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Interest BM

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50 views20 pages

Interest BM

Uploaded by

rhiajeancustodiopanoso
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BUSINESS MATH

1
Most Essential compute interest specifically
Learning
Competency as applied to mortgage,
(MELC) amortization and on
services/utilities and on
deposits and loans.

2
Objectives
• understand the concepts of interest;
• differentiate mortgage from
amortization, services from utilities,
and deposits from loans; and
• compute interest specifically as applied
to mortgage, amortization,
services/utilities, deposits and loans.
3
BM_ACT 1_Q4_W1_Interest
Let’s Play Detective!
Direction:
Decode the scrambled words
through Atbash Cipher. Refer to the
key for guidance. Do your best and
good luck.

4
SCRAMBLED WORD DECODED WORD

YFHRMVHH BUSINESS
OLZM
NLIGTZTV
ZNLIGRAZGRLM
RMGVIVHG 5
SCRAMBLED DECODED
WORD WORD
OLZM Loan
NLIGTZTV Mortgage
ZNLIGRAZGRLM Amortization
RMGVIVHG Interest
KIRMXRKZO Principal
6
Let’s
Define!

7
DEPOSITS financial term that means money is held

at a bank. It is a transaction involving a


transfer of money to another party for
safekeeping.

LOAN is a money (or property) given with the


promise that it will be paid back in the
future, usually with interest.
8
SERVICES are professional support to aid customers.
This is sometimes described as the
intangible product.

UTILITIES refer to the basic amenities like


electricity and water

9
MORTGAGE is a loan, secured by a collateral, that the
borrower is obliged to pay at specified
terms.
AMORTIZATI
ON is the process of reducing a cost or
total in regular small amounts.

10
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.

11
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.

12
Simple Interest

Simple interest is the


interest charge on borrowing 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙
that's calculated using an × 𝑟𝑎𝑡𝑒 × 𝑡𝑖𝑚𝑒
original principal amount only 𝑰 = 𝑷𝒓𝒕
and an interest rate that never
changes

13
Dator started his small business by borrowing an
E
amount of ₱20,000.00 payable for 3 years as a simple
x
interest rate of 8% annually. How much is the interest
a
m that he must pay?
p Given: Solution:
l 𝑰 =? 𝑰 = 𝑷𝒓𝒕
e 𝑷 = ₱20,000.00 𝑰 = (₱20,000) (0.08) (3)
𝒕 = 3 𝑦𝑒𝑎𝑟𝑠 𝑰 = ₱𝟒, 𝟖𝟎𝟎.𝟎𝟎
1 𝒓 = 8% 14
Meena was given ₱200,000.00 by her parents and she
E
deposited it in a bank. Find the maturity value of
x
Meena’s money in five years if the bank offers a
a
m simple interest of 1% per annum.
Given:
p Solution: Solution:
F =?
l 𝑰 = 𝑷𝒓𝒕 F=P+I
e 𝑷 = ₱200,000
𝑰 = (₱200,000)(0.01)(5) F = ₱200,000+10,000
𝒕 = 5 𝑦𝑒𝑎𝑟𝑠
𝑰 = ₱10, 000 F = ₱210,000
2 𝒓 = 1%
15
Compound Interest
Compound interest may be the same percentage rate, but it is
calculated periodically. Every time it is calculated, the new
interest payment is added to the principal amount, thus
increasing the dollar amount due every time it is calculated.
In other words, your interest is earning interest.
Formula: P = principal amount
r = rate
t = time
I=A - P n = compounded times 16
Example 3 Solution:

Jasmine deposits ₱ 520 into A = 520(1+


a savings account that has a A = ₱ 557.65 the balance of
3.5% interest rate Jasmine’s account after 2 years
compounded monthly.
What will be the balance of Solution:
Jasmine’s savings account I=A-P
I = 557.65 – 520
after two years? How much
I = ₱ 37.65, the after 2 years
is the interest
17
Practice No. 1

1.Dereck borrowed ₱2,200,000 2. An investment earns


payable for 5 years to 3% each year and is
purchase a pick-up truck. A compounded monthly.
bank offered him a car loan
Calculate the total value
with simple interest rate of
and total interest after 6
6.75% per year. What is the
years from an initial
maturity value of the loan?
investment of ₱ 50,000.
18
Financials

19
Thank you

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