Senior High School

Business
Mathematics
Quarter 1 – Module 9:
Interest

Writer:
IRISHGEL M. CABASISI
Teacher II – Caduang Tete National High School
(Macabebe)
Editors:
JANE P. VALENCIA, Ed.D. – EPS – Mathematics (CHAIRMAN)
CHARIZEL T. ARCILLA – SPST-I Malino National High School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
 What I Need to Know

This will give you an idea of the skills or competencies you are expected to learn
in the module.

After going through this module, you are expected to:

• Illustrate how interest is computed specifically as applied to mortgage,
amortization, and on services/utilities and on deposits and loans.

What I Know

This part includes an activity that aims to check what you already know about
the lesson to take. If you get all the answers correct (100%), you may decide to skip this
module.

Direction: Choose the letter of the correct answer. Write the letter of your answer on a
separate sheet of paper. Show your solution.

1. In the formula Is = Prt, P stands for?

a. interest c. principal
b. profit d. time

2. What will you do if the given time in the problem is in months?

a. Divide the given month/s by 12
b. Divide the given month/s by 1
c. Multiply the given month/s by 12
d. Multiply the given month/s by 1

3. If the purchase price is ₱112,000 and the down payment is ₱30,000, how much is
the mortgage loan?
a. ₱30,000 c. ₱112,000
b. ₱82,000 d. ₱80,000

4. If the purchase price is ₱67,000 and the buyer wishes to make a 30% down
payment, how much is the down payment?
a. ₱2,010 c. ₱21,000
b. ₱1,020 d. ₱20,100

5. Joan invested ₱50,000 at 7.68% interest rate. How much will her money earn in 2.5
years?
a. ₱9,600 c. ₱9,000
b. ₱6,900 d. ₱6,000

6. Joy borrowed ₱30,000 from a friend and agreed to pay 3.5% interest. How much
will she pay her friend after 8 months?
a. ₱700 c. ₱30,000
b. ₱30,700 d. ₱37,000
7. Based on problem in item number 6, how much is the interest?
a. ₱700 c. ₱30,000
b. ₱30,700 d. ₱37,000

8. Cesar borrowed ₱10,000 from a friend and agreed to pay back with an interest of
₱350 after 2 months. Find the rate of interest charged.
a. 20% c. 21%
b. 0.21% d. 0.20%

9. How much interest is charged when ₱50,000 is borrowed for 9 months at an annual
interest rate of 10%?
a. ₱10,000 c. ₱50,000
b. ₱5,555.55 d. ₱3,750

10. What do you call the person (or institution) who invests the money?
a. lender c. loan date
b. borrower d. rate

11. What do you call the person (or institution) who owes the money?
a. lender c. loan date
b. borrower d. rate

12. It is the amount after t years that the lender receives from the borrower on the
maturity date.
a. lender c. interest
b. borrower d. maturity value

For numbers 13-15, use the given table below.

Principal Rate Time Interest

(P) (r) (t) (Is)
(13) 2.5% 4 years 1,500
36,000 (14) 1.5 4,860
250,000 0.5% (15) 275
a. 9% c. 15,000
b. 0.22 d. 0.09%

3
 Lesson

1 Simple Interest

In the financial world, simple interest can be found many places. You might
encounter it when taking out a personal loan, borrowing money to buy a car, or
setting up a bank account. Nowadays people need money to live. We can no longer
erase the fact that we need money to buy our essential needs. People need money if
they want to purchase something. But sometimes they don’t have the exact money
needed to pay for a certain product that’s when interest and amortization applies.
Interest applies to different aspects in real-life situation. From deposits, loans,
services, utilities, etc. Money is not free to borrow. It costs to borrow money.

What’s In

As a recall of our previous lesson, read and analyze the given problem and then
solve. Write your answer on your notebook or on a separate sheet of paper.

Aling Puring is running a sari-sari store. Last week, she purchased

grocery items amounting to ₱5,250.00. She was able to sell 70% of the
goods and earned ₱4,900. Find her gross profit.

What’s New

TODAY NEXT YEAR

₱1,000 ₱1,000

PJ Bank PJ Bank

₱100 INTEREST
The Loan The Repayment
Based on the illustration above, Interest is the cost of borrowing money. In this
case, PJ borrowed ₱1,000 from the bank. After a year, PJ needs to pay ₱100 for the
interest of borrowing ₱1,000 which happens to be the principal amount.

