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SIMPLE INTEREST

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › SIMPLE INTEREST

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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    Posts
  • August 21, 2021 at 9:57 pm #632460
    msk29
    Member
    • Topics: 82
    • Replies: 65
    • ☆☆

    Hello!

    My query is with regard to the simple interest computation.

    For example: the loan amount is $2,300,000
    time is 72 months (6 years)
    rate is 5%
    the loan period is starting from Oct 2019.
    So what would the simple interest be per month?
    The year end being 31/3/2020

    So this is how I did (please confirm if I’m on the right track):
    I = PRT
    I = 2,300,000*0.05*6
    I = 690,000

    Now what can I do to get the interest per month?

    Is it (690,000/72) $9,583 per month i.e as at 31/10/2019
    Then, as at 30/11/2019 again $ 9,583
    and so forth until the year end.

    Whereby the total interests during the year until 31/3/2020 would be $ 57,498 (9583 *6 months)

    Please help.

    August 22, 2021 at 9:46 am #632505
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51920
    • ☆☆☆☆☆

    If the interest rate is 5% per year, the the monthly interest rate (if it is simple interest as opposed to compound interest) is 5/12 = 0.4167% per month.

    However this is not at all relevant for Paper FM and so I am bit puzzled as to why you are asking.

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