Armando C.

Manzano
1. Pricing, Selling, Commission
and Discount
2. Simple Interest
3. Compound Interest
4. Annuities
5. Amortization and Sinking
Funds
6. Stocks and Bonds
 Interest
When people need to secure funds for
some purposes, one of the ways they usually
resort to is borrowing. On the other hand, the
person or institution, which lends the money
would also wish to get something in return for
the use of the money.
 Debtor or Maker- the person or institution
who borrows the money
 Lender- the person or institution who loans
the money
 Interest- the payment for the borrowed money
 Principal- the capital or sum of money invested
or lend
 Term or Time- number of units of time for which
the money is borrowed and for which interest is
calculated.
 Rate of Interest- the fractional part of the
principal that is paid on the loan and is usually
expressed in percent
 Final Amount or Maturity Value-the sum of the
principal and interest which is accumulated at a
certain time
 Present Value or Proceeds- amount received by
the borrower
 Simple Interest- interest in which only the
original principal bears interest for the entire
term of the loan

 Compound Interest- is the interest added to

the principal at the end of the certain period
of time after which the interest is computed
on the new principal, and this process is
repeated until the end of the term of the loan
is reached.
Formula:
𝑰 = 𝑷𝑹𝑻

 Interest = Principal x Rate x Time

𝐼
 Principal is unknown 𝑃=
𝑅𝑇
𝐼
 Rate is unknown 𝑅=
𝑃𝑇
𝐼
 Time is unknown 𝑇=
𝑃𝑅
 Amount or Maturity Value

𝐹 =𝑃+𝐼

 Present Value or Principal

𝑃 =𝐹−𝐼
 Interest

𝐼 =𝐹−𝑃
 Years 𝑻 = 𝒏 𝒚𝒆𝒂𝒓𝒔

𝒏 𝒎𝒐𝒏𝒕𝒉𝒔
 Months 𝑻=
𝟏𝟐

𝒏 𝒎𝒐𝒏𝒕𝒉𝒔
 Years and Months 𝑻 = 𝒏 𝒚𝒆𝒂𝒓𝒔 +
𝟏𝟐
1. Find the interest and amount on P28, 000 at 8.5%
simple interest for 5 years.
2. Find the interest and amount on P12, 000 borrowed
at 9 ¼ % simple interest for 9 months.
3. Find the interest and amount on P25, 400 for 2 years
and 5 months at 11 3/8 % simple interest.
4. If a principal of P25, 600 earns interest of P8, 450 in
3 years and 3 months, what interest rate is in
effect?
5. A principal earns interest of P4, 465 in 2 years and 9
months at a simple interest rate of 9 ½%. Find the
principal invested.
6. How long will it take for P36, 000 to earn P10,
326.00 interest if it is invested at 8 1/5 % simple
interest?
 Ordinary and Exact Interest

Ordinary Interest
𝒏 𝒅𝒂𝒚𝒔
 𝑻=
𝟑𝟔𝟎
Exact Interest
𝒏 𝒅𝒂𝒚𝒔 𝒏 𝒅𝒂𝒚𝒔
 𝑻= 𝒐𝒓
𝟑𝟔𝟓 𝟑𝟔𝟔
 Note:
 If interest is neither said to be ordinary nor
exact on the problem, then it is assumed to
be ordinary interest
 Ordinary interest is higher than exact interest
 Given:
 P = P18, 800
R = 11 ¾ %= 11.75% = 0.1175
85 85
T = 85 days OI= EI =
360 365
 Required:
 Ordinary/Exact Interest =?
 F=
 Solution:
𝐼 = 𝑃𝑅𝑇
 Ordinary Interest
85
 𝐼= 𝑃18, 800(0.1175)( )
360
 𝐼 = 𝑃521. 57
 𝐹 = 𝑃18, 800 + 𝑃521. 57 = 𝑃19, 321.57
 Exact Interest
85
 𝐼= 𝑃18, 800(0.1175)( )
365
 𝐼 = 𝑃514.42
 𝐹 = 𝑃18, 800 + 𝑃514.42 = 𝑃19, 314.42
Actual and Approximate Time
When time expressed in- between-
dates it is necessary to determine the
actual and approximate time

