UiTM SARAWAK

12/10/2012

INTRODUCTION

UNIVERSITI TEKNOLOGI MARA

SIMPLE
INTEREST
1

MARIATHY KARIM
UiTM SARAWAK (SAMARAHAN)
FSKM(MATHEMATICS)

SIMPLE INTEREST FORMULA

Interest is charge incurred when a loan or

credit is obtained.

Simple Interest is the interest calculated on the

original principal for the entire period it is
borrowed or invested.
The formula:

You borrowed RM 1,000 from a bank for one year and you
paid back RM 1,080 at the end of that year. The additional
amount of RM 80 is the charge or interest you need to pay
when you borrow RM 1,000.

I = Prt
where,

Interest rate is usually expressed as per cent (%)

per annum
There are two types of interest: Simple Interest
and Compound Interest

I - simple interest (RM)

P - principal (RM) (or amount invested or amount
borrowed or present value)
r - rate of interest (%) (per annum or per year)
t - time or period (in years)

SOLVING MATHEMATICAL
SIMPLE INTEREST CONCEPT
1.

PROBLEMS

RM 1,000 is invested for four years in a bank,

earning a simple interest rate of 8% per annum.
Find the simple interest earned at the end of
the fourth year.

I =?
P = RM 1,000
r = 0.08
t = 4 years

2. Find the simple interest on RM 650 invested at

1
5.6% for 3 2 years.
Solution:

RM 1,000

I =?

P = RM 650

r = 0.056
t =3 1 years
2

I = Prt
I = (650)*(0.056)*( 3 1)
2
= RM 127.40

I= ?

I = Prt
I = (1000)*(0.08)*(4)
= RM 320
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MARIATHY BT KARIM

USING

Solution:

Interest is money earned when money is

invested.
You deposited RM 1,000 in a bank for a year and you find
at the end of year one, you have RM 1,050 in your account.
The additional amount of RM 50 is the interest you earned
when you invest RM 1,000.

INTRODUCTION

What is INTEREST?

UiTM SARAWAK

12/10/2012

SIMPLE AMOUNT FORMULA

The Simple Amount is the sum of the original
principal and the interest earned.
The formula is:

3. Find the simple interest on RM 15000 borrowed

at the rate of 3% for 5 months.

Solution:

I =?

S Original Principal + Interest Earned

P = RM 15 000

S PI

S P Pr t

r = 0.03
t = 5 years
12

where,

I = Prt
I = (15000)*(0.03)*( 5 )
12
= RM 187.50
7

RM 10,000 is invested for 4 years 9 months in a

bank earning a simple interest rate of 10% per
annum. Find the simple amount at the end of
the investment period.

Solution:
P = RM 5000
t =3
S = RM 6125
r=

Solution:

S = P(1 + rt)
6125 = 5000 ( 1+ (3))
6125 = 1+ 3

S=?
P = RM 10,000
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S - simple amount or maturity value or future value (RM)

P- principal or amount invested or amount borrowed or
present value (RM)
r - rate of interest (%) (per annum or per year)
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t - time or period (in years)

2. Aida invest RM 5,000 in an investment fund for

three years. At the end of the investment period, his
investment will be worth RM 6125. Find the simple
interest rate that is offered.

SOLVING MATHEMATICAL PROBLEMS

USING SIMPLE AMOUNT CONCEPT
1.

S P( 1 rt )

57

t = 4 12 12
r = 0.10
S = P(1 + rt)

5000
6125
-1=3
5000
57

= 10000(1+ (0.10)*( ))
12
= RM 14750

r = 0.075
r = 0.075 * 100
r = 7.5%

3. How long does it take for an investment of RM1200,

given the rate of interest is stated at 10% per
annum to be worth RM 1260?

4. How much is the deposit for 2 years in a company

that pays at an interest rate of 15% per annum in
order to get an interest worth RM15000?

