EXAMPLE:
A BUSINESSMAN BORROWED P500,000 WITH INTEREST AT THE RATE OF 8% COMPOUNDED SEMI-ANNUALLY. HE AGREES TO DISCHARGE HIS OBLIGATION BY PAYING A SERIES OF 8 EQUAL SEMI-ANNUAL PAYMENTS, THE FIRST BEING DUE AT THE END OF 5/½ YEARS. FIND THE SEMI- ANNUAL PAYMENT.

SOLUTION:
P1 = A[(1+i) – 1]________ (1 + i) n i
       

P1= A[(1.04)8-1] (1.04) (0.04)

P1 = 6.7327 A P1 =

P(1+i)N 6.7327 A = 500,000 (1.04)10

A = 109,928.74

SIMPLE INTEREST

SIMPLE INTEREST

EXAMPLE:

You deposit some money into a bank account paying 10% simple interest per year. You received P15,000 in interest after 2 years. How much was the deposit?

GIVEN: Is = P15,000

r = 10% = 0.10

t = 2

FIND: P

SOLUTION:

P = ls/(r•t)

= 15,000/(0.10•2)

= 15,000/0.20

P = 75,000

BUSINESS AND CONSUMER LOAN.

A business loan, is money or a line of credit a business or individual gives to another business for its startup or operations. A business needs to pay back the loan, usually in installments.
Consumer loan- means a loan to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan.

Ms Rosal bought a car. After paying the downpayment, the amount of the loan is P400,000 with an interest rate of 9% compounded monthly. The term of the loan is 3 years. How much is the monthly payment?

Solution.

The regular payment is P12,719.89.