CE40 / C3

SANCHEZ, Joshua Edward L. October 11, 2015

CE-3 / 2012103230 Assignment #1

EXAMPLES FOR SIMPLE INTEREST

EXAMPLE 1

How long does it take a principal of $25,000 at a simple interest rate of 5% to become $30,000?

EXAMPLE 2

$45,000 is deposited into a savings account. After one year, 4 months and 20 days it totals $52,500.
Calculate the simple interest rate for this account.

EXAMPLE 3

Determine the simple interest rate applied to a principal over 20 years if the total interest paid equals the
borrowed principal.
EXAMPLE 4

How long does it take a principal payment to triple at a simple interst rate of 6%?

EXAMPLE 5

Find the total amount of simple interest that is paid over a perod of five years on a principal of $ 30,000 at

a simple interest rate of 6%.

EXAMPLE 6

Calculate the total worth of an investment after six months with a principal of $10,000 at a simple interest
rate of 3.5%.

EXAMPLE 7

Richard deposits $ 5400 and got back an amount of $ 6000 after a year. Find the simple interest he got.

Solution:
Principal (P) = $ 5400,
Amount (A) = $ 6000
Simple Interest (SI) = Amount (A) Principal (P)
= 6000 - 5400
= 600
EXAMPLE 8

Kyle borrowed $ 3400 at the rate of 8% p.a. for 225 days. Find the interest and amount she paid.

Solution:
Principal = $ 3400,
Rate = 8% p.a.
Time = 225 days.
= 225/365 years.
Simple Interest = (P R T)/100
= (3400 8 225)/(100 365)
= 6120000/36500
= $ 167.67
Amount = Principal + Simple Interest
= 3400 + 167.67
= $ 3567.67
Therefore, Amount paid by Kyle is $ 3567.67
And the Interest paid by Kyle is $ 167.67

EXAMPLE 9

Find Time when, Principal = $ 1500; Interest = $ 450; Rate = 5% p.a.

Solution:
Principal = $ 1500,
Interest = $ 450,
Rate = 5% p.a.
Time = (100 Interest)/(Principal Rate)
= (100 450)/(1500 5)
= 45000/7500
=6
EXAMPLE 10

Find Time when, Principal = $ 3500; Interest = $ 700; Rate = 4% p.a

Solution:
Principal = $ 3500,
Interest = $ 700,
Rate = 4% p.a.
Time = (100 Interest)/(Principal Rate
= (100 700)/(3500 4)
= 70000/14000
=5

EXAMPLES FOR COMPOUND INTEREST

EXAMPLE 1

Mark wants to invest R 30 000 into an account that offers a compound interest rate of 6% p.a. How much
money will be in the account at the end of 4 years?

Solution:
P=30000
i=0.06
n=4
A=P(1+i)n
A=30000(1+0,06)4= 37,874,31

Mark will have R 37,874, 31 in the account at the end of 4 years.

EXAMPLE 2

Find the compound amount and compound interest on the principal 20,000 borrowed at 6% compounded
annually for 3 years.
Solution:
P = 20000
r = 6%
n=3
A=P(1+r)n=20000(1+.06)3=23820.32
Compound interest =23820.3220000
= 3820.32

EXAMPLE 3

Find the compound amount, which would be obtained from an interest of Rs.2000 at 6% compounded
quarterly for 5 years.

Solution:
Principal = 2000
r=6%=64100=.015
n=54=20quarters
A=P(1+r)n=2000(1+.015)20
= 2693.71

EXAMPLE 4

Find compound interest on Rs.2500 invested at 6% per annually, compound semi-annually for 8 years.

Solution:
Principal = 2500
r=6%=0.06616=0.03
n=82=16
A=P(1+r)n=2500(1+.03)16
=4011.73
Compound interest =4011.732500
= 1511.73
EXAMPLE 5

An amount of $1,500.00 is deposited in a bank paying an annual interest rate of 4.3%, compounded
quarterly. What is the balance after 6 years?

Solution:
P = 1500
r = 4.3/100 = 0.043
n=4
t=6

EXAMPLE 6

A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each
on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of
interest is?

Solution:
EXAMPLES 7

The difference between simple and compound interests compounded annually on a certain sum of money
for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is?

Solution:

EXAMPLE 8

There is 60% increase in an amount in 6 years at simple interest. What will be the compound interest of
Rs. 12,000 after 3 years at the same rate?

Solution:
EXAMPLE 9

What is the difference between the compound interests on Rs. 5000 for 1.5 years at 4% per annum
compounded yearly and half-yearly?

Solution:

EXAMPLE 10

The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is?

Solution: