Page 118 - Demo

Review Numbers & Money Exchange│ Unit11184.4 Exact and Trade Simple InterestWhen the borrowing / investment period require the calculation of the number of days, the type of interest need to be taken into consideration: a)Trade (Ordinary) Simple:The calculation of this interest is based on 360 calendar days only. This method is used if it’s required or when type of interest is not mentioned.a)Exact Simple Interest:This interest is calculated based on the number of days per month per year using a 365 days calendar year.This method is used when its required or if currency is Sterling Pound (£) or Kuwaiti Dinar (KD).These two kinds of simple interest are only applicable if the unit of time used is in days.►Trade S.I:T.I = P ×R ×T ÷ 364►Exact S.I:E.I = P ×R ×T ÷ 365 Important Points 4-4-1:\►These two kinds of simple interest are only applicable if the unit of time used is in days. Tips 4-4-1: ►Ali invested BD 2,000 at 6% for 120 days. Find the Trade and Exact simple interest?Solution:Trade S.I :T.I = P ×R ×T ÷ 364= 2,000 ×6% ×120 ÷ 364 = BHD40Exact S.I: E.I = P ×R ×T ÷ 365 = 2,000 ×6% ×804 ÷ 365= BHD39.452Example 4-4-1: