Gen Math Module 2
Gen Math Module 2
This module will allow you to explore the basic concepts and applications of
logarithm. Through this module, you are expected to:
1. Illustrate simple and compound interests.
2. Solve simple and compound interest word problems.
LET’S PREPARE!
At the end of this module, you are expected to SOLVE A SET OF SIMPLE AND
COMPOUND INTEREST REAL-LIFE WORD PROBLEMS. Be guided by the following information.
REMINDERS CRITERIA
This schedule will help you accomplish your tasks in this module.
Example:
Amount invested in a certain bank at 5 % interest
ACTIVITY 2. EXPLORING INTERESTS
Read and understand the statement below. Answer the following questions.
1. Your family wants to buy a brand new laptop for your class activities but you
don’t have enough savings to pay for it. How can your family have the desired
laptop?
Investor
Borrower
/ Saver
Interest Interest
Withdraw Payment
References:
Aoanan, Grace O., Plarizan, Ma. Lourdes P., Regidor, Beverly T., & Simbulas, Lolly Jean C.
(2016). General Mathematics for Senior High School. Quezon City: C&E Publishing Inc.
Crisologo, Leo Andrei A., Hao, Lester C., Miro, Eden Delight P., Ocampo, Shirley R., Palomo,
Emellie G., & Tresvalles, Regina M. (2016). General Mathematics. Commision on Higher
Education.
ACTIVITY 3. EXPLORING SIMPLE INTERESTS
Study the following examples below to perform the next exercises.
Example 1. You invested ₱200.00 in a certain bank at 10% annual simple interest.
NOTE:
Annual means “occurring once a year”
In this example, the Principal 𝑃 is ₱200.00 and the interest rate 𝑟 is 10%.
The interest is 10% of ₱200 which is ₱20 per year.
Principal → ₱200
Example 2. From example number 1, what will be the future value after 12 years?
NOTE:
There are two common ways in solving this problem. First, by continuously adding
the fixed amount which is ₱20 every year until the twelfth year. The second option is
to use the formulas in simple interest.
𝐼 = 𝑃𝑟𝑡 𝐹 =𝑃+𝐼
𝐹 = 𝑃(1 + 𝑟𝑡)
Given:
𝑃 = ₱200.00
𝑟 = 10% 𝑜𝑟 0.10
𝑡 = 12 𝑦𝑒𝑎𝑟𝑠
Solution:
𝐹 = 𝑃(1 + 𝑟𝑡)
𝐹 = 200(1 + (0.10)(12))
𝐹 = 200(1 + 1.2)
𝐹 = 200(2.2)
𝐹 = 440
Therefore, the investment after 12 years is ₱440.00.
Example 3. How much interest will Cyra earn in her investment of ₱15,500 at 8% simple
interest for 3 years?
Given:
𝑃 = ₱15,500
𝑟 = 8% 𝑜𝑟 0.08
𝑡 = 3 𝑦𝑒𝑎𝑟𝑠
Solution:
Use the formula for interest 𝐼 = 𝑃𝑟𝑡.
𝐼 = 𝑃𝑟𝑡
𝐼 = 15500(0.08)(3)
𝐼 = 3720
Therefore, the interest after 3 years is ₱3720.
Example 4. Kevin borrowed ₱50,000 from the NTC Cooperative Management that charges
11% interest with an agreement to pay the full amount with interest at the end of
the term. If he paid ₱88,500 at the end of the term, how many years is the
agreed loan term?
Given:
𝑃 = ₱50,000
𝑟 = 11% 𝑜𝑟 0.11
𝐹 = ₱88,500
𝑡 = 𝑢𝑛𝑘𝑛𝑜𝑤𝑛
Solution:
Use the formula 𝐹 = 𝑃(1 + 𝑟𝑡), solve for 𝑡.
𝐹 = 𝑃(1 + 𝑟𝑡)
0.77 0.11𝑡
=
0.11 0.11
0.77 0.11𝑡
=
0.11 0.11
7 = 𝑡
Therefore, the loan term is 7 years.
Example 5. Derick made a loan of ₱67,800 from Fifty-Shades Lending Company. He intends
to pay his obligation for 30 months with interest of ₱7,627.50. What must be the
interest rate of his loan?
Given:
𝑃 = ₱67,800
𝑟 = 𝑢𝑛𝑘𝑛𝑜𝑤𝑛
𝐼 = ₱7,627.50
𝑡 = 30 𝑚𝑜𝑛𝑡ℎ𝑠 𝑜𝑟 2.5 𝑦𝑒𝑎𝑟𝑠
Solution:
Use the formula 𝐼 = 𝑃𝑟𝑡, solve for 𝑟.
