Learning Activity Sheets in General Mathematics (Week 3)

LEARNING ACTIVITY SHEETS IN
GENERAL MATHEMATICS (Week 3)
Learning Competencies:
1. Calculates the fair market value of a cash flow stream that includes an annuity. (M11GM-IIa-1)
2. Calculates the present value and period of deferral of a deferred annuity.
Fair Market Value of a Cash Flow

INTRODUCTION :
Cash flow is a term that refers to payments received (cash inflows) or payments or deposits made (cash outflows).
Cash inflows can be represented by positive numbers and cash outflows can be represented by negative numbers.
The fair market value or economic value of cash flow (payment stream) on a particular date refers to a single
amount that is equivalent to the value of the payments stream at that date. This particular date is called the focal
date. In its simplest sense, fair market value (FMV) is the price that an asset would sell for on the open market.
Example: Mr. Ribaya received two offers on a lot that he wants to sell. Mr. Ocampo has offered ₱ 50,000 and a
₱1 million lump-sum payment 5 years from now. Mr. Cruz has offered ₱ 50,000 plus ₱ 40,000 every quarter for
five years. Compare the fair market values of the two offers if money can earn 5% compounded annually. Which
offer has a higher market value?
Given:
Solutions:
Page 1 of 4
DEVELOPMENT :
Activity 1.
YOUR Turn!
Answer as indicated. Write your answers in a separate sheet of paper.
Which Offer has a better Fair Market Value?
Company A offers P150,000 at the end of 3 years plus P300,000 at the end of 5 years. Company B offers P25,000
at the end of each quarter for the next 5 years. Assume that money is worth 8% compounded annually. (Hint:
solve for the present value of 150,000 at the end of 3 years and find the present value of 300,000 in 5 years then
add the result to get the FMV of company A )
ENGAGEMENT :
DEFERRED ANNUITIES
Deferred annuities are series of payments, as they have already learned in the past lessons on annuities
but, will start on a later date. Deferred Annuity is an annuity that does not begin until a given time interval
has passed. It is a kind of annuity whose payments (or deposits) starts in more than one period from the
present. Likewise, the first payment interval does not coincide with the first interest period and it is put
off to some later date.
Some examples of this type of annuity in real life.

1. If you will buy appliance, some big stores or appliances center offers deferred payment.
2. A credit card company is offering its clients to purchase today but to start paying monthly with their
choice of the term after 3 months.
3. A real estate agent is urging a house and lot buyer to purchase now and start paying after 3 years when
the housing unit is ready for occupancy.
4. A worker who has gained extra income now and wants to save his money so that he can withdraw his
money monthly starting on the day of his retirement from work.
Period of Deferral is a time between the purchase of an annuity and the start of the payments for the
deferred annuity.
Example:
Find the present value of a deferred annuity of ₱ 1,500.00 every 3 months for 8 years that is deferred 3
years if money is worth 6% converted or compounded quarterly.
Page 2 of 4
ASSIMILATION: Activity 2
Show your complete solution.

A company offers a deferred payment option for the purchase of any furniture. Gladys plans to buy a dining table
set with a monthly payment of ₱ 4,000.00 for 2 years. The payment will start at the end of 3 months. How much is
the cash price of the dining set if the company will give 10% compounded monthly?
LEARNING ACTIVITY SHEETS IN

GENERAL MATHEMATICS (Week 4)
Learning Competencies:
1.Illustrate stocks and bonds.
2. Distinguishes between stocks and bonds.
.
Stocks and Bonds
INTRODUCTION :
Stocks and bonds - the heartbeat of the economy. Much of the world's business activity
would be impossible without stocks and bonds. But whether you trade on the Philippine
Stocks Exchange, financial terms can always be confusing. So, before you invest in a stock or
a bond, you need to know - what is the difference? And which one should you choose?
Stocks and bonds are certificates that are sold to raise money for starting a new company or
for expanding an existing company. Stocks and bonds are also called securities, and people
who buy them are called investors.
DEVELOPMENT :
STOCKS
Companies sell shares of ownership in their company to raise money to finance operations,
plan expansion, and so on. These ownership shares are called stocks. The buyers of the
stock (stockholders) receive stock certificates verifying the number of shares of stocks they
own. The two basic types of stocks are common stock and preferred stock.
Common stockholders have voting rights. Preferred stockholders do not have voting rights,
but they receive preference over common stockholders in dividends (payments from profit)
and the company’s assets if the company goes bankrupt. Stock Market provides an orderly
trading place for stock wherein prices or market value vary from day to day and within a
day. Only stockbrokers who specialize in work in the stock market are allowed to trade on
the floor. The broker receives a commission for the services of both buying and selling
stocks.
BONDS
Sometimes companies raise money by selling bonds instead of stock. When you buy a stock,
you become a part-owner in the company. To raise money, companies may not want to sell
more stocks and thus dilute the ownership of their current stock owners, so they sell bonds.
A bond is a form of long-term investment issued by a corporation or government where the
purchaser becomes a creditor of the company. It represents a promise from the company to
pay the face amount to the bond owner at a future date, along with interest payments at a
stated rate. The company, state or municipality that issues the bond is called the issuer.
The annual interest paid by the issuer to the lender (bond holder) on the bond is referred to
as the coupon. The coupon rate is the annual payout as percentage of the bond’s par value.
Bonds have two kinds of values. These are par value and market value. The par value of the
bond is the same as its face value while the market value of a bond is the price at which the
bond is being sold. It may be greater than or less than the amount of the par value. If the
market value is greater than the par value, then the bond is selling at a premium. If the
market value is less than the par value, then the bond is selling at a discount.
Page 3 of 4
ENGAGEMENT :
COMPARING STOCKS AND BONDS!
ASSIMILATION: Activity 3
Directions: Group the following characteristics of stocks and bonds. Write your answer on the table (copy the
table on your answer sheet.)
1.offers fixed interest rate STOCKS BONDS
2. makes profit by dividend
3. debt instrument
4.equity instrument
5.own a small piece of the company
6.sold by Government and financial institution
7.lower risk with lower reward
8. higher risk but with higher reward
9. market value varies everyday
10.It has a maturity date.
Rubric:
Criteria 25 points 20 points 15 points 10 points 5 points
CORRECTNESS 96% TO 100% 75% TO 95% 50% TO 74% 25% TO 49% 0% TO 24% of
of the given of the given of the given of the given the given
solutions are solutions are solutions are solutions are solutions are
correct correct correct correct correct
Page 4 of 4

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LEARNING ACTIVITY SHEETS IN

GENERAL MATHEMATICS (Week 3)

Fair Market Value of a Cash Flow

Some examples of this type of annuity in real life.

Show your complete solution.

LEARNING ACTIVITY SHEETS IN

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