LEARNING ACTIVITY SHEET

ABM 11 BUSINESS MATHEMATICS (Q1-WK8) 2. Find the maturity value of a loan of Php8,000.00 borrowed at an interest rate of 15% if it
Interest has to be repaid for 15 months.

Solution: M = P (1 +¿ RT)
0.15
I. Discussion = Php8,000 [1 +¿ ( )(15) ]
12
= Php9,500
Simple Interest and Maturity Value
Convert each rate
The fee on the privilege of borrowing money is called INTEREST. In loans, it may be
For example: Convert the following rate to equivalent monthly rate and equivalent annual
considered as an expense on the part of the borrower or debtor and may be regarded by the
rate.
lender or creditor as income.
a. 14% per year to the equivalent monthly rate.
Typically, banks or credit firms issue short and long-term loans or transactions. Short-term
b. 2.5% per month to equivalent annual rate.
loans are good for one day or up to one year, whereas long-term loans are good for more
than one year. Solution:
We use I = PRT for calculating the simple interest, where P is the principal, R annual a. Divide the annual rate by 12 to obtain the equivalent monthly rate.
interest rate, and T interest period (in years). 14 ÷ 12 = 1.17% monthly
b. Multiply the monthly rate by 12 to get the equivalent annual rate.
From the equation I = PRT, we arrive for P = I ÷ R (T), for R = I ÷ P (T) and lastly for T =
2.5 × 12 = 30% annually
I ÷ P (R).
Ordinary Interest and Exact Interest
The maturity value M that the lender receives from the debtor on the date of maturity of
the loan shall be equal to the sum of principal P and simple interest I. That is, we have If the loan term is given as a certain number of days, we can divide the number of days by
365 days or 360. When the divisor is 360, we are applying Ordinary Interest, which is still
M=P+I
used by many companies today.
Since I = PRT, we get M = P + PRT = P (1 + RT)
Banks and other credit unions are using the Exact Interest in which 365 is used as a
For example: divisor.

1. Joanna borrowed an amount of Php100,000.00 from Tagum Cooperative at an interest We substitute the I = PRT formula, where T is expressed in days, as follows:
rate of 2% to finance renovation of her house. How much is the interest if her due date is
For Ordinary Interest
October of this year?
I = P [R÷ 360] (T), where we get for
Given: P = Php100,000 R = 2% = 0.02 T = 1 year

Solution: I = PRT P = [I÷ {(R ÷ 360)} (T)],

= 100,000(0.02)(1)
= Php2,000 for R= I ÷ [(T÷360) (P)] and we get

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T = I ÷ [(R ÷ 360) (P)]. payments of Php2,600.00 each. Calculate for the total interest when it is paid equally over
four months.
For Exact Interest
Solution: I = PRT
I = P [R÷ 365] (T), where we get for
= 10,400 (0.10) (4/12) = Php346.67
P = [I÷ {(R÷ (365)} (T)],
Thus, the total interest is Php346.67.
for R= I ÷ [(T÷365) (P)] and we get
346.67 ÷ 4 = Php86.67 per month for interest.
T = I ÷ [(R ÷ 360) (P)].
The summary of computations is provided by the table below.
Example:

1. Eloisa wants to know which credit company provides lower interest at the same interest Month Unpaid Monthly Principal Total Payment New
rate of 7% if she decides to borrow a quick cash of PHP60,000.00 for 180 days. Company Balance Interest Payment Balance
A uses the ordinary method of interest to compute interest while Company B uses the exact
interest method. What firm should she choose? 1 Php10,400 Php86.67 Php2,600 Php2,686.67 Php7,800

Solution: 2 7,800 86.67 2,600 2,686.67 5,200

In Ordinary Interest, 3 5,200 86.67 2,600 2,686.67 2,600

I = P [R/360] (T)
4 2,600 86.67 2,600 2,686.67 0
= 40,000 (0.07/360) (180)
= Php1,400
TOTAL Php120 Php10,400 Php10,746.68
In Exact Interest,

I = P [R/360] (T)
= 40,000 (0.07/365) (180) In the case of a credit sale, the buyer can pay the purchase price and the credit charges for
= Php1,380.82 monthly payments called INSTALLMENTS. Here are the basic terms in finding for the
amount financed, installment price and instalment loan.
Eloisa would borrow money from Company B, as the interest is lower than Company A at
the same interest rate. 1. Cash price- it is the price paid at the time of purchase
2. Down payment-is the initial partial payment in buying goods.
Finance Charges on Unpaid Balance 3. Amount financed-it is the total amount charged usually done in regular payments to pay
off the balance.
The finance charges on the unpaid balance each month is the general principle of
4. Finance charge- it includes the interest and any costs associated with an installment
charging for transactions by credit card.
loan.
Example: Rica bought fossil watch using a credit card at a price of Php10,400.00 payable 5. Installment price- it is the sum of all installment payments, finance charge if any and
in four months at 10% interest. The principal is also repaid equally each month with four down payment made.