 Approximate Time- it is where all the

months in a year contains 30 days

 Actual Time- it is the exact or actual

number of days in a given month
 Month Approximate Time Actual Time

March…23 7 8
April 30 30
May 30 31
June 30 30
July 30 31
August 30 31
September 30 30

October…16 16 16
203 207
days Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
1 1 32 60 91 121 152 182 213 244 274 305 335
2 2 33 61 92 122 153 183 214 245 275 306 336
3 3 34 62 93 123 154 184 215 246 276 307 337
4 4 35 63 94 124 155 185 216 247 277 308 338
5 5 36 64 95 125 156 186 217 248 278 309 339
6 6 37 65 96 126 157 187 218 249 279 310 340
7 7 38 66 97 127 158 188 219 250 280 311 341
8 8 39 67 98 128 159 189 220 251 281 312 342
9 9 40 68 99 129 160 190 221 252 282 313 343
10 10 41 69 100 130 161 191 222 253 283 314 344
11 11 42 70 101 131 162 192 223 254 284 315 345
12 12 43 71 102 132 163 193 224 255 285 316 346
13 13 44 72 103 133 164 194 225 256 286 317 347
14 14 45 73 104 134 165 195 226 257 287 318 348
15 15 46 74 105 135 166 196 227 258 288 319 349
16 16 47 75 106 136 167 197 228 259 289 320 350
17 17 48 76 107 137 168 198 229 260 290 321 351
18 18 49 77 108 138 169 199 230 261 291 322 352
19 19 50 78 109 139 170 200 231 262 292 323 353
20 20 51 79 110 140 171 201 232 263 293 324 354
21 21 52 80 111 141 172 202 233 264 294 325 355
22 22 53 81 112 142 173 203 234 265 295 326 356
23 23 54 82 113 143 174 204 235 266 296 327 357
24 24 55 83 114 144 175 205 236 267 297 328 358
25 25 56 84 115 145 176 206 237 268 298 329 359
26 26 57 85 116 146 177 207 238 269 299 330 360
27 27 58 86 117 147 178 208 239 270 300 331 361
28 28 59 87 118 148 179 209 240 271 301 332 362
29 29 88 119 149 180 210 241 272 302 333 363
30 30 89 120 150 181 211 242 273 303 334 364
31 31 90 151 212 243 304 365
 This means that it is 6 months and 23 days
then 6x30 + 23= 180 +23 = 203 days (
approximate)

 Then count the number of months having 31

days then 203 + 4 = 207 days ( actual)
Four Time Combination
 Approximate Time over Ordinary Interest
𝐴𝑝𝑝𝑟𝑜𝑥𝑖𝑚𝑎𝑡𝑒 𝑇𝑖𝑚𝑒
( APOI) - 𝑇=
𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
 Actual Time over Ordinary Interest
𝐴𝑐𝑡𝑢𝑎𝑙 𝑇𝑖𝑚𝑒
( ACOI) - 𝑇=
𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
 Approximate Time over Exact Interest
𝐴𝑝𝑝𝑟𝑜𝑥𝑖𝑚𝑎𝑡𝑒 𝑇𝑖𝑚𝑒
( APEI) - 𝑇=
𝐸𝑥𝑎𝑐𝑡 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
 Actual Time over Exact Interest
𝐴𝑐𝑡𝑢𝑎𝑙 𝑇𝑖𝑚𝑒
( ACEI) - 𝑇=
𝐸𝑥𝑎𝑐𝑡 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
 Using the four-time combination between
March 23, 2016 to October 16, 2016, we
know that

 Approximate Time = 203 and Actual Time =

207

 then using the four-time combination

203 207
 𝐴𝑃𝑂𝐼 = 𝐴𝐶𝑂𝐼 =
360 360
203 207
𝐴𝑃𝐸𝐼 = 𝐴𝐶𝐸𝐼 =
366 366
 Example:
 Mr. Rodrigo Garcia borrowed P65, 000 on
March 23, 2016 and promised to pay with simple
interest of 12.65% on October 16, 2016. How
much is the amount and interest of the loan
using four-time-combination?

