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Dynamic Learning Program (General Mathematics) : Arellano University

This document contains notes on basic business mathematics involving finding interest rates and time in compound interest. It defines key terms like equivalent rates, maturity value, nominal rate, and effective rate. Formulas are provided for finding the number of periods and interest rate given other variables. Examples are worked out for finding the nominal interest rate given the principal, future value, time period, and frequency of compounding, and for finding the time period given the same variables. Exercises are included for students to solve problems involving doubling principal, accumulating to a future value, and finding the rate that doubles the amount in a given number of years.

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arianna
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88 views

Dynamic Learning Program (General Mathematics) : Arellano University

This document contains notes on basic business mathematics involving finding interest rates and time in compound interest. It defines key terms like equivalent rates, maturity value, nominal rate, and effective rate. Formulas are provided for finding the number of periods and interest rate given other variables. Examples are worked out for finding the nominal interest rate given the principal, future value, time period, and frequency of compounding, and for finding the time period given the same variables. Exercises are included for students to solve problems involving doubling principal, accumulating to a future value, and finding the rate that doubles the amount in a given number of years.

Uploaded by

arianna
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ARELLANO UNIVERSITY

Juan Sumulong Campus


2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-

Dynamic Learning Program


(General Mathematics)

NAME: _____________________________ DATE:________________________


GRADE & SECTION:___________________ TEACHER:_____________________

1|SHS MATHEMATICS DEPARTMENT


ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-

CONCEPT NOTES 5
I. TOPIC: BASIC BUSINESS MATHEMATICS: Finding Interest Rate and Time in Compound
Interest
II. LEARNING GOAL: The students should be able to:
a. differentiate equivalent, nominal, and effective rate; and
b. solve problems involving rate of interest and time in compound interest

III. CONCEPTS

 Equivalent Rates – two annual rates with different conversion periods that will earn
the same compound amount at the end of a given number of years.
¿
 Maturity Value - F=¿
 Nominal rate – Annual rate of interest
 Effective rate – rate compounded annually that will give the same amount as a given
nominal rate denoted by (i)1 .
Formulas:
Finding the Number of Periods n, for Compounded Interest
log F
n=
mlog ( 1+ j )
Finding the Interest Rate j, per Conversion Period
j=√n F−1
im
Using j= then , im =mj
m
Examples:
1. At what nominal rate compounded semi-annually will P10, 000 accumulate to P15,
000 in 10 years.
Given:
F=15,000 P=10,000
t=10 years m=2 n=mt =( 2 )( 10 )=20

Solutions:

F=P ¿
15,00=10,00¿
15,000
=¿
10,000
1.5=¿
(1.5)1/ 20=1+ j
(1.5)1/ 20−1= j

2|SHS MATHEMATICS DEPARTMENT


ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-
j=0.0205
im
j=
m
i2
0.0205=
2
i (2 )=( 0.0205 ) (2)
i (2 )=0.0410∨4.10 %
The nominal rate is 4.10%

2. How long will it take P3, 000 to accumulate to P3, 500 in a bank savings account at
0.25 % compounded monthly?
Given:
P=3,000 F=3,500
(12) i (12) 0.0025
i =0.25 %=0.0025m=12 j= =
m 12

Find: n and t
Solutions:

F=P ¿
3,500=3,000¿
3,500
=¿
3,000
To solve for n, take the logarithms of both sides.
3,500
log =log ¿
3,000

3,500 0.0025
log =nlog (1+ )
3,000 12
3,500
log
3,000
n= =740.00
0.0025
log ⁡(1+ )
12
Thus, payments must be made for 740 months,
n 740
or t= = =61.67 years
m 12

IV. EXERCISES

3|SHS MATHEMATICS DEPARTMENT


ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-
Directions: Solve the following problems. Show your complete solution and box your
final answer. Use blue ballpen in answering.
1. How long will a principal double when invested at 10% compounded semi-annually?
2. In how many years will it take Php 18,000 accumulate to Php 20,000 when deposited in a
savings account that earns 0.250% compounded monthly?
3. What rate compounded annually will double an amount of money in 3 years?

4|SHS MATHEMATICS DEPARTMENT

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