate time.

𝒂𝒑𝒑𝒓𝒐𝒙𝒊𝒎𝒂𝒕𝒆 𝒕𝒊𝒎𝒆 Solution:
𝑰𝒐𝒆 = 𝐏 𝐫 log 𝐹−log 𝑃
𝟑𝟔𝟎 𝑡=
𝑓𝑙𝑜𝑔 (1+𝑖)
401 log(𝑃24,000)−log(𝑃20,000)
𝐼𝑜𝑎 = 𝑃18,600 (8.9%)( ) 𝑡= 8.5%
360 12𝑙𝑜𝑔 (1+
12
)
𝑰𝒐𝒆 =P1,843.93 𝐭 = 2.15 years

c. exact interest using exact time.

𝒆𝒙𝒂𝒄𝒕 𝒕𝒊𝒎𝒆
𝑰𝒆𝒆 = 𝐏 𝐫
𝟑𝟔𝟓
407
𝐼𝑜𝑎 = 𝑃18,600 (8.9%)( )
365
𝑰𝒆𝒆 =P1,845.88

d. exact interest using approximate time

𝒂𝒑𝒑𝒓𝒐𝒙𝒊𝒎𝒂𝒕𝒆 𝒕𝒊𝒎𝒆
𝑰𝒆𝒂 = 𝑷𝒓
𝟑𝟔𝟓
401
𝐼𝑒𝑎 = 𝑃18,600 (8.9%)( )
360
𝑰𝒆𝒂 = P1818, 67

Compound Interest- is the interest added to the principal of an

investment or loan so that the added interest also earns
interest from then on.
Compounding- it is the additional interest
Legend:
F= Future Value j= nominal rate
P= Principal f= frequency
𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑗
i= rate of the interest 𝑖 = or 𝑖 =
𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 𝑓
n= total number of payments (frequency x time) or n = (f * t)