4
 What is It

SIMPLE INTEREST

Simple Interest (Is) is the interest that is computed on the principal and then added
to it.

Lender or creditor is a person (or institution) who invests the money or makes the
funds available.
Borrower or debtor is a person (or institution) who owes the money or avails of the
funds from the lender.

Maturity Value or Future value (F) is the amount t years that the lender receives
from the borrower on the maturity date.

Annual Simple Interest

Is = Prt

where : Is = simple interest

P = principal, or the amount invested or borrowed
r = simple interest rate
t = term of time in years

Note: When the term is expressed in months (M), it should be

𝑀
converted in years by t=
12

Derived Formulas:

INTEREST
P r t
𝑰𝒔
P=
𝒓𝒕
To get the value of the Principal amount, divide the interest by the product of
the rate and time.
𝑰𝒔
r=
𝑷𝒕
To get the interest rate, divide the interest by the product of the Principal
amount and time.
𝑰𝒔
t=
𝑷𝒓
To get the time, divide the interest by the product of the Principal amount and
rate.

5
Illustrative Example:

A bank offers 0.25% annual simple interest rate for a particular deposit. How
much interest will be earned if 1 million pesos is deposited in this savings account for
1 year?

Given: P = 1 000 000 I = 0.25% or 0.0025 t = 1 year

Find Is

Solution: Is = Prt

Is= (1000000)(0.0025)(1)
Is= 2,500

Answer: The interest earned is ₱2,500

Mortgage Loan

Mortgage Loan is a type of loan which is secured by some physical property such as
real estate hence it involves big amount.

Mortgagor is the person who borrows the money for a mortgage.

Mortgagee is the lender of money for a mortgage

Down Payment is a type of payment made in cash during the onset of the purchase of
an expensive good or service.

Amortization is a debt-payment scheme wherein the original amount borrowed is

repaid by making equal payments periodically.

Illustrative Example:
Chris would like to purchase a kitchen package worth ₱75,000. He agreed to
give 20% down payment and settle the balance with equal installments. How much is
the down payment? How much is the mortgage loan? If the mortgage loan is to be paid
in 6 months, how much is the cost of monthly amortization?

Down Payment = 20% of P75 000

= 0.20 x 75 000
= ₱ 15 000

Mortgage Loan = Purchase price – down payment

= 75 000 – 15 000
= ₱60 000

Monthly Amortization = ₱60,000 ÷ 6

= ₱10 000 If there is no interest charged

6
Monthly Payment
The computation shown above is true if there no interest added to the mortgage
loan. But if the loan is obtained from a bank, for sure an interest will be added to the
mortgage loan.

Monthly Amortization with Interest

𝑖 𝑥 𝑃 𝑥 [1+𝑖]𝑛
A= where A = monthly payment
[1+𝑖]𝑛 −1
P = mortgage loan
i = monthly interest rate
n= the total number of payments

What is an Amortization Table?

An amortization table is a table showing the monthly payments on a loan
acquired including the interest and balance.

Consider this example:

If a bank charges 5% interest annually, 5% is also known as Annual
Percentage Rate or APR. But since payments are to be done monthly, hence 5% APR
is to be divided by 12 to get the monthly rate. (Or 5% ÷ 12 = 0.416% or 0.00416)

Monthly Amortization Formula

0.05 0.05
( )𝑥 60000 𝑥 [1+ 12 ]6
A= 12
0.05 = 10, 146.34
[1+ 12 ]6 −1

To get the Principal, To get the Interest,

10,146.34 – 249.60 = 9896.74 60,000 x 0.00416 = 249.60

Monthly Amortization Schedule

Payment Amount Principal Interest Balance
60,000
1 10, 146.34 9896.74 249.60 50103.26
2 10, 146.34 9937.91 208.43 40165.35
3 10, 146.34 9979.25 167.09 30186.10
4 10, 146.34 10020.77 125.57 20165.33
5 10, 146.34 10062.45 83.89 10102.88
6 10, 144.91 10102.88 42.03 0
60, 876.61 60 000 876.61

Notice that the amount of last payment was adjusted based on the balance after
the 5th payment. Hence the actual amount of interest after 6 months is only ₱876.61.

That is 60,876.61 – 60,000 = ₱876.61

7
 What’s More

Activity 1.1 Try this!

Direction: Complete the table. Don’t forget to show your complete solution. Write your
answer on your notebook.