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 For example:
1. SGD Inc. purchased a printer for their department on an installment plan with
Php1,000.00 down payment and 10 payments of Php1,500.00. Find the installment price of Activity # 2: Complete the missing variable
the printer if there’s an additional finance charge of Php100.00.
Find the missing variable using Exact Interest Method. Write your answer on each number.
Solution: I.P = total of installment payments + D.P + finance charge Use another sheet of paper for your solution. Round off your percentage and peso to two
= 10(1,500) + 1,000 + 100 = Php16,100 decimal places.
Principal Rate Time Interest
2. The installment price of a cell phone is Php10,000 for a 5-month loan of a down Php1,950 6% 90 days (1)
payment of Php1,500 was made, how much is the installment payment? (2) 8% 125 days Php250
Php10,400 25% 160 days (3)
Solution: We compute the amount financed by subtracting the D.P from the installment
Php825 20% 120 days (4)
price.
(5) 7% 75 days Php90
Amount Financed = Installment Price – Down Payment Php5,480 10% 65 days (6)
= 10,000 – 1,500 = Php8,500 Php5,000 15% 60 days (7)
Php20,000 15% 90 days (8)
Installment payment = Php8,500/5 = Php1,700
Php4,600 10% 60 days (9)
V. Activities Php7,000 20% 40 days (10)

Activity # 1: Check for missing variable Activity # 4: Calculate for the unpaid balance
Analyze the problem. Compute for the missing part. Use another sheet of paper for the
Find the missing variable using Ordinary Interest Method. Write your answer on each solution. Write your final answer on the box.
number. Use another sheet of paper for your solution. Round off your percentage and peso Unpaid Monthly Principal Total New
to two decimal places. Month Balance Interest Payment Payment Balance
1st month Php6,000 (1) Php1,500 (2) (3)
Principal Rate Time Interest 2nd month 4,500 (4) 1,500 Php1,575 (5)
Php5,000 15% 60 days (1) 3 month
rd
3,000 (6) 1,500 1,575 (7)
Php2,500 (2) 90 days Php50 4th month 4,500 (8) 1,500 1,575 (9)
Php6, 620 20% 90 days (3) Total (10) Php6,000 Php6,300
Php1,900 (4) 120 days Php80 Activity # 5: Solve the problem
Php7,000 10% 90 days (5) Solve the following problems for computing interest. Write your solution on another sheet
Php6,500 15% 40 days (6) of paper. Round off your peso to two decimal places.
Php8,000 25% 60 days (7)
Php3,900 (8) 135 days Php250 1. If the interest amount is Php300.00 at 9% interest rate for 60- day loan, using the exact
Php2,800 10% 90 days (9) interest method, how much is the principal amount?
(10) 15% 180 days

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2. Anna bought a new food blender on an instalment plan. She made a down payment of 2. Find the maturity value of a loan of Php50,000 at 15% interest rate for 15 months.
Php1,500.00. How much is the installment payment if the installment price of the food A. Php150,000 B. Php112,500 C. Php69,495 D. Php59,375
blender for a 6 month loan was Php4,860.00?
3. How much is the interest if the principal amount is Php2,000 at 5% interest rate
3. Find the installment price of a digital camera if there’s an additional charge of for 3 years?
Php500.00 in an installment plan with Php1,000.00 down payment and 6 payments of A. Php3,000 B. Php250 C. Php260 D. Php2,000
Php1,500.00.
4. Fashion 26 Inc., purchase an office desk for their department on an installment plan
4. The installment price of a refrigerator is Php7,500.00 for a 12 month loan, of a down with Php2,000.00 down payment and 12 payments of Php3,000.00. Find the
payment of Php1,000.00 was made, how much is the installment payment? installment price of the printer if there’s an additional finance charge of
Php5,300.00.
5. Compute the interest of a credit purchase of Php40,000.00 at 10% for a 6 months. A. Php36,200 B. Php38,300 C. Php38,000 D. Php30,000

6. Find the monthly value of a loan of Php4,000.00 borrowed at an interest rate of 25% if it 5. Convert 18% per year to the equivalent monthly rate.
has to be repaid for 16 months. A. 1.5% B. 2.5% C. 30% D. 2.16%

7. A bank offers 7% interest rate for a particular deposit. How much interest will be earned 6. Convert 2.4% per year to the equivalent annual rate.
if Php500,000.00 is deposited in this savings account for a year? A. 28.8% B. 20% C. 0.80% D. 14.4%

8. How much interest is charged when Php10,000.00 is borrowed for 120 days using 7. If a business owner applies for a loan of Php500,000.00 in a bank, the interest
ordinary interest method at interest rate of 10%? amount is Php141,500.00 for 3 years, what interest rate is being charge?
A. 9% B. 9.23% C. 9.43% D. 9.53%
9. Find the maturity value of Php20,000.00 if deposited in a bank at an interest rate of 15%
after 18 months. 8. How much money was originally invested when the amount earned
Php10,200.00 interest amount is invested at interest rate of 7% for 2 years?
10. How much is the interest of Php20,000.00 principal amount at 12% interest rate for 5 A. Php10,280.14 C. Php72,857.14
years? B. Php20,457.14 D. Php70,000

VI. Assessment 9. Shella Marie has a loan with an interest rate of 15%. The amount of her loan is
Php60,000.00 for a period of 10 months. How much is her interest using ordinary
A. Multiple Choice. Read the following problems. Encircle the letter of the correct interest method?
answer. A. Php675,000 B. Php120,000 C. Php2,900 D. Php1,875

1. Using Exact Interest Method, how much is the interest for Php6,000 loan 60 days 10. Compute the interest on a credit purchase of Php15,000.00 at 15% for 6 months.
at 6% interest rate? A. Php375 B. Php750 C. Php4,500 D. Php5,500
A. Php800 B. Php600 C. Php700 D.Php900

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