Solution:

Solution:

P = RM 1200
S = RM 1260
r = 0.1

t =2
r = 0.15
S = RM 15000
P=?

t =?
S = P(1 + rt)
1260 = 1200 (1 + 0.1(t))

S = P(1 + rt)
15000 = P (1 + 0.15(2))
15000 = 1.3 P
P = RM 11538.46

(1260/1200 ) -1 = 0.1t
0.05/0.1 = t
t = 0.5 years (or 6 months)
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MARIATHY BT KARIM

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UiTM SARAWAK

12/10/2012

EXACT TIME AND APPROXIMATE TIME

EXAMPLE

CONCEPTS

DETAILS

1. Find the Exact time from 15 June 2011 to 23

October 2011.

Exact Time

It is exact number of days between any

two given dates. Each specific month of
the year that is involved is counted exactly
as it is e.g. January = 31 days; February =
28 or 29 days;...

Approximate
Time

Assume that a month has 30 in the

calculation of number of days between
two given dates.

Month
June
July
August
September
October
TOTAL

June
July
August
September
October
TOTAL

Number of
(Exact time)
30 15 =15
30
30
30
23
128

days

13

14

3. Find the Exact time from 3rd May 2009 to 29 August

2009.

2. Find the Approximate time from 15 June 2011 to

23 October 2011.
Month

Number of
(Exact time)
30 15 =15
31
31
30
23
130

days

Month

Number
of
(Exact time)
31 3 = 28
30
31
29
118

May
June
July
August
TOTAL

days

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ORDINARY SIMPLE INTEREST AND EXACT

SIMPLE INTEREST

4. Find the Approximate time from 3rd May 2009 to

29 August 2009.
Month
May
June
July
August
TOTAL

Number of
(Exact time)
30 3 =27
30
30
29
116

CONCEPTS

DETAILS

Ordinary
Simple
Interest

t is based upon a 360 day year

days

Exact Simple t is based upon a 365 (depending on

Interest
whether it is a leap year or not) day
year

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MARIATHY BT KARIM

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Using the exact time and ordinary simple interest also

known as Bankers Rule.

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UiTM SARAWAK

12/10/2012

EXAMPLE

P RM 2000

1. On 15th February 2012, Jamil deposited RM 2000

into a saving account. Using Bankers Rule,
determine the accumulated amount on 18 August
2012 if the interest rate was 9.89%.
Month
February
March
April
May
June
July
August
Total

Number of Days
29 15 = 14
31
30
31
30
31
18
185

185
365
r 0.0989

S P (1 rt )
2000(1 0.0989*
RM 2101.65

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2. Find the amount interest using exact time and exact

simple interest on a loan of RM 1000 made on the 13
January 2011 where the loan was paid on the 14
April 2011. Given that the simple interest rate was
4%.
Month
January
February
March
April
Total

185
)
360

P RM 1000
91
365
r 0.04

I Pr t

Number of Days
31 13 = 18
28
31
14
91

1000(0.04)(

91
)
365

RM 9.97

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PRESENT VALUE

3. An actor borrowed RM19000 from a bank on 17

May 2010 at 12% ordinary simple interest using
approximate time. After a certain time, he paid
back RM19316.67. Find the date of repayment.

Formula of present value:

P S (1 rt) 1

Answer : 7 July 2010.

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MARIATHY BT KARIM

Present Value is the value on a given date of a

payment.

1 rt

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UiTM SARAWAK

12/10/2012

EXAMPLE

THANK YOU.NEXT..

1. Find the present value at 9% simple interest of a debt

RM 4000 due in 8 months.

Tutorial 2
Pass Years
Quiz 2

Answer: RM3773.58

2. Find the present value of a debt 100 days prior to its date
of maturity at 8% exact simple interest with a maturity
value of RM 2020.
Answer: 1976.68

3. Ajay borrowed a certain amount of money at 7% simple

interest. If he has to pay back RM3000 in 9 months,
what is the actual amount that he borrowed?
Answer: RM 2850.36

MARIATHY BT KARIM

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