 Solution: Since four-time combination from

March 23, 2016 to October 16, 2016 was
computed already:
203 207
𝐴𝑃𝑂𝐼 = 𝐴𝐶𝑂𝐼 =
360 360
203 207
𝐴𝑃𝐸𝐼 = 𝐴𝐶𝐸𝐼 =
366 366

Note: We use 366 because 2016 is leap year

 Using I = PRT and F= P+I

 P= P65,000 ; r = 12.65% or 0.1265

and the four time combination
203
 APOI 𝐼 = 𝑃65,000 0.1265 = 𝑷𝟒, 𝟔𝟑𝟔. 𝟓𝟖
360
 𝐹 = 𝑃65,000 + 𝑃4,636.58 = 𝑃69, 636.58
207
 ACOI 𝐼 = 𝑃65,000 0.1265 = 𝑷𝟒, 𝟕𝟐𝟕. 𝟗𝟒 **
360
 𝐹 = 𝑃65,000 + 𝑃4,727.94 = 𝑃69,727.94
203
 APEI 𝐼 = 𝑃65,000 0.1265 = 𝑷𝟒, 𝟓𝟔𝟎. 𝟓𝟕*
366
 𝐹 = 𝑃65,000 + 𝑃4,560.57 = 𝑃69, 560.57
207
 ACEI 𝐼 = 𝑃65,000 0.1265 = 𝑷𝟒, 𝟔𝟓𝟎. 𝟒𝟑
366
𝐹 = 𝑃65,000 + 𝑃4,650.43 = 𝑃69, 650.43

 ** Banker’s Rule- it is used mostly by banks and lending

agency in computing interest
 Accumulation – is the process of determining
the amount F of a given principal P due at a
specified time T to accumulate a principal P for t
years means to solve for the final amount F by
the formula

𝑭 = 𝑷 𝟏 + 𝑹𝑻

syntax
 Discounting - is the process of
determining the present value P of any
amount F due in the future. To discount
an amount F for t years, means to solve
for P applying the formula

𝑭
𝑷=
𝟏 + 𝑹𝑻

syntax ∗ 𝑭 ÷ 𝟏 + 𝑹 × 𝑻 =
 Given: Required:
 P = P39, 900 I =?
 R = 9 ¼%= 0.0925 F =?
 T = 2.75 years
 Solution: Using the original formula
 𝐼 = 𝑃𝑅𝑇
 𝐼 = 𝑃39, 900(0.0925)(2.75)
 𝑰 = 𝑷𝟏𝟎, 𝟏𝟒𝟗. 𝟓𝟔
 𝐹 =𝑃+𝐼
 𝐹 = 𝑃39, 900 + 𝑃10, 149.56
 𝑭 = 𝑷𝟓𝟎, 𝟎𝟒𝟗. 𝟓𝟔
 Using the Accumulation Formula
 𝐹 = 𝑃 1 + 𝑅𝑇
 𝐹 = 𝑃39,900 1 + 0.0925(2.75)
 𝑭 = 𝑷𝟓𝟎, 𝟎𝟒𝟗. 𝟓𝟔
 𝐼 =𝐹−𝑃
 𝐼 = 𝑃50, 049.56 − 𝑃39, 900
 𝑰 = 𝑷𝟏𝟎, 𝟏𝟒𝟗. 𝟓𝟔
 Given: Required:
 F = P45, 500 P =?
 R = 12.35%= 0.1235 I=
 T = 3.25 years
 Solution:
𝐹
 𝑃=
1+𝑅𝑇
𝑃45,500
 𝑃=
1+0.1235(3.25)
 𝑷 = 𝑷𝟑𝟐, 𝟒𝟔𝟖. 𝟏𝟏
 𝐼 =𝐹−𝑃
 𝐼 = 𝑃45, 500 − 𝑃32, 468.11
 𝑰 = 𝑷𝟏𝟑, 𝟎𝟑𝟏. 𝟖𝟗
 A discount is a deduction from the final
amount F or maturity value MV of a loan or
obligation.

