Simple Amount

SIMPLE AMOUNT FORMULA

Total amount of money obtained or iccured after a certain period of time, t. with

                                                S              = Simple Amount or Sum

I               = Simple Interest

                                                P             = Principal

                                                r              = Simple Interest Rate

                                                t              = Time (in years)

Example 4

Calculate the maturity value for an investment of RM3500 at an interest rate of 5.5%. the investment matures after 7 years.

Example 5

A person borrows RM975 from a bank at an interest of 11.25%. After some time, he pays the bank RM1304.10 as full and final settlement of the loan. What is the duration of his loan?

Example 6

Rahimi obtained a RM2000 loan from a bank which charges an interest of 7.5%. siti intends to settle the loan after 2 years.

a)     Calculate the amount of interest Siti will need to pay.

b)    What is the maturity value of Siti’s loan?

Example 7

May Lyn made three deposits of RM100 each at ABC Bank. Each deposit was made one month after the previous deposit. The accounts with ABC Bank earn an interest of 9%. Calculate the value of the accounts three months after the first deposit.