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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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 Spring '11
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 Math, Calculus, Sets

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