 Simple Discount (D)- is often called
bank discount or interest-in-advance.
 Proceeds (P)- the amount of money that the
borrower receives
 Discount rate (d)- same as interest rate
 Maturity Value or Final Amount (F)- the sum
of the principal and discount
 Time or term (t)- period of time of the loan
 𝑫 = 𝑭𝒅𝒕
 Discount = Final Amount x discount Rate x Time

𝑫
 Final Amount is unknown 𝑭=
𝒅𝒕
𝑫
 Discount Rate is unknown 𝒅=
𝑭𝒕
𝑫
 Time is unknown 𝒕=
𝑭𝒅

 Amount or Maturity Value 𝑭=𝑷+𝑫
 Present Value or Proceeds 𝑷=𝑭−𝑫
 Bank Discount 𝑫=𝑭−𝑷
 Present Value Formula (Discounting)

𝑷 = 𝑭 𝟏 − 𝒅𝒕

 Maturity Value or Amount ( Accumulation)

𝑷
𝑭=
𝟏−𝒅𝒕
 Given: Required:
 F = P25, 000 D =?
 d = 11 1/8%= 11.125%=0.11125 P=
 T = 9 months
 Solution: Using the original formula
 𝐷 = 𝐹𝑑𝑡
 𝐷 = 𝑃25, 000(0.11125)(9/12)
 = 𝑃2, 085.94
 𝑃 =𝐹−𝐷
 𝑃 = 𝑃25, 000 − 𝑃2, 085.94
 𝑃 = 𝑃22, 914.06
 Using the discounting formula for Simple Discount
 𝑃 = 𝐹 1 − 𝑑𝑡
 = 𝑃25, 000(1 − 0.11125 9/12)
 𝑃 = 𝑃22, 914.06
 Given: Required:
 P = P35, 000 F =?
 d = 10 4/5%= 0.108 D=
 T = 2 yr/ 3 months= 2.25
 Using the accumulation formula for Simple
Discount
𝑃
 𝐹 =
1−𝑑𝑡
𝑃35,000
 =
1−0.108 2.25
 𝐹 = 𝑃46, 235.14
 Equivalent rates are those whose present
values for an amount are the same. An interest
rate and a discount rate are said to be equivalent
if the two rate result in the same present value
for an amount due in the future. For instance, if
we multiply separately, an interest and the
discount rate with the same amount, and we
arrive at the same product for both, then the
interest rate and discount rate are said to be
equivalent.
 Formula to be applied:
𝒅 𝒓
 𝒓= × 𝟏𝟎𝟎% 𝒅= × 𝟏𝟎𝟎%
𝟏−𝒅𝒕 𝟏+𝒓𝒕
 *𝑑 ÷ 1 − 𝑑 × 𝑡 = *𝑟 ÷ 1 + 𝑟 × 𝑡 =
Formula to be applied:

𝒅
 𝒓= × 𝟏𝟎𝟎%
𝟏−𝒅𝒕
*𝑑 ÷ 1 − 𝑑 × 𝑡 =

𝒓
𝒅= × 𝟏𝟎𝟎%
𝟏+𝒓𝒕

*𝑟 ÷ 1 + 𝑟 × 𝑡 =
Example:

1. A lender charges a discount rate 11 ¾% for

discounting a note due in 4 months. What is the
equivalent interest rate?
 Given:
Required:
 d= 11 ¾ % or 0.1175
r=?
 t = 4months = 4/12
 Solution:
𝒅
 𝒓 =
𝟏−𝒅𝒕
0.1175
 = 4
1−0.1175(12)
 𝑟 = 0.122289679 𝑜𝑟 12.23%


 Compound Interest- it is the interest resulting from

the periodic addition of simple interest to the
principal and when the interest is periodically added
to the principal and this new sum is used as the new
principal for a certain number of periods. This
process is repeated until it reach the last period of
the term
 Final or Compound Amount- the sum of the
compound interest and the principal resulting from
compounding system
 Conversion or Compounding period- the time
between two successive interest computations
 𝒎=
𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒄𝒐𝒏𝒗𝒆𝒓𝒔𝒊𝒐𝒏 𝒑𝒆𝒓𝒊𝒐𝒅 𝒑𝒆𝒓 𝒚𝒆𝒂𝒓


 Periodic Rate- annual or yearly rate for compound
interest
 𝒊 = 𝒑𝒆𝒓𝒊𝒐𝒅𝒊𝒄 𝒓𝒂𝒕𝒆
𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒓𝒂𝒕𝒆
 𝒊=
𝒄𝒐𝒏𝒗𝒆𝒓𝒔𝒊𝒐𝒏 𝒑𝒆𝒓𝒊𝒐𝒅 𝒑𝒆𝒓 𝒚𝒆𝒂𝒓
𝒓
 𝒊=
𝒎

