General Mathematics: Science, Technology, Engineering and Mathematics (Stem)

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Republic of the Philippines

Department of Education
MIMAROPA REGION
SCHOOLS DIVISION OF CALAPAN CITY

Supplementary Learning Materials (SLMs)

SCIENCE, TECHNOLOGY,
ENGINEERING AND MATHEMATICS (STEM)

General Mathematics

MODULE 1

Content Standard:

The learner demonstrates understanding of the key concepts of simple and compound interests,
and simple and general annuities.

Performance Standard:

The learner is able to investigate, analyze and solve problems involving simple and compound
interests and simple and general annuities using appropriate business and financial instruments.

Most Essential Learning Competencies:

Week 1
• Illustrates simple and compound interests. (M11GM-IIa-1)
• Distinguishes between simple and compound interests. (M11GM-IIa-2)
• Computes interest, maturity value, future value, and present value in simple interest and
compound interest environment. (M11GM-IIa-b-1)
Week 2
• Solves problems involving simple and compound interests. (MIIGM-IIb-2)
General Mathematics SELF-LEARNING MODULE

OBJECTIVES

At the end of the lesson, the learners are expected to:


➢ define simple interest; and
➢ compute simple interest, maturity value and present value.

LESSON
1 Simple Interest
In many aspects of modern life, Mathematics plays an important role. In the field of business, mathematics is
essential in analyzing markets, predicting stock market prices, business decision making, forecasting production, financial
analysis, and in business operation in general. This module will introduce the students to the basic concepts of business
mathematics such as the simple and compound interests.

ACTIVITY

Directions: Determine the words depicted by the pictures in each box. Write it on the space provided below each picture.

ANALYSIS

1. How do you find the activity?


________________________________________________________________________________
2. How did you come up with your answers?
________________________________________________________________________________

ABSTRACTION

“When you saved money in the bank, you will gain an interest paid by the bank. On the other hand, when you
borrow money, you are charged an interest on the amount you borrowed. How does gained and charged interests computed?”

A debtor pays the bank an amount which is more than the amount they borrowed. An investor may withdraw from
the bank more than the amount deposited. This additional sum is called INTEREST.

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

DEFINITION OF TERMS
➢ Lender or creditor – person (or institution) who invests the money or makes the funds available.
➢ Borrower or debtor – person (or institution) who owes the money or avails of the funds from the lender.
➢ Origin or loan date – date on which money is received by the borrower.
➢ Repayment date or maturity date – date on which the money borrowed or loaned is to be completely repaid.
➢ Time or term (t) – amount of time in years the money is borrowed or invested; length of time between the origin and
maturity dates.
➢ Principal or present value (P) – amount of money borrowed or invested on the origin date.
➢ Rate of interest or simply rate (r) – annual rate, usually in percent, charged by the lender, or rate of increase of the
investment.
➢ Interest (I) – amount paid or earned for the use of money.
➢ Maturity Value or Future Value (F) – amount after t years that the lender receives from the borrower on the maturity
date; equal to the sum of principal and the interest earned.

SIMPLE INTEREST (Is)


For every financial transaction, whether you borrowed or invested a certain amount P, a corresponding percentage
of the principal called interest is being paid. Simple Interest (Is) is the interest charged on the principal alone for the entire
duration or period t of the loan or investment, at a particular rate r. After the term of the loan or investment, the maturity
value or future value F is computed by getting the sum of the principal and the interest due.

Formulas:
• 𝑰𝒔 = 𝑷𝒓𝒕
• 𝑭 = 𝑷 + 𝑰𝒔 or 𝑭 = 𝑷 + 𝑷𝒓𝒕 or 𝑭 = 𝑷(𝟏 + 𝒓𝒕)
𝑰𝒔
• 𝑷= or 𝑷 = 𝑭 − 𝑰𝒔
𝒓𝒕
𝑰
• 𝒕= 𝒔
𝑷𝒓
𝑰
• 𝒓= 𝒔
𝑷𝒕
where 𝑰𝒔 − simple interest
𝑷 − principal
𝒓 − rate of interest or simply rate
𝒕 − time (in year)
𝑭 − future value (or maturity value)

𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠
Note: If the given time is in months, it can be converted to year(s) by using the formula 𝒕 = .
12

Example. Complete the table below by solving the unknown quantities in each row.

Principal Rate Time Simple Interest Future Value


(P) (r) (t) (Is) (F)
1. ₱500,000.00 12.5% 10 years

2. 2.5% 4 years ₱1,500.00


1 year and
3. ₱36,000.00 ₱4,860.00
6 months
4. ₱250,000.00 0.5% ₱1,400.00

Solution:
1.) Given: P = ₱500,000.00; r = 12.5% or 0.125 ; t = 10 years
𝐼𝑠 = 𝑃𝑟𝑡 𝐹 = 𝑃 + 𝐼𝑠
𝐼𝑠 = ₱500,000.00(0.125)(10) 𝐹 = ₱500,000.00 + ₱625,000.00
𝑰𝒔 = ₱𝟔𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎 𝑭 = ₱𝟏, 𝟏𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎
2.) Given: r = 2.5% or 0.025 ; t = 4 years ; 𝐼𝑠 = ₱1,500.00
𝐼𝑠
𝑃= 𝐹 = 𝑃 + 𝐼𝑠
𝑟𝑡
₱1,500.00
𝑃= 𝐹 = ₱15,000.00 + ₱1,500.00
0.025 (4)
𝑷 = ₱𝟏𝟓, 𝟎𝟎𝟎. 𝟎𝟎 𝑭 = ₱𝟏𝟔, 𝟓𝟎𝟎. 𝟎𝟎

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE
6
3.) Given: P = ₱36,000.00 ; t=1 years or 1.5 years ; 𝐼𝑠 = ₱4,860.00
12
𝐼𝑠
𝑟= 𝐹 = 𝑃 + 𝐼𝑠
𝑃𝑡
₱4,860.00
𝑟= 𝐹 = ₱36,000.00 + ₱4,860.00
₱36,000.00(1.5 )
𝒓 = 𝟎. 𝟎𝟗 or 9% 𝑭 = ₱𝟒𝟎, 𝟖𝟔𝟎. 𝟎𝟎
4.) Given: P = ₱250,000.00 ; r = 0.5% or 0.005 ; 𝐼𝑠 = ₱1,400.00
𝐼𝑠
𝑡= 𝐹 = 𝑃 + 𝐼𝑠
𝑃𝑟
₱1,400.00
𝑡= 𝐹 = ₱250,000.00 + ₱1,400.00
₱250,000.00(0.005)
𝒕 = 𝟏. 𝟏𝟐 years 𝑭 = ₱𝟐𝟓𝟏, 𝟒𝟎𝟎. 𝟎𝟎

APPLICATION

Directions: Complete the table below by solving the unknown quantities in each row. Write your complete solutions and
answers on a separate sheet of paper.

Principal Rate Time Simple Interest Future Value


(P) (r) (t) (Is) (F)
1. ₱40,000.00 2% 3 years
2. 10% 5 years ₱2,500.00
3. ₱100,000.00 1.5 years ₱3,600.00
4. ₱250,000.00 4.5% ₱15,400.00

OBJECTIVES

At the end of the lesson, the learners are expected to:


➢ define compound interest;
➢ compute compound interest, maturity value and present value; and
➢ differentiate simple from compound interest.

LESSON
2 Compound Interest
Problems involving simple interest were discussed on the previous lesson. Simple interest is the interest charged on
the principal alone for the entire length of the loan or investment. Several formulas were introduced to solve problems
involving simple interest. The second type of interest that will be discussed on this lesson is the compound interest. For
many long-term financial transactions, compound interest is used instead of simple interest.

ABSTRACTION

DEFINITION OF TERMS
➢ Compound amount (F) – also called maturity value, it is an accumulated amount obtained by adding the principal and
the compound interest.
➢ Conversion period (m) – the number of times in a year the interest will be compounded.
The following are the common conversion periods in a year:
annually : m=1
semi-annually : m=2
quarterly : m=4
monthly : m = 12
➢ Number of conversion periods (n) – the total number of times interest is calculated for the entire term of the investment
or loan.
➢ Annual interest rate or nominal rate (r) – the stated rate of interest per year.
➢ Periodic rate (i) – the interest rate per conversion period.
➢ Present value of F (P) – this is the principal P, that will accumulate to F if there is an interest at periodic rate i for n
conversion periods.

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

COMPOUND INTEREST (IC)


Compound interest (Ic) is usually used by banks in calculating interest for long-term investments and loans such
as savings account and time deposits. In this type of interest, the interest due at stipulated interval is added to the principal
and earns interest thereafter. It implies that the principal increases over a period of time, resulting to an increase in interest
earned at every compounding period. Thus, compound interest is an interest resulting from the periodic addition of simple
interest to the principal amount or simply the difference between the compound amount and the original principal.

