Compound Interest Lesson

Simple Interest and Compound Interest

M11GM-IIa-1 to b-1

December 12-13, 2022

Review

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Express 3% to decimal.

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Express this 5.5% to decimal

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Express 0.75% to decimal.

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Express 200% to decimal

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Express 10 $\frac{1}{2}$ % to decimal

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Express 1 as percent form.

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Express 0. 20 as percent form.

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Express 0. 20 as percent form.

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Express 0.020 as percent form.

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Express 0.5025 as percent form.

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Express $\frac{1}{4}$ to percent

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What is 30 % of 50?

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70 is what percent of 200?

LECTURE

WHAT'S NEW

Multiple Choice

__________________person (or institution) who owes the money or avails of the funds from the lender

• Lender or creditor

• Principal (P)

• Borrower or debtor -

• Manager

Lender or creditor

person (or institution) who invests the money or makes the funds available

Borrower or debtor

person (or institution) who owes the money or avails of the funds from the lender

Origin or loan date

date on which money is received by the borrower

Repayment date or maturity date

a date on which the money borrowed or loan is to be completely repaid

Time or term (t)

amount of time in years the money is borrowed or invested; length of time between the origin and maturity dates

Principal (P)

- amount of money borrowed or invested on the origin date

Rate (r) -

annual rate, usually in percent, charged by the lender, or rate of increase of the investment

Interest (I) -

amount paid or earned for the use of money

Simple Interest (Is) (Is = Prt)

- interest that is computed on the principal and then added to it.

Maturity value or future value (F)

- amount after t years; that the lender receives from the borrower on the maturity date

Compound Interest (Ic) -

interest is computed on the principal and also on the accumulated past interests. (Ic = F-P )

Conversion period (m) – the number of times in a year the interest will be compounded, i.e., annually (m=1), semi-annually(m=2), quarterly(m=4) and monthly (m=12)

If an amount P is invested at an interest rate r compounded annually, then the investment will increase to a value A ( future value ), at the end of t years. It is modeled by the equation. ( 𝑨 = 𝑷(𝟏 + 𝒓) 𝒕 ) 

Draw

Complete the table

Draw

Complete the Table Solve for Compound Interest

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Activity 2 SIMPLE INTEREST

Suppose you won P10,000 and you plan to invest it for 5 years. A cooperative group offers 2% simple interest rate per year. How much is your total investment after 5 years?

(input your answer without a comma example 5000)

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Activity 2 COMPOUND INTEREST

Suppose you won P10,000 and you plan to invest it for 5 years. A cooperative group offers 2% compound interest rate per year. How much is your total investment after 5 years?

(input your answer and roundoff to two decimal point example 5500.12)

• Name of Author

Evaluation

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a. Fill in the Blank

(Write your answer without a comma)

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b. Fill in the Blank

(Write your answer with percent symbol)

example 2.55%

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C. Fill in the Blank

(Write your in decimal form )

0.75 years

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Clarification Principal Amount is 500,000

(Write your answer without a comma )

example 75000

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2. What is the amount of interest of a loan for P35,000 at 10% simple interest for 7 years?

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3. How long will a principal earn an interest equal to half of it at 5% simple interest?

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3. How many years a principal earn an interest equal to half of it at 5% simple interest?

(Write years in your answer example 5 years)

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4. How much interest will you have after 6 years if you deposited P 15,000 in a bank that pays 1.5% simple interest?

(Write pesos in your answer example 15500 pesos)

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5. How long will 5 million pesos earn a simple interest of 100,000 at 2% per annum

(Write years in your answer example 5 years)