Credit And Collection Finman 6 PDF

CREDIT AND COLLECTION Finman 6 Simple Interest Is interest on the amount invested or I = Prt borrowed at a given rate and for a given time. Simple Interest I = Prt Simple Interest (interpolation) I I I...

CREDIT AND COLLECTION Finman 6 Simple Interest Is interest on the amount invested or I = Prt borrowed at a given rate and for a given time. Simple Interest I = Prt Simple Interest (interpolation) I I I I = Prt r= P= t= Pr Pt rt Maturity Value F=P+I Also, F = P + Prt F = P (1 + rt) Ordinary & Exact Interest I = Pr (D/360) I = Pr (D/365) I = interest P = principal D = days APPROXIMATE Time & Exact Time  What would you do if the Time for computing the Simple Interest is not in years but in dates? Problem: On May 4, 2021, Edward borrowed ₱ 22,000 at 10% interest. Interest and principal were due on September 6, 2021. What was the total amount he paid on that date? APPROXIMATE Time & Exact Time  There are two ways of finding time between the two dates given.  One method is to find approximate time and the other is to find actual time. 2 Methods of Finding Time 1) Approximate = estimate 2) Actual = verifiable, realistic, literal Approximate Time Example 1. On May 4, 2021, Edward borrowed ₱ 22,000 at 10% interest. Interest and principal were due on September 6, 2021. What was the total amount he paid on that date? P = ₱ 22,000 r = 10% =.10 t = May 4 to September 6, 2021 Solution To find the interest due on September 6, 2021, we will first find the time between May 4 and September 6, 2021. a. Approximate Time Year Month Day SUBTRACT 2021 9 (Sept.) 6 6-4 = 2 2021 5 (May) 4 4 2 This means 4 months and 2 days. To find the number of days: (4 x 30 days) + 2 days = 120 + 2 days = 122 days. [Note: We consider 1 month = 30 days]. Example 1. On May 4, 2021, Edward borrowed ₱ 22,000 at 10% interest. Interest and principal were due on September 6, 2021. What was the total amount he paid on that date? P = ₱ 22,000 r = 10% =.10 t = May 4 to September 6, 2021 APPROXIMATE TIME Using approximate time, the total amount paid by Edward on September 6, 2021 can be obtained by the following solution: Compute: F=P[1+r D ] 360 122 = 22,000 [ 1+ (.10) ] 360 = 22,000 (1.033888889) = 22,745.56 ACTUAL TIME ACTUAL TIME The actual number of days between May 4 and September 6, 2021 can be obtained by the following solution: May (31-4) 27 (How many days from May 5 to May 31?) June 30 July 31 August 31 September 06 125 days Illustrative examples “Number of Days of the Year” may also be used to find actual number of days, especially when the two given dates involve longer time. September 249 F=P[1+r D ] 365 May 124 125 days = 22,000 [ 1+.10 125 365 = 22,000 (1.342465753) = 22,753.42 Illustrative examples 2. Find the number of days from February 24, 2001 to June 14, 2001. a. Approximate time? Solution: Year Month Day Year Month Day 2001 6 14 2001 5 44 2001 2 24 2001 2 24 3 months 20 days We can’t subtract 24 from 14, so x 30 borrow “1 month” from 6 months. 90 days + 20 days = 110 days 1 month = 30 days, so we add 30 to 14. Solution b. Actual time? 1. February (28-24) = 4 March 31 April 30 May 31 June 14 110 days 2. June 14 165 = is the 165th day of the year February 24 55 = is the 55th day of the year 110 days Illustrative examples 3. Find the number of days from April 12, 2002 to October 25, 2003. Solution a. Approximate time? Year Month Day 2003 10 25 2002 4 12 1 yr 6 months 13 days x 360 days x 30 days 360 + 180 + 13 = 553 days Illustrative examples from April 12, 2002 to October 25, 2003 Solution: a. Actual time? 1. April (30 - 12) 2002 18 Jan (2003) 31 May 31 Feb 28 June 30 Mar 31 July 31 Apr 30 August 31 May 31 Sept 30 June 30 October 31 July 31 November 30 August 31 December 31 September 30 263 October 25 298 263 + 298 = 561 days Illustrative examples 4. Find the actual time between November 10, 2015 to March 15, 2016. Solution March (2016) 15 Feb 29 Jan 31 Dec (2015) 31 Nov 20 126 days 2016 = leap year