Example. ₱50,000.00 was loaned for a period of 3 years with 5% interest compounded annually. What amount of money
will be needed to repay the loan?

Principal at the
Interest Amount at the end of the year
start of the year
First Year ₱50,000.00 ₱50,000 × 0.05 × 1 = ₱2,500.00 ₱50,000 + 2 500 = ₱52,500.00

Second Year ₱52,500.00 ₱52,500 × 0.05 × 1 = ₱2,625.00 ₱52,500 + 2625 = ₱55,125.00

Third Year ₱55,125.00 ₱55,125 × 0.05 × 1 = ₱2,756.25 ₱55,125 + 2 756.25 = ₱57,881.25

The required answer to the problem is ₱57,881.25.

Note: As shown in the table, the amount at the end of the year is equal to the sum of the principal and the interest
for that year. Thus,

Amount for First Year : A = 50000 + (50000 × 0.05)


= 50000 (1 + 0.05)

Amount for Second Year: A = 50000 (1 + 0.05) + [50000 (1 + 0.05)(0.05)]


= 50000 (1 + 0.05) (1 + 0.05)
= 50000 (1 + 0.05)2

Amount for Third Year: A = 50000 (1 + 0.05)2 + [50000 ( 1 + 0.05)2(0.05)]


= 50000 (1 + 0.05)2 (1 + 0.05)
= 50000 (1 + 0.05)3

Generally, when interest is compounded annually for n years, the amount A = P(1 + i) n.

Computation of the compound amount by the method shown above is tedious and time-consuming. The formulas
below will greatly ease computations.

Formulas: where:
𝒓 𝒎𝒕 𝑰𝒄 − compound interest
• 𝑭 = 𝑷(𝟏 + 𝒊)𝒏 or 𝑭 = 𝑷 (𝟏 + )
𝒎
𝑷 − present value of F
𝒓 −𝒎𝒕
• 𝑷 = 𝑭(𝟏 + 𝒊)−𝒏 or 𝑷 = 𝑭 (𝟏 + ) 𝒓 − annual interest rate
𝒎
𝒕 − time (per year)
𝑰𝒄 = 𝑭 − 𝑷 or
𝑭 − compound amount or maturity value
𝑰𝒄 = 𝑷[(𝟏 + 𝒊)𝒏 − 𝟏] 𝒎 − conversion period
𝟏 annually : m=1
𝑭 𝒏 semi-annually : m=2
• 𝒓= 𝒎 [( ) − 𝟏]
𝑷 quarterly : m=4
𝑭 monthly : m = 12
𝐥𝐨𝐠(𝑷)
• 𝒕= 𝒏 − total number of conversion periods (𝑛 = 𝑚𝑡)
𝒎[𝐥𝐨𝐠(𝟏+𝒊)]
𝑟
𝒊 − periodic rate (𝑖 = )
𝑚

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

APPLICATION

Directions: Solve what is asked in each item. Write your complete solutions and answers on a separate sheet of paper.

1. Find the final or compound amount of ₱15,900.00 at 5.5% interest compounded annually for 18 months.
2. Find the interest on ₱25,750.00 for 3 years at 8% compounded quarterly.
3. Find the present value of ₱150,000.00 at 15% interest compounded monthly for 6 years.

Write your solution here.

OBJECTIVE

At the end of the lesson, the learners are expected to solve problems involving simple interest and compound interest.

Solving Problems Involving


LESSON
3 Simple and Compound
Interest
In the previous lessons, you learned the definition of simple and compound interest, their nature and concepts. In
this lesson, we will be dealing with solving problems about simple and compound interests.

ABSTRACTION

PROBLEMS INVOLVING SIMPLE INTEREST

Example 1. A bank offers 1.5% annual simple interest rate for a particular deposit. How much interest will be earned if 1
million pesos is deposited in this savings account for 1 year?
Solution:
Given: r = 1.5% or 0.015 ; P = ₱1,000,000.00 ; t = 1 year
Formula: 𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = ₱1,000,000.00 (0.015)(1)
𝑰𝒔 = ₱𝟏𝟓, 𝟎𝟎𝟎.00

Therefore, an interest amounting to ₱15,00000 will be earned if 1 million pesos is deposited in a savings account
for 1 year with 1.5% annual simple interest rate.

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

Example 2. When invested at an annual interest rate of 7%, the amount earned ₱11,200.00 of simple interest in 2.5 years.
How much money was originally invested?
Solution:
Given: r = 7% or 0.07 ; 𝐼𝑠 = ₱11,200.00 ; t = 2.5 years
𝐼𝑠
Formula: 𝑃 =
𝑟𝑡
₱11,200.00
𝑃=
0.07(2.5)
𝑷 = ₱64,000.00

Therefore, the amount of money originally invested was ₱64,000.00.

Example 3. Ricky borrowed ₱25,000.00 and paid ₱1,250.00 interest for 6 months. What was the rate of interest?
Solution:
6
Given: P = ₱25,000.00 ; 𝐼𝑠 = ₱1,250.00 ; t = year or 0.5 year
12
𝐼𝑠
Formula: 𝑟 =
𝑃𝑡
₱1,250.00
𝑟=
₱25,000.00(0.5)
𝒓 = 0.1 or 10%

Therefore, the rate of interest was 0.1 or 10%.

PROBLEMS INVOLVING COMPOUND INTEREST

Example 1. Joseph borrows ₱50,000.00 and promise to pay the principal and interest at 12% compounded monthly. How
much must he repay after 6 years?
Solution:
Given: P = ₱50,000.00 m = 12 r = 12% or 0.12 t = 6 years
𝑟 0.12
𝑖= = = 0.01 𝑛 = 𝑚𝑡 = 12(6) = 72
𝑚 12

Formula: 𝐹 = 𝑃(1 + 𝑖)𝑛


𝐹 = ₱50,000.00(1 + 0.01 )72
𝑭 = ₱𝟏𝟎𝟐, 𝟑𝟓𝟒. 𝟗𝟕

Therefore, Joseph must repay ₱𝟏𝟎𝟐, 𝟑𝟓𝟒. 𝟗𝟕 after 6 years.

Example 2. A loan ₱125,000.00 at 8% compounded quarterly was paid back with an amount of ₱176,000.00 at the end
of the period. For how long was the money borrowed?
Solution:
Given: P = ₱125,000.00 r = 8% or 0.08 F = ₱176,000.00
𝑟 0.08
m=4 𝑖= = = 0.02
𝑚 4
𝐹
log(𝑃)
Formula: 𝑡 =
𝑚[log(1+𝑖)]

₱176,000.00
log ( )
₱125,000.00
𝑡=
4[log(1+0.02)]

𝒕 =4.32 years

Therefore, the money was borrowed for 4.32 years.

Example 3. How much must be invested today in a savings account in order to have ₱50,800.00 in 6 years and 9 months
if money earns 5.4% compounded semi-annually?
Solution:
9
Given: F = ₱50,800.00 t = 6 years or 6.75 years r = 5.4% or 0.054 m=2
12
𝑟 0.054
𝑖= = = 0.027 𝑛 = 𝑚𝑡 = 2(6.75) = 13.5
𝑚 2

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

Formula: 𝑃 = 𝐹(1 + 𝑖)−𝑛


𝑃 = ₱50,800.00(1 + 0.027)−13.5
𝑷 = ₱𝟑𝟓, 𝟒𝟓𝟑. 𝟕𝟗

Therefore, an amount of ₱35,453.79 must be invested today.

APPLICATION

A. Directions: Answer the following problems involving simple and compound interests. Write your complete solutions and
answers on a separate sheet of paper.
1. Find the simple interest on a loan of ₱65,000.00 if the loan is given at a rate of 2% and is due in 5 years and 3
months?

2. In a certain bank, Justine invested ₱100,000.00 in a time deposit that pays 0.5% compounded annually. How much
will be his money after 5 years? How much interest will he gain?

References
DepEd. 2020. General Mathematics: Alternative Delivery Mode. Philippines: Department of Education.
Alday, Eward M., Batisan, Ronaldo S., and Caraan, Aleli M.General Mathematics. Makati City: Diwa Learning
Systems Inc.,2016.67-68.

Oronce, Orlando A., and Mendoza, Marilyn O. General Mathematics. Quezon City:Rex Bookstore, Inc.,2016.32-39.

