Moi-ass1

Ma. Elissa A. Pagulayan Lomboy OFA31

Dr. Buencamino Professor

ASSIGNMENT IN MATHEMATHICS OF INVESTMENT 1) What are Interest Rate, Debtor and Time? Give Examples.  INTEREST RATE – the functional part of the principal that is paid on the loan and investment, which is usually expressed as percent. This is denoted by . Interest- the payment for the user of borrowed money or the amount earned on invested money denoted by .  Example 1 Find the interest paid by Ms. Rose on P15,000 that she borrowed for three years at 6٪ simple interest. Solution

Given: Required: Formula: Computation:

 Example 2: Determine the simples interest paid by Ana if she borrowed P1,600 at 6 ¼ for 4 months? Solution

Given: Required: Formula: Computation:

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2) Differentiate Ordinary Interest from Exact Interest. Give Examples.  ORDINARY INTEREST- denoted by , is computed using the approximate number of days in a year, which is 360 days.

 EXACT INTEREST- denoted by , is computed using the exact number of days in a year, which is 365 days.

 Example 1 Maris plans to deposit an amount of P60,000 for 385 days at 4 ¼ ٪simple interest. How much would the interest be if she opts to deposit it at a.) ordinary simple interest ? b.) exact simple interest ? Solution

Given: Required: Formulas:

Computations:

3) Differentiate Actual from Approximate Time. Give Examples.  ACTUAL TIME- refers to the true or existing number of days in a given month.  APPROXIMATE TIME- is simply assuming that each month has 30 days.

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 Example 1 Find the actual and approximate time from January 23, 2003 to October 5, 2003 Solution Actual Time 8 28 31 30 31 30 31 31 30 5 255

Month January (23) February March April May June July August September October (5) Total No. of Days

AppproximateTi me 7 30 30 30 30 30 30 30 30 5 252

4) What are the 4 methods of interest between dates? Give examples of each.  FOUR METHODS USED TO DETERMINE THE INTEREST BETWEEN DATES Ordinary Interest using actual time (Banker’s Rule)

Ordinary Interest using approximate time

Exact Interest using actual time

Exact Interest using approximate time

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 Example 1 Myra wonders how much would she get as interest in each of the four methods id she deposits P85,000 from September 21, 2003 to February 15, 2004 at 12٪ simple interest. Solution

Given: Required: Computations:

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5) What is Simple Discount? Give an example.  SIMPLE DISCOUNT- the interest is computed based on the final amount and is paid at the beginning of a specified period of time. Thus, this interest is paid in advance.

 Example 1 George borrowed P150,000 from DLSU Credit Cooperativefor a term of one year. The interest charged is 10٪ simple discount rate. Find the proceeds of the loan. Solution

Given: Required: Computations:

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