THEORY QUESTIONS (Simple Interest)

TOPIC : SIMPLE INTEREST (Q & A)
PRESENTER: TEAM 2
CLASSMASTER: Angana, Kissy Lovell Mae
11/23/21
TEAM 1
THEORY QUESTIONS (Simple Interest)

1. TRUE/FALSE. When the time given in a simple interest problem is between two
dates, there are two methods to compute the days for the numerator and the
denominator; these are Approximate interest method and Exact or actual time method.
Answer: False
2. In measuring time, when do we use 360 days and 365 days in one year?
Answer:
- The ordinary method of computing interest uses 360 days in a year.
- The exact interest method adopts 365 days in a year. But in a leap
year, it uses 366 days.
3. TRUE/FALSE. If a known amount in the past is subject to the time value of money,
the maturity value is to be calculated.
Answer: True
PRACTICE QUESTIONS (Simple interest)

4. On April 15, 2021, Jakie borrowed P100,000 from ASPAC Bank at 10% interest
rate. The loan is payable on September 10, 2021. Compute the simple interest using
ordinary interest method using exact or actual time.
Exact time:
April (31-15) = 16 days
May = 31 days
June = 30 days
July = 31 days
August = 31 days
September = 10 days
Exact time = 149 days
Approximate time:
April (30-15) = 15 days
May = 30 days
June = 30 days
July = 30 days
August = 30 days
September = 10 days
Approximate = 145 days
time
Answer:
Ordinary interest method using exact or actual time:
I = 100,000 x 10% x 149/360
I =P 4,138.89
5. Find the sum of money that amounts to P992 in 4 years at 5% per annum.
Answer:
- M = P(1+ RT)
- 992 = P (1 + (0.05)(4)
- 992 = P (1.2)
- 992/1.2 = P826.67
- P = P826.67
6. Thano's father had borrowed 1,000 from the bank and the rate of interest was 5%.
What would the simple interest be if the amount is borrowed for 1 year? Similarly,
calculate the simple interest if the amount is borrowed for 2 years, 3 years, and 10
years?
Answer:
1 Year S.I = 1,000 ×5% × 1 = P 50.00
2 Year S.I = 1,000 × 5 %× 2 = P 100.00
3 Year S.I = 1,000 ×5 %× 3 = P 150.00
10 Year S.I = 1,000 × 5% × 10 = P 500.00
TEAM 2

1. TRUE/FALSE: Before you can calculate INTEREST your time must be in
MONTHS.
Answer: TRUE. In computing the interest, you can use the time either 1 year or
12 months
2. Define interest rate. Use a maximum of two sentences for your answer.
Answer: Interest refers to the money individuals and businesses are charged for
borrowing a given amount of money. It appears as an additional amount of the
money loaned.
3. TRUE/FALSE. The time element in simple interest is computed by dividing the

interest with the product of the principal and the rate.
Answer: True

4 - 5. On January 1, 2012 Monica borrowed 500,000 from Bogo SVF Lending at 7%
interest, payable 1 year.
Question No. 1: Is the problem a simple interest?

Answer: Yes, since it can be observed that 7% interest is payable only once from
the time of borrowing up to maturity date.
Question No.2: Find the simple interest.

Answer: 35,000
I=PRT / 35,000= (500,000 x 0.07 x 1)
6. A sum of money triples itself in 12 years at simple interest. Find the rate of interest?
A. 12 1/2%
B. 14 4/7%
C. 15 2/3%
D. 16 2/3%
Answer: D. 16 2/3%
Let the pricipal be Rs. x, then amount = 3x (where R = rate of interest)
=> Interest = 3x - x = Rs. 2x
R = (100 * 2x) / (x * 12) = 50/3 % = 16 2/3%
TEAM 3

1. It is considered economic or financial in character if there is a monetary value
involved in the exchange.
Answer: Transaction
2. What are the difference between Ordinary and Exact Interested methods?
Answer: The difference between Ordinary Interest and Exact Method is the
denominator used in the same element of the interest formula. Another salient
difference is that the amount of simple interest using the ordinary interest
method is higher compared to exact interest method.
3. When the time given in the problem is expressed in number of days but the interest
rate is expressed in percent per year. What methods should be used to determine the
interest?
Answer: Ordinary and Exact Interest Methods

4. On January 1, 2021, Morris borrowed a sum of money from Community Bank,
payable for 3 year at 8% simple interest. She paid P12,000 for the interest of her loan.
How much is the principal amount borrowed by Morris?
Solution:
I= P12,000
R= 8% or 0.08
T=3 years
P=?
P= P50,000
Answer: P50,000 is the principal amount borrowed by Morris.
5. On December 1, 2021, Regine deposited P800,000 at Community Bank. The

deposit earned simple interest of P560,000 for 5 years. Compute the rate of simple
interest deposit.
Solution:
P = P800,000
I = P560,000
T = 5 years
R=?
Answer: R = 560,000/(800,000 x 5) = 0.14 or 14%
6. When Josieme bought a new office phone, she borrowed P1,200 at a rate of 18%
for 9 months. How much interest did she pay?
Given:
P = P1,200
R = 18% or 0.18
T = 9 months or 0.75
(Solution for Time:) To get the time in years we represent 9 months as 9/12 of a year,
or 0.75.
SOLUTION:
I = PxRxT
I = (1200)*(0.18)*(0.75)
I= 162.00
Answer: Josieme paid P162.00 in interest.
TEAM 4

1. The amount of money charged to the borrower for the use of money.
Answer: Interest
2. The initial amount of money deposited or borrowed.

Answer: Principal
3. In this method, it is assumed that there are 30 days in each month.

Answer: Approximate Time Method

4. Find the interest if:
P = Php 150
R = 15%
T = 18 months
I=?
Answer:
I = PRT
= (150)(.18)(1.5)
= Php 33.75 in 1.5 years
5. Calculate for the time if:

P = Php 15,000
R = 10% I = Php 9,000
T=?
Solution:
T= I/PR
= 9,000/ (15,000)(10%)
= 9,000/ 1500
T=6
6. Jaz deposited Php 10000 for 4 year at a rate of 6% per annum. Find the interest and
amount Jaz got.
Solution:
Principal (P) = Php 10000
Time (T) = 4 years
Rate (R) = 6% per annum
Interest ( I ) = ?
I = PRT
= (10,000)(6%)(4)
= Php 2,400
For the amount P = 10,000 I = 2,400 P + I 10,000 + 2,400 = Php 12,400
TEAM 5

1. The sum of the principal and interest due is called?
ANSWER: Amount or Accumulated Value
2. This could be a bank that borrows and lends money to profit on the difference in
interest rates.
ANSWER: Financial Institution
3. The period that money is lent to someone or is borrowed from?

ANSWER: Time

4. Ariel takes a loan of P8,000 to buy a used truck at the rate of 9 % simple Interest.
Calculate the annual interest to be paid for the loan amount.
ANSWER:
Given in the problem:
P = P8,000
R = 9% or 0.09 expressed as a decimal
T =1 year
SOLUTION:
I=PxRxT
= P8,000 x 0.09 x 1
I = P720.00
Annual Interest to be paid = P720
5. Luna wants to borrow money from her mother, and she is offered a five-year, non-
compounding loan of P7,000, with a 3% annual interest rate. What is Luna’s total
interest expense?
ANSWER:
P = P7,000
T = 5 years
SOLUTION:
I=PxRxT
I = P7,000 x 0.03 x 5
I = P1,050
6. Mr. Sherlock plans to place his money in a certificate of deposit that matures in
three months. The principal is P10,000 and 5% interest is earned annually. He wants
to calculate how much interest he will earn in those three months.
ANSWER:
P = P10,000
T = 3/12 of a year
SOLUTION:
I=PxRxT
I = P10,000 x 0.05 x 3/12
I = P125

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TOPIC : SIMPLE INTEREST (Q & A)