General Mathematics

Quarter 2 – Module 1:
Simple and Compound
Interests

CO_Q2_General Mathematics (SHS)_ Module 1

General Mathematics – Senior High School
Alternative Delivery Mode
Quarter 2 – Module 1: Simple and Compound Interests
First Edition, 2020

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Development Team of the Module

Writers: Mary Grace D. Constantino, Raiza Ann E. Lipardo
Editors: Elizabeth D. Lalunio, Elizabeth B. Dizon, Anicia J. Villaruel, Roy O. Natividad
Reviewers: Jerry Punongbayan, Diosmar O. Fernandez, Dexter M. Valle, Jerome
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General Mathematics
Quarter 2 – Module 1:
Simple and Compound
Interests
Introductory Message

This Self-Learning Module (SLM) is prepared so that you, our dear

learners, can continue your studies and learn while at home. Activities,
questions, directions, exercises, and discussions are carefully stated for
you to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you
step-by-step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons

in each SLM. This will tell you if you need to proceed on completing this
module or if you need to ask your facilitator or your teacher’s assistance
for better understanding of the lesson. At the end of each module, you need
to answer the post-test to self-check your learning. Answer keys are
provided for each activity and test. We trust that you will be honest in
using these.

In addition to the material in the main text, Notes to the Teacher are
also provided to our facilitators and parents for strategies and reminders
on how they can best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on
any part of this SLM. Use a separate sheet of paper in answering the
exercises and tests. And read the instructions carefully before performing
each task.

If you have any questions in using this SLM or any difficulty in

answering the tasks in this module, do not hesitate to consult your teacher
or facilitator.

Thank you.

iii
 What I Need to Know

Hello my dear learners!

Are you familiar with this saying, “Nothing is permanent except change”? A
big change happens to all of us. No one expected this, but we have to live with it.
Instead of taking it negatively let’s do our part to achieve a positive result.

Have you met the subject matters about interest, loan, savings, finances,
expenses, and investment when you were in Junior High or even in Elementary?
Have you heard your parents, relatives, classmates, teachers, friends, or even your
neighbor talking about these matters? You can actually encounter those not only in
school but anywhere you go like your home, market, malls, banks, and other public
places.

So here we go to the next module about Math of Investment. I hope you learned
the previous module for logical sequence.
This lesson helps you understand thoroughly what is simple interest and
compound interest. It will let you decide correctly on how and where to save money.
Nowadays savings is very important, it is like saying “If you do not have savings you
are out” and it will make you analyze whether to save in simple or compound in favor
of you, as a borrower or investor.
Are you ready now? Let’s begin working on this module. Open your heart and
mind and have focus. Good Luck!

The module is composed of two lessons namely:

 Lesson 1 – Simple Interest
 Lesson 2 – Compound Interest
After going through this module, you are expected to:
1. illustrate simple and compound interests; and
2. distinguish between simple and compound interests.

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CO_Q2_General Mathematics (SHS)_ Module 1
 What I Know

Dear students, I know that this is a new lesson for you I need you to be
patient in answering this to test what you already know about the lesson. Good
luck!

Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.
1. What interest remains constant throughout the investment term?
a. simple c. annuity due
b. compound d. ordinary annuity

2. It is an interest computed based on the principal amount.

a. simple c. annuity due
b. compound d. ordinary annuity

3. What is the difference between simple and compound interest?

a. Simple yields higher interest than compound interest.
b. Simple interest has a shorter term than compound interest.
c. Simple interest is always better than compound interest.
d. Simple interest is computed based on the principal while compound
interest is computed based on the principal and also on the
accumulated past interests.
4. If you would like to invest money, which bank offer would you prefer if
you do not plan to withdraw your money in 2 years?
a. 5% simple interest per annum
b. 4% compounded interest per annum
c. 3% compounded interest semi-annually
d. 2% compounded interest quarterly
5. Which of the following statement is true about the borrower or debtor?
a. It is the amount of money borrowed or invested on the origin date.
b. It is the interest is computed on the principal and also on the accumulated
past interests
c. It refers to the person (or institution) who owes the money or avails of the
fund from the lender.
d. It refers to the person (or institution) who invests the money or makes the
funds available.

6. Which of the following statements is/are true?

I. Compound interest of a loan favors the borrower.
II. Simple interest remains constant throughout the investment term.
III. In compound interest, the interest from the previous year also earns
interest.
a. I only c. II and III
b. I and II d. I and III

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CO_Q2_General Mathematics (SHS)_ Module 1
 7. Which of the following formula can be used to solve for the simple
interest?
a. I = Prt c. A= P(1 + rt)
Prt
b. SI = d. All of the above
100

8. It is an amount after t years that the lender receives from the borrower
on the maturity date.
a. loan date C. maturity value
b. maturity date D. term

9. Which of the following describes time or term?

a. It is the date on which money is received by the borrower.
b. It is the amount of time in years the money is borrowed or invested; length
of time between the origin and maturity dates
c. It is the date of which the money borrowed or loan is to be completely repaid
d. It is the amount paid or learned for the use of money.

10. In the formula, I= Prt, what is r?

a. revenue c. repaid
b. real value d. rate of interest

11. It is the amount of money borrowed or invested on the origin date.

a. future value c. maturity value
b. principal value d. repayment value

12. A person (or institution) who invests the money or makes the funds
available.
a. Lender c. Both a and b
b. Creditor d. None of the choices.

13. It refers to an interest that is computed based on the principal and

interest accumulated every conversion period.
a. simple c. annuity due
b. compound d. ordinary annuity

14. It refers to the amount after 𝑡 years that the lender receives from the
borrower on the maturity date?
a. present value c. interest
b. future value d. ordinary annuity

15. Which of the following formula can be used to solve for the compound
interest?
r
a. A = P(1 + n)t c. C = P(1 + r)n − 1
r
b. A = P(1 + n)nt d. Both a and b

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 Lesson

1 Simple Interest

You know, it’s quite difficult to pursue our dreams, especially in some trying
times like what our country is experiencing on the COVID-19 pandemic. Dreaming
is just a dream the realization of it is the product of our perseverance, patience, and
determination. For now, continue your studies, develop your skills, and cultivate
your talents because those are your weapons in life.

I hope that you somehow encountered some math of investment terms like
simple interest, loans, savings, investments, maturity value, money, resources, and
the like. This lesson will help you understand simple interest. Different terminologies
about the simple interest that you can use for the succeeding lesson once you go
deeper on the problem solving about simple interest.

What’s In
Match Me! Reveal Me!

Match the terminologies in column B to its definition or statement in column A. Write

your answer on the blanks provided below the trivia question inside the box. Your
answer should reveal an important Filipino value that everyone should possess.
Finally, answer the guided questions that follow.

A B
1. It is the amount of time in years the money is S. Creditor
borrowed or invested.
2. It is the date on which the total amount borrowed R. Time or Term
with interest is to be completely repaid.
3. It refers to the person or institution that invests C. Origin/Loan Date
the money or makes the funds available.
4. It is the amount of money borrowed or invested on E. Principal
the origin date.
5. It is the amount after t years that the lender P. Maturity date
receives from the borrower on the maturity date.
6. It is the date on which money is received by the T. Maturity/Future Value
borrower.

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CO_Q2_General Mathematics (SHS)_ Module 1
 What Filipino value is shown when a person giving the greeting bows down
towards another person older that him or taking his hand or her hand and
pressing it on the forehead? This is an important Filipino value that the
younger generations should never forget and performed with the right hand
and saying "Mano po" to the elders.

_____ _____ _____ _____ _____ _____ _____

1 4 3 2 4 6 5

Guided Questions:

1. How will you define interest in your own words?

.

2. Based on the definition given will you able to know some important terms in
simple business math? If yes try to elaborate just one term.
.

3. Are all the terms given, important in finding simple interest? Justify your
answer. .

This module introduces a new chapter in General Mathematics, specifically it

introduces Math of Investment others call it Business Mathematics but either way
it still includes finances, money, credit, investments, banking policies, and other
topics that are related to finances. I know that some of you have encountered the
words or terminologies mentioned above that would be a big help to start.

Notes to the Teacher

You may suggest to the students to use their gadgets at home of be

resourceful to search more about different term use for math of
investment and Business mathematics. Ask them what do they expect
in this subject since it is new to them. This will give you inspirations
and something to ponder about.

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 What’s New
What Am I!
Read and analyze! Choose your answers among the principal, simple interest, interest
rate and term write your answer on the blank provided for each number.

1. I am the _____________________ which is calculated by multiplying the

principal, the rate of interest and the time in years.
2. I am the _____________________, and simple interest is computed based on me
and the time in years.
3. I am the _______________________, usually I am in percent and also called as
the rate of increase of interest.
4. I am the _______________________, and I am the length of time between the
origin and maturity dates.

Simply Saving!

Using the idea that you learned in the What I am? activity, try to answer the problem
below. If you find difficulty solving the problem, that will be okay. Continue reading
this module and soon you will find the solution correctly.

A working student at one of the biggest fast-food restaurants in Lucena City wants
to save for the upcoming school year. He wants to deposit his money to a Filipino
owned bank so that even in a simple way he can help his fellow Filipino. Supposed
his monthly salary is ₱10,000.00 and, it was deposited to an account that earns a
simple interest of 2.75% per annum. Find the simple interest after 6 months, one
year, and 18 months.

What is It

The Name Me activity previously summarizes the definition of the following terms:

Simple Interest (𝑰𝒔 ) – interest that is computed on the principal. The interest
remains constant throughout the term.

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

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 Repayment date or maturity date – date on which the money borrowed or loan
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 (P) – amount of money borrowed or invested on the origin date

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
To solve the problem in the Simply Saving activity which is a common scenario
among Filipino working students wherein many can relate.

You can solve this problem using the simple interest formula

𝐼𝑠 = 𝑃𝑟𝑡
where:
Is = Simple Interest
P = Principal or amount invested or borrowed
r = simple interest rate
t = term of time in years
Here are the steps to find the simple interest:
Step 1: Identify the given and the unknown
P = ₱10,000.00
r = 2.75% or 0.0275
6 18
t =0.5 or (6 months), 1 (1 year), 1.5 or (18 months)
12 12
Is =?
Step 2: Substitute the given to the formula
Is = Prt

For 6 months For 1 year

Is = (₱10,000.00) (0275) (0.5) Is = (₱10,000.00) (0275) (1)
= ₱137.50 = ₱275.00

For 18 months
Is = (₱10,000.00) (0275) (1.5)
= ₱412.50

Notice that the time is divided into 12 since there are 12 months in a year.
You will also do the same if the given is in days, the divisor will be 360 for ordinary
interest or 365 if you are looking for exact interest. Don’t worry because it will be
indicated in the problem if you will compute for the ordinary or exact interests but if
not indicated always use the ordinary interest which consists of 360 days. In case
that the given time is in years then multiply it as is.

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CO_Q2_General Mathematics (SHS)_ Module 1
Now that you have the idea of how to solve simple interest study the example below.
Example

Problem Solving: Due to COVID-19 pandemic Miss Dada a female resident of Brgy.
May Pagkakaisa somewhere in Quezon Province thinks of a business that can provide
for her needs as well as the need of her neighbors so she can be of help even in this
trying time.
Having no money at hand she decided to borrow from a bank as the start-up
capital of ₱50,000.00 at 7% simple interest rate payable within 5 years. Compute for
the interest yield.
Solution.
Simple Interest

Time Principal Interest Simple Interest Amount after (t) years

(t) (P) Rate (r) Solution Answer (Maturity Value)
50,000 + 3,500 =
1 50,000 7% (50,000)(0.07)(1) 3,500
53,500
50,000 7% (50,000)(0.07)(2) 50,000 + 7,000 =
2 7,000
57,000
50,000 7% (50,000)(0.07)(3) 50,000 + 10,500 =
3 10,500
60,500
50,000 7% (50,000)(0.07)(4) 50,000 + 14,000 =
4 14,000
64,000
50,000 7% (50,000)(0.07)(5) 50,000 + 17,500 =
5 17,500
67,500

Notice the simple interest remains constant throughout the year and you
only multiply with the term that you are computing. Therefore, if you are a
borrower make sure that the interest on your loan is not too high. Try to compute
it first before you apply for a loan. Compare first the interest and the term of the
different lending institutions before you decide to consider a loan or investment.

What’s More

Activity 1.1
Write the word TRUE if the statement is correct, otherwise write FALSE on a
separate answer sheet. If your answer is FALSE write the word or phrase that will
make the statement correct.

1. Simple interest changes throughout the investment term.

2. Simple interest computation will always be based on the original principal.
3. Interest is the amount of money invested or borrowed originally.

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CO_Q2_General Mathematics (SHS)_ Module 1
4. Simple interest is the product of the principal, rate of interest, and time.
5. In ordinary interest, the interest is computed based on 365 days.

Activity 1.2
Match the corresponding term/formula in column B with its definition in column A.
Write letter only on the blank provided for each number.
A B
___1. It is the amount that is charged a. 𝐼𝑠 = 𝑃𝑟𝑡
for the privilege of borrowing money.
___2. It refers to a person or institution b. Principal
who owes money.
___3. It is the amount of money c. 𝐹 = 𝑃(1 + 𝑟)𝑡
originally invested or borrowed.
___4. It is the formula for computing d. Lender/Creditor
simple interest.
___5. It refers to the person/institution e. Interest
who made the funds available.
f. Borrower/Debtor

Activity 1.3

Solve the following problems.

1. A couple with three children are peacefully living in a barangay near the City
proper. The husband is a government employee while the wife is a rug sewer. They
always remind their children about this: “Bilhin and kailangan at huwag kailanganin
ang hindi kayang bilhin”. Because of this teaching, the children open a joint account
to a certain cooperative to have a better investment. The total amount they earned
in selling rugs, was put in their account in the cooperative to help their parents.
Their total earnings amounting to ₱5,000.00 will earn an interest rate of 7.5% per
year. Help them to compute for the simple interest earned and maturity value, if their
money will be invested in 3 years.

What I Have Learned

A. Please read the sentences carefully and fill in the missing word/s by writing your
answer on the blanks provided.
1. Some who have the privilege of using a fund and promise to pay at some future
date is called ________________________________.
2. The amount that will be received at maturity date is the_____________________.
3. Simple interest is the interest computed on the the ______________________.
4. The date on which the loan amount is to be fully paid is called _____________.

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CO_Q2_General Mathematics (SHS)_ Module 1
5. ___________________is the amount calculated on the initial principal and with fixed
interest throughout the periods or term.

B. Give the formula to find the simple interest.

What I Can Do

Read and analyze the situation below then answers the question given.

A typhoon severely damaged a certain place in Quezon Province. The

wealthiest family in that area who happened to have large businesses have thought
of a way to help SME’s or the small business enterprises to recover, as well as those
poor families affected by the said typhoon. The family then decided to allot funds to
lend to those who are victims of calamity by giving a simple interest loan for only
10% per annum. If the family was able to lend ₱1,500,000.00, how much interest
would be earned after 5 years? Use a model table discussed in this lesson to show
the simple interest earned. What do you think about Filipino values being shown in
this situation? Can you think of other means to help the community use simple
interest?

Your output will be graded, according to this rubric.

Criteria 4 3 2 1
Comprehension Identify, analyze Identify, Identify, Identify, analyze
and understand analyze and analyze and and understand
all of the main understand understand few of the main
issues in the most of the some of the issues in the
study main issues in main issues in problem solving
the study the study
Accuracy of the With a complete With the With some Incomplete and
solution and accurate correct answer data missing to incorrect
solution. but the complete the solution.
incomplete solution,
solution
Analysis Insightful and Thorough Seeming Incomplete
thorough analysis and analysis and analysis and
analysis and exploration of exploration of exploration of
exploration of the questions the questions the questions
the questions asked asked asked
asked
Filipino Values With at least With two With one Without Filipino
three Filipino Filipino values Filipino value value that
values which which are which is related to the
are significant significant and significant and problem
and related to related to the related to the
the problem problem problem

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 Lesson

2 Compound Interest

This lesson will lead you to understand another type of earning interest, the
compound interest. If you understand the simple interest in this module, lesson 2
will give you knowledge of how simple interest differs with compound interest. This
will lead you to compare your investment in the future from different options. It will
also help you to make wise decisions if you will apply for loans from a bank to start
your own business or if you need funds for emergency purposes. Being financially
literate is also a skill that will help you to be successful in money matters and have
a good life.

What’s In

Match Me! Reveal Me, for the second time!

Match the terminologies in column B to its definition or statement in column

A. Write your answer on the blanks provided below the trivia question inside the box.
Your answer should reveal one of the products that we should be proud of as a
Filipino. Finally, answer the guided questions that follow.

A B
1. It is the amount paid or earned for the use O. Borrower/Debtor
of money.
2. It refers to the person or institution who N. Compound Interest
owes money or avails of the funds from the
lender.
3. It is the interest computed on the principal T. Interest
and also on the accumulated past interest
4. It is the percentage of the principal that will C. rate of interest
be changed for a specified period of time.
5. It refers to maturity value. U. Future Value

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 This is one of the fruit bearing trees found in the Philippines. We are also
second to the highest exporter of this product all over the world. It is also
traditionally called “the tree of life” because all the parts of this tree has varied
uses, from housing materials, novelty items up to food products.

_____ _____ _____ _____ _____ _____ _____

4 2 4 2 3 5 1

Guide Questions:

1. How will define compound interest?

2. Based on the definition given will able to know some important terms in
compound interest? If yes. name those terms.

The activity gives you a glimpse of what the lesson is all about. It is all about
compound interest and what makes this interest differ from the simple interest

What’s New

Be hospitable and helpful, please!

Read and analyze each item and write the word GENEROUS if your answer is
true and write HELPFUL if otherwise. It is hoped that these two words will remind
you of Filipino values, so whenever you see true kindness and good deeds be
generous to share it with others and be helpful if you see someone on difficult (false)
situation.

1. Simple interest is computed using the formula Is = Prt.

2. Compound interest is computed on the principal and also on the accumulated
past interests.
3. An amount of ₱10,000.00 will yield more interest if it is invested in a bank that
offers a simple interest of 10% annually than a bank that offers a 10% compound
interest annually if it will be invested for three years.
4. Compound interest works best over a short period of time.
5. A borrower or debtor prefers compound interest rather than simple interest.
6. In compound interest, the interest from the previous years also earns interest.
7. It is better to deposit in a bank that offers simple interest than a bank that
offers compound interest.

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 Are you confident about your answer? Are you generous enough to share
your answer and help your classmates to answer each item correctly? Or do you
think you still need help from your classmates? If you are still in doubt, don’t
worry, the next discussion will give your ideas of the correct answer.

What is It

Compound interest (𝑰𝒄 ) is the interest computed on the principal and also on the
accumulated past interest, so compound interest is a way to earn money because
you don’t just earn using your original money, but also the interest you earned.

To give you a deeper concept of compound interest, reflect the following

questions: Have you ever lend money to someone like a friend, sibling, or relative? If
so, would you let them pay more than or less than or just equal to what you lent to
them? Since you consider to help them, probably you will answer just an equal
amount is ok even though your money has been used for a period of time. But, I’m
sure some will answer that you should receive more than the amount they borrowed
and no one will say that you should receive less than the amount they borrowed. I
know you have your own perspective in life but let us see if compound interest will
change your view in life regarding loans or borrowings, savings, and investment.
Are you being familiar with credit cards? We have what we called “Perma-
Debt” which means a continuous outstanding balance of a credit card where they
pay the monthly minimum that fits in their budget to lessen the burden of interest
monthly but tries to add some debt again on the following month so the debts never
end. So why did I tell you this? If you are a debtor compound interest is not good for
you. Better yet pay your debt in full the soonest possible so that the burden of
interest will not be on your shoulder. Conversely, if you are an investor compound
interest is your best buddy and it is better to invest in a long period of time for you
to have a greater return of your investment through interest earned. So, if you have
the means or a way to save and invest early, you must consider it as soon as possible
for you to gain more money in the future.
Now, that you already know how to solve simple interest. Study the example
below and compare this to the example given in Lesson 1. (Note: Same problem was
given here to compare the interest earned in simple and compound interests)
Example

Problem Solving: Due to COVID-19 pandemic Miss Dada a female resident of Brgy.
May Pagkakaisa somewhere in Quezon Province thinks of a business that can provide
for her needs as well as the need of her neighbors so she can be of help even in this
trying time.

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CO_Q2_General Mathematics (SHS)_ Module 1
Having no money at hand she decided to borrow from a bank as the start-up capital
of ₱50,000.00 at 7% interest rate compounded annually and payable within 5 years.
Compute for the interest yield.
Solution.
Compound Interest

Amount at Compound Interest Amount at the end of

Time Interest
the start of year t (Maturity
(t) Rate (r) Solution Answer
year t Value)
50,000 + 3,500 =
1 50,000 7% (50,000)(0.07)(1) 3,500
53,500
53,500 7% (53,500)(0.07)(1) 53,500 + 3,745 =
2 3,745
57,245
57,245 7% (57,245)(0.07)(1) 57,245 + 4,007.15 =
3 4,007.15
61,252.15
61,252.15 7% (61,252.15)(0.0 61,252.15 + 4,827.65
4 4,827.65
7)(1) = 66,079.80
66,079.80 7% (66,079.80)(0.0 66,079.80 + 4,625.59
5 4625.59
7)(1) = 70,705.39

Compound interest includes the interest from the current year and added on
the principal at the start of the following year, which means that the previous interest
earns interest as well, together with the principal until fully paid. So the interest
yielded on simple interest is lower than the compound interest. The amount at the
end of 5 years in simple interest is ₱67,500.00 while in compound interest it is
₱70,705.39. Therefore, if you are a borrower make sure that the interest on your loan
is not too high if you will find a lender that offers simple interest better grab it that
a lender who offers compound interest. On the other hand, if you are an investor
learn to invest your money to an interest that will yield higher returns like compound
interest. If you will be a lender in the future, I hope that you will not be abusive
regarding the interest, be reasonable, and act generously by helping others who
needed you the most.
Notice that the formula to find the future value in a compound interest is given by

𝐹 = 𝑃(1 + 𝑟)𝑡
where:

𝐹 = future value

𝑃 = principal amount

𝑟 = compound interest rate

𝑡 = time or time in years
Also, to find the compound interest just deduct the principal (P) from the computed
future value (F). In the next module, you will encounter a situation where interest
will be compounded more than once a year.

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CO_Q2_General Mathematics (SHS)_ Module 1
 What’s More

Activity 2.1
Write the word TRUE if the statement is correct, otherwise write FALSE on a
separate answer sheet. If your answer is FALSE, write the word or phrase that will
make the statement correct.

1. Perma-debt decreases the amount of money available on hand to spend in the

future.
2. Compound interest works well if you save early for retirement or invest early.
3. The longer it takes for you to pay a debt the smaller the interest you pay.
4. If borrowers pay at least the minimum payment every month of their debt, their
must not be of good standing.
5. If you are planning to invest, compound interest is better than the simple interest.

Activity 2.2

Assuming that your father asks you about investment and wanted to know
the interest that will be earned if he will invest ₱500,000.00 in a certain bank that
offers an annual compounding interest of 8% for 5 years.

Complete the table below to help your father.

Amount at Compound Interest
Interest Amount at the end of
Time (t) the start of
Rate (r) Solution Answer year t (Maturity Value)
year t
1 500,000 8% (500,000)(0.08)(1)
2 540,000 8% 43,200
8% (583,200)(0.08)(1) 583,200 + 46,656 =
3
629,856
8% 629,856 + 50,388.48 =
4 50,388.48
680,244.48
5 680,244.48 8% 54,419.56

What I Have Learned

A. Please read the sentences carefully and fill in the missing word/s by writing your
answer on the line/s provided.
1. The amount calculated on the principal and accumulated interest from previous
periods on a deposit or loan is ___________________________.
2. Compound interest yields _______________ amount than simple interest.
3. If you are an investor, it is better to invest your money in ____________________.

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CO_Q2_General Mathematics (SHS)_ Module 1
4. If you are borrower it is better to borrow money in a lender who offers
__________________.
5. Debt using credit cards is an example of _________________.

B. Distinguish compound interest from a simple interest.

What I Can Do

Read and analyze the situation below then answers the question given.

COVID-19 pandemic effects shocked every one of us. Nobody expected that it
will occur in the early year of the 21st century. It has affected the health, economy,
education, and lives of many people around the world. It is during these hard times
that we need to show our deepest concern not only to ourselves, and to our family
but our government as well. By simply after the rules like staying at home, wearing
a face mask on public places, and social distancing.

Now, everyone including you can help amidst pandemic or any kind of
calamity if you have the basic knowledge of value investing.

Assuming that somebody from your family is planning to borrow money from
a bank or institution to start a business. You are asked to help him to look for a bank
or lending institution that could offer the lowest interest rate. List all the necessary
information and possible lending institutions by researching within your community.
Identify the interest rate offered by different institutions and the rules and
regulations when it comes to payment. Compare their offers and decide on the best
lender where you can borrow funds. Submit a short report of your research.

Here is the rubric that will serve as your guide to finish the task.
Criteria 4 3 2 1
Knowledge Demonstrate a Demonstrate an Demonstrate a Demonstrate a
about systematic understanding partial little
compound understanding when deciding understanding understanding
interest when deciding with regards to when deciding when deciding
with regards to value investing with regards to with regards to
value investing using compound value investing value investing
using compound interest using compound using compound
interest interest interest
Connections Independently Determines the Some Requires support
determines the connections of effectiveness when
connections of math of evidence when determining the
math of investment to determining the connections of
investment to the the decision connections of math of
decision making making using math of investment to
using simple and simple and investment to the the decision
decision making making using

16
CO_Q2_General Mathematics (SHS)_ Module 1
 compound compound using simple and simple and
interest interest compound compound
interest interest
Accuracy of With complete With With partially With incomplete
data and accurate data considerable completeness and and inaccurate
to help with completeness accuracy of data data
decision making and accuracy of to help with
data to help decision making
with decision
making

Assessment

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

1. Which interest is computed on the principal and then added to it?

a. simple c. annuity due
b. compound d. ordinary annuity

2. The simple interest formula is I = Prt. What does the t represent?

a. principle c. interest
b. time d. percent rate

3. All of the following are used to find simple interest, EXCEPT?

a. principal c. time
b. rate of interest d. future value

4. It is the amount after t years that the lender will receive from the borrower.
a. future Value c. interest
b. present Value d. principal

5. Which of the following describes rate (r)?

a. It is the amount of money borrowed or invested on the origin date.
b. It is the amount paid or earned for the use of money.
c. It is charged by the lender, or rate of increase of the investment
d. It is computed on the principal and also on the accumulated past interests.

6. Rate of interest must be converted into ________ before substituting to the formula
of finding the interest.
a. fractions c. mixed numbers
b. decimals d. percentage

17
CO_Q2_General Mathematics (SHS)_ Module 1
7. The principal in the formula I = Prt is ___________________.
a. the amount of money borrowed or deposited
b. the percent interest for his year
c. the amount taxed
d. the amount the bank owes you for being a customer at their bank

8. The interest from the previous year also earns interest, which of the following
describes the statement?
a. simple c. rate
b. compound d. time

9. Variable P in simple interest formula when you are the creditor stands for?
a. Original Amount borrowed c. Maturity Amount Borrowed
b. Original Amount invested d. Maturity Amount invested

10. The following statements are true EXCEPT ________.

a. The amount invested to a compounded interest yields to greater
maturity value than to a simple interest.
b. The amount borrowed from a simple interest yields to a smaller
maturity value than a compound interest
c. The simple interest yields interest only from initial principal amount.
d. The interest in a compound account yields interest only from initial
principal amount.

11. Compound interest is favorable to the following except?

a. investor of a retirement fund
b. person who saves in bank
c. investor of stocks
d. borrower of a loan

12. Which of the following will yield a higher interest?

a. Investing in a bank that offers a simple interest rate of 10% annually
for 2 years
b. Investing in a cooperative that offers an interest rate of 10%
compounding annually for 2 years
c. Saving money in a piggy bank for 2 years
d. Both a and b

13. What formula can be used to find maturity (future) value of a compound interest?
a. F = P + I c. Both a and b
b. F = (1 + 𝑟)𝑡 d. None of the choices.

14. What interest is computed on the principal and also on the accumulated past
interests?
a. simple c. annuity due
b. compound d. ordinary Annuity

18
CO_Q2_General Mathematics (SHS)_ Module 1
15. Which of the following can be used to find compound interest?
F
a. I = F – P c. P = (1+r)t )
b. F= P(1+r)t d. I = Prt

Additional Activities

Solve the following:

1. Supposed that a local farmer wants to borrow money from Landbank of the
Philippines to start the organic farming in his one (1) hectare of agricultural land.
The farmer needs ₱150,000.00 as start-up capital. The bank offers him 10%
interest rate compounded annually. Compute for the total amount to be paid every
year for 5 years. Show your answer in tabular form.
2. A private school teacher plans to apply for a housing loan in the Home Mutual
Development Fund or Pag-ibig. It offers her a loan amounting to ₱1,500,000.00,
considering all the rules and regulations regarding the policy with 6.5% interest
per annum payable within 15 years. Compare the maturity value if interest will be
paid using simple interest and/or compound interest compounded yearly. Please
use the model table shown in this module to compute and compare the interest.

19
CO_Q2_General Mathematics (SHS)_ Module 1
CO_Q2_General Mathematics (SHS)_ Module 1
20
What I Know What's More Assessment
1. a Activity 1.1 1. a
2. a 2. b
3. d 1. False; remains constant 3. d
4. a 2. True 4. a
5. c 3. False; it must be the principal is the 5. c
6. c original amount. 6. b
7. a 4. True. 7. a
8. c 5. False; 360 8. b
9. b Activity 1.2 9. a
10. d 1. E 10. d
11. b 2. F 11. d
12. c 3. B 12. b
13. a 4. A 13. b
14. b 5. D 14. b
15. d 15. d
Activity 1.3
a. I = ₱1,125.00 ; F= ₱4,125.00
b. I = ₱1,211.48 ; F = ₱6,211.48
What's More
Activity 2.1
1. True
2. True
3. False; the longer you pay debt the
greater interest you pay.
4. False; the debtor is still in good standing
since no penalty will be charge.
5. True.
Activity 2.2
Compound Interest Amount
Amount at the
Ti Interes
at the end of
me t Rate
start of Solution Answer year t
(t) (r)
year t (Maturity
Value)
500,000
(500,000) + 40,000
1 500,000 8% 40,000
(0.08)(1) =
540,000
540,000 8% (540,000) 540,000
(0.08)(1) + 43,200
2 43,200
=
583,200
583,200 8% (583,200) 583,200
(0.08)(1) + 46,656
3 46,656
=
629,856
629,856 8% (629,856) 629,856
(0.08)(1) +
50,388.4 50,388.4
4
8 8=
680,244.
48
680,244. 8% (680,244. 680,244.
48 48)(0.08)( 48+54,41
54,419.5
5 1) 9.56 =
6
734,664.
04
Answer Key
References

Oronce, Orlando.General Mathematics.Sampaloc Manila, Philippines. Rex

Bookstore, Inc. 2016.

Faylogna, Frelie T., Calamiong, Lanilyn L., Reyes, Rowena C. General

Mathematics.Sta. Ana Manila: Vicarish Publications and Trading, Inc. 2017.
pp. 102-106

General Mathematics Learner’s Material. First Edition. 2016. pp. 135-167

*DepED Material: General Mathematics Learner’s Material

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CO_Q2_General Mathematics (SHS)_ Module 1
For inquiries or feedback, please write or call:

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Ground Floor, Bonifacio Bldg., DepEd Complex

Meralco Avenue, Pasig City, Philippines 1600

Telefax: (632) 8634-1072; 8634-1054; 8631-4985

Email Address: [email protected] * [email protected]