rudy borrowed from Harry PhP 1,000 at an annual interest rate of 10%. After a year, Rudy should pay PhP1,100. However, Rudy failed to pay. At the end of another year, Harry asks for PhP 1200.00. What type of interest is employed in the situation?
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Given:
P = Php 1,000
r = 10% = 0.10
t = 1
when t = 1
A = Php 1,000 × (1 + 0.10 × 1) = Php 1,100
when t = 2
A = Php 1,000 × (1 + 0.10 × 2) = Php 1,200
So, simple interest is applied in the situation.
Answer:
→ SIMPLE INTEREST