Borrowing and Lending Money

Everyone has supposedly experienced borrowing or lending money, to friends and you yourself borrowed to them. And as you lend them money you sometimes joke to them "hey there's an interest when you give it back to me". Well as a continuation to that it's time to understand how interest really works.

The first thing to do about interest is learning a couple of formulas:
1. I=Prt
2. t=I/Pr
3. r=1/Pt
4. F=P+1
5. F=P+Prt
6. F=P(1+rt)
7. P=F/(1+rt)
8. t+1/r(F/P-1)

where:
I = interest
t = time (expressed in years unless if stated months in the problem)
r = interest rate
P = principal amount
F = final amount

*to change the time from years to months just multiply it by 12 (since there are 12 months) and from months to years is divide it by 12.

Next time someone borrows money from you try to compute the interest as a practice, it might come in handy. The most important thing to remember are the formulas and designating the right number to the right term. 

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sample problem: Find the time in months investing P30,000 at the rate of 12% if the person earns an interest of P459?

SOLUTION
    P = 30,000
    r = 12% = 0.12
    I = 459
    t = ?

    t=I/Pr = 459/30,000(0.12)
           = 459/3600
           = 0.1275 yrs
           = 0.1275 (12)
           = 1.53 months

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Prof. Cris Paner