3.2. INTEREST RATES
• Determine the simple interest rate if R3 600 accumulates to R5 760 in five years’ time.
S = P (1 + rt)
5 760 = 3 600 (1 + r × 5)
1+5r =
5 760
3 600
5r =
5 760
3 600
− 1
r =
5 760
3 600
− 1
÷ 5
=0,12
The simple interest rate is 12%.
Key in as
( 5 760 ÷ 3 600 − 1 ) ÷ 5 =
The answer is 0,12, that is, 12%.
3.2.2 Simple discount
P = S (1 − dt)
• Determine the present value of a promissory note that is worth R2 500 15 months later,
and the applicable discount rate is 10,24% per year.
P = S (1 − dt)
P = 2 500
1 − 0,1024 ×
15
12
= 2 180,00
The present value is R2 180,00.
Key in as
2 500
( 1 − 0.1024 × 15 ÷ 12 =
The answer is 2 180,00.
• Determine the time under consideration (in months) if a simple interest rate of 11,76%
is equivalent to a 10,25% simple discount rate.
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