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Learning Objectives
Understand what is meant by simple interest
Understand the concept of time value of
money
Complete various calculations regarding
simple interest
Outline
The Concepts of Simple Interest and Time
Value of Money
Manipulation of Simple Interest Equation
Payment with Installment
Time Value of Money
Which option will you choose?
OR
OR
FV PV (1 r ) n
If it is known in days :
number of days
a) Exact Interest Method (SIe) : t
365
number of days
b) Ordinary Interest Method (SIo) : t
360
Simple Interest Equation Manipulation
SI
P
rt
SI P r t
SI
r
Pt
SI
t
Pr
Simple Interest : Final Value (S)
The final value is calculated as :
S P SI