 Thus, the interest rate of 12% compounded
0.12
 Annually 𝑖=
1
0.12
 Semi- Annually 𝑖=
2
0.12
 Quarterly 𝑖=
4
0.12
 Monthly 𝑖=
12
 Accumulation Factor (finding for F or final
amount)
𝒏
 𝑭=𝑷 𝟏+𝒊
 Discounting Factor (finding for P or Present
Value)
𝑭
 𝑷= or 𝑷 = 𝑭 𝟏 + 𝒊 −𝒏
𝟏+𝒊 𝒏
 Where: 𝐹 = 𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑟 𝐶𝑜𝑚𝑝𝑜𝑢𝑛𝑑 𝐴𝑚𝑜𝑢𝑛𝑡
 𝑃 = 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 𝑜𝑟 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑉𝑎𝑙𝑢𝑒
 𝑛 = 𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 𝑛=
𝑡×𝑚
 𝑖 = 𝑝𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑟𝑎𝑡𝑒 𝑖=
𝑟
𝑚
Accumulation Factor (finding for F or
final amount)
𝒏
𝑭 = 𝑷 𝟏 + 𝒊
 Syntax:

 *1 + 𝑟 ÷ 𝑚 = ∧ 𝑛 =× 𝑃 =

 *𝑃 × (1 + 𝑟 ÷ 𝑚) ∧ 𝑛 =


 Given:
 𝑃 = 𝑃25, 500 𝑟 = 0.10 𝑡 = 3 𝑦𝑒𝑎𝑟𝑠
𝑚 = 4 ( 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦)
 Finding 𝑖, 𝑛 𝑎𝑛𝑑 𝐹
 Solution:
𝑟 0.10
 𝑛 = 𝑡 × 𝑚 = 3 × 4 = 12 𝑖= = = 0.025
𝑚 4
 using
 𝑭=𝑷 𝟏+𝒊 𝒏
0.10 12
 𝐹 = 𝑃25, 500 1 +
4
12
 𝐹 = 𝑃25, 500 1 + 0.025
 = 𝑃34, 294.67
 using 𝑰 = 𝑭 − 𝑷
 𝑰 = 𝑃34, 294.67 − 𝑃25, 500
 𝑰 = 𝑃8, 794.67
 Given:
 𝑃 = 𝑃18, 400 𝑟 = 0.1125 𝑡 = 2 𝑦𝑒𝑎𝑟𝑠 𝑚 = 12 ( 𝑚𝑜𝑛𝑡ℎ𝑙𝑦)
 Finding 𝑖, 𝑛 𝑎𝑛𝑑 𝐹
 Solution:
𝑟 0.1125
 𝑛 = 𝑡 × 𝑚 = 2 × 12 = 24 𝑖=𝑚= 12
 using
𝒏
 𝑭=𝑷 𝟏+𝒊
0.1125 24
 𝐹 = 𝑃18, 400 1 + 12
 = 𝑃23, 018.60
 using
 𝑰=𝑭−𝑷
 = 𝑃23, 018.60 − 𝑃18, 400
 = 𝑃4, 618.60
 1. What sum of money will be required to settle a loan of P48,
600 after 3 years and 6 months when compounded
 a) semi annually at 12.5% interest rate?
 b) quarterly at 11.75% interest rate?
 c) monthly at 10.8% interest rate?

 2. Accumulate P65, 000 at 12.75% interest when compounded
 a) monthly for 3.5 years
 b) quarterly for 4.5 years
 c) semi- annually for 5.5 years

 3. Accumulate P54, 200 at 11.75% interest when compounded
 a) semiannually for 3 years and 5 months
 b) quarterly for 4 years and 4 months
 c) monthly for 5 years and 2 months
 Discounting Factor (finding for P or Present Value)
𝑭
 𝑷=
𝟏+𝒊 𝒏
 Syntax:
 *𝐹 ÷ (1 + 𝑟 ÷ 𝑚) ∧ 𝑛 =
 Or
 𝑷=𝑭 𝟏+𝒊 −𝒏

 Syntax:
 *1 + 𝑟 ÷ 𝑚 = ∧ (−)𝑛 =× 𝐹 =
 .Given:
 𝐹 = 𝑃36, 860 𝑟 = 0.105 𝑡 = 2 𝑦𝑟𝑠 & 9 𝑚𝑜𝑠 𝑚=4