𝐼 = 𝑃𝑟𝑡
7627.50 = 67800(𝑟)(2.5)
7627.50 = 67800(2.5)(𝑟)
7627.50 = 169500𝑟
7627.50 169500𝑟
=
169500 169500
7627.50 169500𝑟
=
169500 169500
0.045 = 𝑟
𝑟 = 4.5%
Exercise 1. Complete the table below by solving the unknown quantities in each row.
Principal (₱) Interest Rate Time Interest (₱) Final Amount (₱)
₱20,000 2.5% 2 years
8% 1.5 years ₱1,960
₱340,000 12% ₱408,000
₱2,500 6 years ₱3,100
20 years ₱522 ₱1,392
Exercise 2. Based on the examples above, solve the following problems. Write your
answer and solution on the space below.
1. Kerobine made a loan of ₱79,250 from a bank that charges 4% simple interest. How
much must he pay the bank after 4 years? How much is the interest after 4 years?
2. Baby Lyrica received ₱29,200 for an investment for 8 years at 7.5% interest rate. Find
the amount invested.
3. How long will a principal amount double its value at 5% simple interest?
READING 2. SIMPLE AND COMPOUND INTEREST
Example:
Suppose you received ₱2000.00 and you plan to invest it for 5 years.
a. Red-V Lending Company offers 10% simple interest rate per year.
b. Big-Bank offers 10% compounded annually.
𝐼 Interest
𝑃 Principal or present value
𝑟 Interest rate
𝑡 Time or term
𝐹 Final amount or future value or maturity value
𝑚 Frequency of conversion
Frequency of conversion
compounded annually once a year 𝑚=1
compounded semi-annually twice a year 𝑚=2
compounded quarterly four times a year 𝑚=4
compounded monthly twelve times a year 𝑚 = 12
compounded bimonthly six times a year 𝑚=6
References:
Aoanan, Grace O., Plarizan, Ma. Lourdes P., Regidor, Beverly T., & Simbulas, Lolly Jean C.
(2016). General Mathematics for Senior High School. Quezon City: C&E Publishing Inc.
Crisologo, Leo Andrei A., Hao, Lester C., Miro, Eden Delight P., Ocampo, Shirley R., Palomo,
Emellie G., & Tresvalles, Regina M. (2016). General Mathematics. Commision on Higher
Education.
ACTIVITY 4. EXPLORING COMPOUND INTEREST
Examine the following examples below to perform the next exercises.
Example 1. Timothy borrows ₱15,000 from Got8 Cooperatives and promises to pay the
principal and the interest at 12% compounded quarterly. How much must he
pay after 5 years?
Given:
𝑃 = ₱15,000
𝑟 = 12% 𝑜𝑟 0.12
𝑡 = 5 𝑦𝑒𝑎𝑟𝑠
𝑚 = 4
Solution:
𝑟 𝑚𝑡
Use the formula = 𝑃 ቀ1 + 𝑚ቁ , solve for the future value.
𝑟 𝑚𝑡
𝐹 = 𝑃 ቀ1 + ቁ
𝑚
0.12 4(5)
𝐹 = 15000 (1 + )
4
𝐹 = 15000(1 + 0.03)20
𝐹 = 15000(1.03)20
𝐹 = 27091.66852
Example 2. Find the maturity value and the interest if ₱2,000 is deposited in a bank at 3%
compounded annually for 18 months.
Given:
𝑃 = ₱2,000
𝑟 = 3% 𝑜𝑟 0.03
𝑡 = 18 𝑚𝑜𝑛𝑡ℎ𝑠 𝑜𝑟 1.5 𝑦𝑒𝑎𝑟𝑠
Solution:
In solving the problem, use the formula 𝐹 = 𝑃(1 + 𝑟)𝑡 .
𝐹 = 𝑃(1 + 𝑟)𝑡
𝐹 = 2000(1 + 0.03)1.5
𝐹 = 2000(1.03)1.5
𝐹 = 2090.6716
Example 3. How much will be invested to accumulate ₱45,000 at the end of 6 years if
money earns 4% interest rate, compounded semi-annually?
Given:
𝑃 = 𝑢𝑛𝑘𝑛𝑜𝑤𝑛
𝑟 = 4% 𝑜𝑟 0.04
𝑡 = 6 𝑦𝑒𝑎𝑟𝑠
𝐹 = ₱45,000
𝑚 = 2
Solution:
The problem ask for the principal or present value of the investment. Use the
𝐹
formula 𝑃 = 𝑟 𝑚𝑡
.
ቀ1+ ቁ
𝑚
𝐹
𝑃 =
𝑟 𝑚𝑡
ቀ1 + 𝑚ቁ
45000
𝑃 =
0.04 2(6)
ቀ1 + 2 ቁ
45000
𝑃 =
(1 + 0.02)12
45000
𝑃 =
(1.02)12
𝑃 = 35482.1929
Example 4. In preparation for your graduation, 2 years from now, you invested ₱8,000 and
wish to have ₱15,000 by that time. At what rate compounded monthly should
the money be invested?
Given:
𝑃 = ₱8,000
𝑟 = 𝑢𝑛𝑘𝑛𝑜𝑤𝑛
𝑡 = 2 𝑦𝑒𝑎𝑟𝑠
𝐹 = ₱15,000
𝑚 = 12
Solution:
𝑟 𝑚𝑡
Given the formula for the future value 𝐹 = 𝑃 ቀ1 + 𝑚ቁ , the formula for the
1
𝐹
interest rate can be derived as 𝑟 = 𝑚 (ቀ𝑃ቁ
𝑚𝑡
− 1).
1
𝐹 𝑚𝑡
𝑟 = 𝑚 (( ) − 1)
𝑃
1
15000 12(2)
𝑟 = 12 (( ) − 1)
8000
𝑟 = 0.3184566
Given:
𝑃 = ₱27,000
𝑟 = 5% 𝑜𝑟 0.05
𝑡 = 𝑢𝑛𝑘𝑛𝑜𝑤𝑛
𝐼 = ₱10,000
𝐹 = ₱27,000 + ₱10,000 = ₱37,000
𝑚 = 2
Solution:
The future value is the sum of the principal and accumulated interest. Given
𝑟 𝑚𝑡
the formula = 𝑃 ቀ1 + 𝑚ቁ , the formula for the term of investment can be derived as
𝐹
𝑙𝑜𝑔ቀ ቁ
𝑡= 𝑃
𝑟 .
𝑚[𝑙𝑜𝑔ቀ1+ ቁ]
𝑚
𝐹
𝑙𝑜𝑔 ቀ𝑃 ቁ
𝑡 = 𝑟
𝑚 [𝑙𝑜𝑔 ቀ1 + 𝑚ቁ]
37000
𝑙𝑜𝑔 ቀ27000ቁ
𝑡 =
0.05
2 [𝑙𝑜𝑔 ቀ1 + 2 ቁ]
𝑡 = 6.38
Exercise 1. Based on the examples above, solve the following problems. Write your
answer and solution on the next page.
1. Find the maturity value of ₱100,000 invested at 9% interest compounded annually for
30 months.
2. Accumulate the amount if ₱25,000 invested at 8% interest compounded quarterly
after 5 years.
3. How much should Jamie set aside and invest in a fund earning 3% compounded
monthly if she needs ₱100,000 in 2 years?
PROBLEM SET. “LET’S TRY!” SIMPLE AND COMPOUND INTEREST WORD
PROBLEMS
This time you are very much prepared to accomplish the final assessment for this module. You
go back to page 1, “Let’s Prepare” for the reminders and rubrics and be able to apply the
skills learned in the lessons given. Use the space provided after the word problems.
1. How much interest will be earned in an investment of 25,000 at 11% simple interest for 5
years?
2. April made a loan from a bank that charges 8% simple interest. How much must she pay
after 36 months?
3. To buy a car, Jimmy borrowed 680,000 for 5 years with an interest rate of 18%
compounded quarterly. How much will he pay if he pays the entire loan with interest at
the end of the fifth year?
4. Mr. Song deposited 80,000 into a savings account for his child’s educational fund. How
much will Mr. Song have in his account after 18 years at 2.25% compounded semi-
annually?
5. In how many years will 17,500 accumulate to 75,000 if invested at 10% compounded
annually?
6. How much will be invested by Angel to accumulate 30,000 at the end of 3 years if that
money earns 12% interest rate, compounded quarterly?
7. Michelle borrowed 350,000 intended for the wedding. If she repaid 612,500 after 6 years,
at what interest rate did she borrow the money?
8. A 20-year old student wishes to have 600,000 at the age of 60. How much should the
student invest in his account if the interest rate is 5%?
10. How long will it take 2,000 to earn 600 if the interest is 12% compounded semi-annually?