Oronce, Orlando. General Mathematics. Quezon City:Rex Bookstore, Inc.,2016. 40- 51

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

PERFORMANCE TASK
Module 1

• Directions: Construct your own situational word problems involving simple and compound interests with the
following given.
• Given:
• Simple Interest:
▪ Given: P = ₱35,600 r = 6% t = 9 months
▪ Find: Maturity Value (F)
• Compound Interest:
▪ Given: P = ₱50,000.00 r = 5% comp. quarterly t = 5 years
▪ Find: Maturity Value (F)
• Rubric: Your work will be written on a long bond paper and will graded using the rubric below.

Equivalent Points Description

The problem is constructed perfectly with


5 points
complete solution and correct answer.

The problem is constructed perfectly with


4 points
complete solution and incorrect answer.

The problem is constructed perfectly with


3 points
incomplete solution and incorrect answer.

The problem is not perfectly done, incomplete


2 points
solution and incorrect answer.

1 point The problem is incorrect

• Answer:

_______________________________________________________
SIGNATURE OVER PRINTED NAME OF PARENT/GUARDIAN

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com
General Mathematics SELF-LEARNING MODULE

SUMMATIVE TEST
Module 1

Name of Learner: __________________________________ Date: ____________


Grade Level & Section: _____________________________ Score: _____/_____

A. Multiple Choice.
Directions: Choose the letter of the best answer. Write the chosen letter on a separate sheet of paper.

1. Date on which money is received by the borrower.


A. Conversion period C. Maturity date
B. Loan date D. Repayment date
1
2. 3 % is equivalent to
5
A. 0.0032 C. 0.32
B. 0.032 D. 3.2
3. This refers to the interest charged on the principal alone for the entire duration or period of the loan or investment.
A. Compound interest C. Interest rate
B. Future value D. Simple interest
4. This refers to the number of years for which the money is borrowed or invested.
A. Conversion period C. Principal
B. Interest rate D. Time
5. An interest resulting from the periodic addition of simple interest to the principal amount.
A. Compound amount C. Interest rate
B. Compound interest D. Simple interest
6. What is the formula in computing the present value of F in a financial transaction involving compound interest?
A. 𝑃 = 𝐹(1 + 𝑖)−𝑛 C. 𝑃 = 𝐹(1 − 𝑖)−𝑛
𝑛
B. 𝑃 = 𝐹(1 + 𝑖) D. 𝑃 = 𝐹(1 − 𝑖)𝑛
7. How much was the interest if Althea invested ₱30,400.00 and received a total of ₱40,300.00 at the end of the term?
A. ₱9,900.00 C. ₱40,300.00
B. ₱30,400.00 D. ₱70,700.00
8. How much is the future value on this financial transaction, P = ₱10,000.00, r = 5%, and t = 3 years?
A. ₱1,500.00 C. ₱21,500.00
B. ₱11,500.00 D. ₱25,000.00
9. What is the total number of conversion periods when a certain amount is borrowed at 5.5% compounded quarterly for
4 years?
A. 4 C. 16
B. 12 D. 22
10. What is the interest rate per conversion period if ₱29,500.00 was invested at 2.5% compounded semi-annually for 5
years and 4 months?
A. 0.0025 C. 0.025
B. 0.0125 D. 2.5
11. Edgardo invested ₱15,600.00 at 10.25% interest rate. How long will take for his investment to earn an interest of
₱5,055.00?
A. 0.32 years C. 6.29 years
B. 3.16 years D. 30.11 years
12. Find the simple interest on a loan of ₱65,000.00 if the loan is given at a rate of 8% and is due in 6 years and 3 months.
A. ₱3,250.00 C. ₱32,500.00
B. ₱31,200.00 D. ₱46,800.00
13. Nikolas made a loan of ₱20,450.00 from a bank that charges 3% simple interest. How much must he pay the bank
after 2 years?
A. ₱1,227.00 C. ₱32,720.00
B. ₱21,677.00 D. ₱42,127.00
14. At what interest rate compounded semi-annually will ₱15,000.00 accummulate to ₱25,000.00 in 10 years?
A. 2.05% C. 4.05%
B. 2.59% D. 5.17%
15. ABC University anticipates additional expenses of ₱367,800.00 for a new equipment needed for offering a new
course 5 years from now. How much should be invested in an account that earns 12% compounded monthly?
A. ₱62,427.83 C. ₱202,455.37
B. ₱165,344.63 D. ₱668,181.05

_______________________________________________________
SIGNATURE OVER PRINTED NAME OF PARENT/GUARDIAN

J. P. Rizal St., San Vicente East, Calapan City


Telefax No. (043) 288 – 8811 www.orminnhs.com

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