math110_simple_interest_lecture_notes

math110_simple_interest_lecture_notes - Mathematics of...

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Unformatted text preview: Mathematics of Finance Simple Interest and Discount Interest is a fee paid by the borrower to the lender for the use of their assets (e.g. money). Principal is the amount borrowed or deposited. Simple Interest is a fee paid only on the amount borrowed or invested and not on past interest. Interest on loans of a year or less is frequently calculated as simple interest. Simple Interest Formula: is the simple interest. is the principal. is the rate of interest per year. is a number of years. Mathematics: Applications for Business Example: Anne Kelly borrowed \$25,900 from her father to start a flower shop. She repaid him after 11 month, with interest of 8.4%. (a) (b) Find the simple interest that Anne paid on the loan. Find the total amount she repaid. Solution: , , Then, ( (a) ⁄ ) (b) Based on custom edition “Math: Applications for Business.” Prepared and summarized by Vera Klimkovsky. ...
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