Ma. Elissa A. Pagulayan Dr.

Buencamino
Lomboy
OFA31 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 Month AppproximateTi
Time me
8 January (23) 7
28 February 30
31 March 30
30 April 30
31 May 30
30 June 30
31 July 30
31 August 30
30 September 30
5 October (5) 5
255 Total No. of 252
Days

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: