FIRST SEMESTER FINALS

TOPICS – BUSINESS MATH

SIMPLE INTEREST

SIMPLE INTEREST is the money borrowed which usually

bears a cost call interest.

The amount borrowed is called the Principal.

DETERMINING INTEREST

Formula: I = P r t
 Where: I – interest
P – Principal
r – interest rate on the principal usually stated in percent
t – time or duration of the loan, expressed in number of years, months, days, etc.
DETERMINING THE RATE OF INTEREST

FORMULA : r = I/Pt
DETERMINING THE PRINCIPAL

FORMULA: P = I/rt
DETERMINING THE TIME

FORMULA: t = I/Pr
DETERMINING THE RPINCIPAL, Given (A)(R)(t)

 In any mathematical computation solving two unknown variables

using one equation or formula is not possible.
 However, two equations with at least one common variable can be
combined to derive a new equation.
DETERMINING THE SUM

A = Prt
ACTUAL TIME & APPROXIMATE TIME

 APPROXIMATE TIME like ordinary interest assumes that each of the 12 months in a year has
30 days (360 days in a year). On the other hand, ACTUAL TIME, counts the exact number
of days; hence a year is taken as composed of 365 days.

 THIRTY days have September,

 April, June, and November
 The rest have THIRTY ONE except
 February which has twenty eight
 Or twenty nine.
ORDINARY INTEREST & EXACT INTEREST

 Where time is expressed in days, interest could either be ordinary interest or exact interest.
To ordinary interest, one year is taken as 360 days (approximate days in a year)

I = P x r x D/360
where D is the number of days. For exact time, one year is taken 365 days
(exact days in a year)

I = P x r x D/365
COMMISSIONS and OVERRIDES
COMMISSIONS and OVERRIDES

COMMISSION is a percentage of the total

sales generated by a salesperson.
COMMISSIONS and OVERRIDES

OVERRIDES is a different commission rate that

may apply is a certain target is reached.
CALCULATING COMMISSION

C = S x RC(%)
Where,
C = Commission
S = Amount of Sales
RC(%) = Rate of Commission
EXAMPLES:

1. Maria makes money by commission rates. She gets 15% of

everything she sells. If Maria sold PHP23,000.00 worth of items
this month, how much will she get?
2. Peter makes PHP7,000.00 a month plus some money
commission rates. He gets 6% of everything he sells. If Peter
sold PHP55,000.00 worth of items, how much will be his gross
earning for the month?
3. Paul makes a base monthly salary of PHP1,500.00. As a
vendor, he must sell PHP19,000.00 worth of products per
month. He also makes a 6% commission on all sales beyond
the monthly quota . If Paul sold PHP26,600.00 this month, what
is his gross earning for the month?
EXAMPLES:

4. Tiffany makes money by commission rates. She gets 21%

of everything she sells. If Tiffany sold PHP 27,000.00 worth of
products, how much will she receive for the month?
5. Cindy makes PHP 9,000.00 a month plus some commission
rates. She gets 10% of everything she sells. If Cindy sold PHP
30,000.00 worth of items, how much total will she get?
SOLUTIONS:

1. C = (15%) x (PHP 23,000.00)

C = PHP 3,450.00
2. C = (6%)x (PHP 55,000.00) + PHP7,000.00
= PHP3,300.00 + PHP 7,000.00
= PHP 10,300.00
3. C = (6%) x (PHP 26,600.00 – PHP 19,000.00) + PHP 1,500.00
= (6%) x (PHP 7,600.00) + PHP 1,500.00
= PHP 456.00 +PHP 1,500.00
= PHP 1,956.00
SOLUTIONS:

4. C = (21%) x (PHP 27,000.00)

C = PHP 5,670.00
5. C = (10%) x (PHP 30,000.00) + PHP 9,000.00
= PHP 3,000.00 +PHP 9,000.00
= PHP 12,000.00
MORTGAGE

MORTGAGE is a loan in which property

or real estate is used as collateral. The
borrower enters into an agreement with
the lender (usually a bank) wherein the
borrower receives a\ cash upfront then
makes payments over a set time span
until he pays back the lender in full.
EXAMPLES:

1. Suppose you need to buy a car, but you don’t have enough money to fully pay for one.
The only way you can buy one is to take out a car loan. Given the amount of the car, the
current annual interest rate, and the numbers of years you have to pay for the car, how
can you determine of you can afford to pay for monthly payment of the loan?
Given the following:
P = P24,000.00 Monthly Payment = P2,880.00
Annual Interest = 12% Monthly Interest Rate = 1%
Time = 5 months
SOLUTION:

Payment Balance
Amount Principal Interest
Number P21,120
1 P4,351.5601 P4,140.3601 211.2 P16,979.6399
2 P4,351.5601 P4,181.7637 169.7964 P12,797.8762
3 P4,351.5601 P4,223.5813 127.9788 P8,574.2949
4 P4,351.5601 P4,265.8172 85.7429 P4,308.4777
5 P4,351.5601 P4,308.4753 43.0848 P0.00
EXAMPLES:

2. What is the amortization schedule for the balance of PHP 12,000.00 with annual
interest rate of 5% and 2% down payment that runs for 5 months.
3. You want to take out a mortgage for P50,000.00 with monthly payments at 5%
and you can afford P2,500 per month payments. Amortization schedule.
4. Pedro currently owe P150,000.00 on a mortgage, and make payments of
P1,900.00 per month. The current interest rate is 45% per month. Pedro is to pay of it
for 12 months.
5. What are the payments on a loan of P200,000.00 over 10 years, at 50% interest per
month.
 SOLUTIONS:

2.
Payment Balance
Amount Principal Interest
Number P11,400
1 P2418.6057 P2190.6057 228 P9,209.3943
2 P2418.6057 P2234.4178 184.1879 P6974.9765
3 P2418.6057 P2279.1062 139.4995 P4695.8773
4 P2418.6057 P2324.6883 93.9174 P2731.1890
5 P2418.6057 P2371.1819 47.4238 0.00
3.
Payment Balance
Amount Principal Interest
Number P47500
1 P10970.7293 P8595.7293 2735 P38904.2707
2 P10970.7293 P9025.5158 1945.2135 P29878.7549
3 P10970.7293 P9476.0623 1493.9377 P20402.6926
4 P10970.7293 P9950.5947 1020.1346 P10452.0979
5 P10970.7293 P10448.1244 522.6049
PRESENTED BY:
GROUP 1