Principal (P) Rate (r) Time (t) Interest (Is)

2,000 5% 3 (1)
(2) 12% 5 20,000
88,000 (3) 4 8,000
500,000 9.5% (4) 285,000
1,000,000 0.5% 12 (5)

Activity 1.2 Try this!

Direction: Solve the following problems about simple interest, mortgage loan and
amortization. Write your answer on your notebook. Don’t forget to show your complete
solution.
1. Find the simple interest on a loan of ₱65,000 if the loan is given at a rate of
20% and is due in 3 years?

2. What is the mortgage loan is the price of a lot is ₱400,000 then you make a
down payment of ₱130,000?

3. Chie bought a television set of ₱36,000. He agreed to give 12% down payment
and pay the balance for 6 months with 6% interest rate. Prepare for the
amortization table for 6 months manually.

4. Find the simple interest on a loan of ₱50,000 if the loan is given at a rate of 3%
and is due in 3 years?

5. What is the mortgage loan is the price of a car is ₱800,000 then you make a
down payment of ₱160,000?

8
 What I Have Learned

Supply the necessary answers to complete the statements about simple

interest. Write your answer on your notebook.

1. _______________ is the interest that is computed on the principal and then added
to it.
2. _____________ is the person who borrows the money for a mortgage.
3. _____________ is the lender of money for a mortgage
4. _____________ is a type of payment made in cash during the onset of the
purchase of an expensive good or service.
5. ______________ is a debt-payment scheme wherein the original amount
borrowed is repaid by making equal payments periodically.

What I Can Do

Solve the problem. Write your answer on your notebook. Don’t forget to show
your complete solution.
Problem: Chris would like to purchase a sound system package worth ₱135,000. He
agreed to give 25% down payment and settle the balance with equal installments.

1. How much is the down payment? Answer: ________________

2. How much is the mortgage loan? Answer:_________________
3. If the mortgage loan is to be paid in 3 months with 5% interest annually,
complete the monthly amortization table below.

Monthly Amortization Schedule

Payment Amount Principal Interest Balance

_________
1 ___________ ___________ ___________ _________
2 ___________ ___________ ___________ _________
3 ___________ ___________ ___________ _________

9
 Assessment

Multiple Choice. Choose the letter of the best answer. Write the chosen letter on your
notebook. Don’t forget to show your complete solution.

1. Lovely invested ₱50,000 at 7.68% interest rate. How much will her money earn in
2.5 years?
a. ₱9,600 c. ₱9,000
b. ₱6,900 d. ₱6,000

2. Adie borrowed ₱30,000 from a friend and agreed to pay 3.5% interest. How much
will she pay her friend after 8 months?
a. ₱700 c. ₱30,000
b. ₱30,700 d. ₱37,000

3. Based on problem in Number 2, how much is the interest?

a. ₱700 c. ₱30,000
b. ₱30,700 d. ₱37,000

4. If the purchase price is ₱112,000 and the down payment is ₱30,000, how much is
the mortgage loan?
a. ₱30,000 c. ₱112,000
b. ₱82,000 d. ₱80,000

5. What will you do if the given time in the problem is in months?

a. Divide the given month/s by 12
b. Divide the given month/s by 1
c. Multiply the given month/s by 12
d. Multiply the given month/s by 1

For numbers 6-8, use the given table below.

Principal Rate Time Interest

(P) (r) (t) (Is)
(6) 2.5% 4 years 1,500
36,000 (7) 1.5 4,860
250,000 0.5% (8) 275

a. 9% c. 15,000
b. 0.22 d. 0.09%

9. In the formula Is = Prt, P stands for?

a. Interest c. Principal
b. Profit d. time

10. If the purchase price is ₱67,000 and the buyer wishes to make a 30% down
payment, how much is the down payment?
a. ₱2,010 c. ₱21,000
b. ₱1,020 d. ₱20,100

10
11. Kean borrowed ₱10,000 from a friend and agreed to pay back with an interest of
₱350 after 2 months. Find the rate of interest charged.
a. 20% c. 21%
b. 0.21% d. 0.20%

12. How much interest is charged when ₱50,000 is borrowed for 9 months at an
annual interest rate of 10%?
a. ₱10,000 c. ₱50,000
b. ₱5,555.55 d. ₱3,750

13. What do you call the person (or institution) who invests the money?
a. lender c. loan date
b. borrower d. rate

14. What do you call the person (or institution) who owes the money?
a. lender c. loan date
b. borrower d. rate

15. It is the amount after t years that the lender receives from the borrower on the
maturity date.
a. lender c. interest
b. borrower d. maturity value

Additional Activities

For your final task in this module, do the activity below:

Write your answer on your notebook.
Ask someone (it maybe a friend, a neighbor or a family member) who owns a car
and still pays its monthly amortization. List down the following:
a. Amount of down payment: ______________
b. Principal balance: ____________________
c. Monthly amortization: __________________

11
 12
What I Can Do What I Have What’s More
1. P33,750
Learned
2. P101,250 1. Simple Interest
Activity 1.2
2. Mortgagor 1. P39,000
3. Mortgagee 2. P270,000
4. Down Payment 4. ₱4 500
5. Amortization
5. ₱640 000
What’s More What’s in What I Know
Answer: P1,225 1. C
Activity 1.1 2. A
3. B
1. P300 4. D
2. P33,333.33 5. A
3. 2.27% 6. B
4. 6 years 7. A
5. P60,000 8. C
9. D
10.A
11.B
12.D
13.C
14.A
15.B
Answer Key
 13
What’s More
Activity 1.2, Number 3
Monthly Amortization Table
Payment Amount Principal Interest Balance
31,680
1 5,372.78 5,214.38 158.4026,465.62
2 5,372.78 5,240.45 132.3321,225.17
3 5,372.78 5,266.65 106.1315,958.52
4 5,372.78 5,292.99 79.7910,665.53
5 5,372.78 5,319.45 53.33 5,346.08
6 5,372.81 5,346.08 26.73 0
32,236.71 31,680 556.71
What I Can Do Assessment
Number 3 1. A
2. B
Monthly Amortization Table
3. A
Payment Amount Principal Interest Balance 4. B
101,250 5. A
1 34,031.64 33,609.76 421.88 67,640.24 6. C
2 34,031.64 33,749.81 281.83 33,890.43 7. A
3 34,031.64 33,890.43 141.21 0 8. B
102,094.92 101,250 844.92 9. C
10.D
11.C
12.D
13.A
14.B
15.D
 Development
Development Team
Team of the
of the Module
Module

Writer: IRISHGEL M. CABASISI

IRISHGEL – T-II Caduang
M. CABASISI – SST-II Caduang
Tete National
TeteHigh School
National (Macabebe)
High School
JANE P. VALENCIA, Ed.D. – EPS – Mathematics
Editor: (Macabebe)
Reviewer:
Editor: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
Reviewer: CHARIZEL T. ARCILLA
JANE P. VALENCIA, – SPST-I
Ed.D. – EPSMalino
– Mathematics
National High School
JHOANNA
CHARIZEL S.T. MANALOTO – T-II San
ARCILLA – SPST-I Juan
Malino High School
National (Mexico)
High School
Illustrator: IRISHGEL
JHOANNAM. CABASISI – T-II Caduang
S. MANALOTO – T-II SanTete
JuanNational High (Mexico)
High School School (Macabebe)
Layout Artist: IRISHGEL M. CABASISI – T-II
Illustrator: Caduang
SST-II CaduangTete National
Tete High
National School
High (Macabebe)
School
Language Reviewer:
(Macabebe)
Layout Artist: IRISHGEL M. CABASISI – SST-II Caduang Tete National High School
(Macabebe) Management Team
Language Reviewer:
ZENIA G. MOSTOLES, Ed.D., CESO V, Schools Division Superintendent
LEONARDO C. CANLAS,Management
Ed.D., CESE.TeamAsst. Schools Division Superintendent
ROWENA T. QUIAMBAO, CESE, Asst. Schools Division Superintendent
ZENIA G. MOSTOLES, Ed.D., CESO V, Schools Division Superintendent
CELIA R. LACNALALE, Ph.D., CID Chief
LEONARDO C. CANLAS, Ed.D., CESE. Asst. Schools Division Superintendent
JANE P. VALENCIA, Ed.D., Education Program Supervisor, Mathematics
ROWENA T. QUIAMBAO, CESE, Asst. Schools Division Superintendent
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
CELIA R. LACNALALE, Ph.D., CID Chief
RUBY M. JIMENEZ, Ph.D., Education Program Supervisor, LRMDS
JANE P. VALENCIA, Ed.D., Education Program Supervisor, Mathematics
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
RUBY M. JIMENEZ, Ph.D., Education Program Supervisor, LRMDS