 Finding 𝑖, 𝑛 𝑎𝑛𝑑 𝑃
 Solution:
𝑟 0.105
 𝑛 = 𝑡 × 𝑚 = 2.75 × 4 = 11 𝑖=𝑚= 4
 Using
𝑭
 𝑷 = 𝟏+𝒊 𝒏 𝑷 = 𝑭 𝟏 + 𝒊 −𝒏
𝑷𝟑𝟔,𝟖𝟔𝟎 0.105 −11
 = 𝟎.𝟏𝟎𝟓 𝟏𝟏
= 𝑃36, 860 1 + 4
𝟏+ 𝟒
𝑷𝟑𝟔,𝟖𝟔𝟎 1
 = 𝟏.𝟑𝟐𝟗𝟕𝟗𝟓𝟓𝟑𝟖 = 𝑃36, 860 𝟏.𝟑𝟐𝟗𝟕𝟗𝟓𝟓𝟑𝟖

 = 𝑃27, 718.55 = 𝑃27, 718.55




 Given:
 𝐹 = 𝑃24, 850 𝑟 = 0.095 𝑡 = 4 𝑦𝑟𝑠 & 6 𝑚𝑜𝑠 𝑚=
12 ( 𝑚𝑜𝑛𝑡ℎ𝑙𝑦)

 Finding 𝑖, 𝑛 𝑎𝑛𝑑 𝑃
 Solution:
𝑟 0.095
 𝑛 = 𝑡 × 𝑚 = 4.5 × 12 = 54 𝑖 = =
𝑚 12

𝑭 𝑃24,850
 Using 𝑷= = 0.095 𝟓𝟒
𝟏+𝒊 𝒏 𝟏+ 12
𝑃24,850
 = = 𝑃 16, 232.92
𝟏.𝟓𝟑𝟎𝟖𝟒𝟎𝟏𝟑𝟐
0.095 −𝟓𝟒
 Or using 𝑷=𝑭 𝟏+𝒊 −𝒏
= 𝑃24, 850 1 +
12
 = 𝑃 16, 232.92
 Given:
 𝐹 = 𝑃88, 460 𝑟 = 0.1025 𝑡 = 5 𝑦𝑟𝑠 & 6 𝑚𝑜𝑠 𝑚=2

 Finding 𝑖, 𝑛 𝑎𝑛𝑑 𝑃

 Solution:
 𝑛 = 𝑡 × 𝑚 = 5.5 × 2 = 11 𝑖=
𝑟 0.1025
=
𝑚 2

𝑭 𝑃88,460
 Using 𝑷= = 0.1025 𝟏𝟏
𝟏+𝒊 𝒏 𝟏+
2
𝑃88,460
 = = 𝑃51, 048.25
𝟏.𝟕𝟑𝟐𝟖𝟕𝟎𝟒𝟓𝟒
0.1025 −𝟏𝟏
 Or using 𝑷= 𝑭 𝟏+𝒊 −𝒏
= 𝑃88, 460 𝟏+
2
 = 𝑃51, 048.25
 4. Discount P85, 900 at 11.75% interest when
compounded
 a) monthly for 2.5 years
 b) quarterly for 3.25 years
 c) semi- annually for 4.5 years

 5. Discount P64, 820 at 12.25% interest when
compounded
 a) semiannually for 4 years and 5 months
 b) quarterly for 4 years and 8 months
 c) monthly for 3 years and 7 months
 1. Find the present value of P38, 140 due at the end of 6 years
and 6 months, if money is worth 9½ % compounded
semiannually.
 2. Find the present value of P54, 470 due at the end of 4 years
and5 months, if money is worth 10.25% compounded monthly?
Or if it is worth 11.5% compounded quarterly?
 3. Discount P55, 000 for 9 years at
 a) r = 8.75% m=4
 b) r = 10.15% m=2
 c) r = 11.25 m = 12
 4. If money is worth 11.5% converted quarterly, find the present
value and compound discount, if P39, 450 is discounted for 4
years and 9 months. If the same problem discounted for 5 years
and 9 months?
 5. Mike Macalinao owns a note for P45, 500 due in 5 years and 6
months. How much should a buyer pay now for the note with an
interest of 3 ¼% every 3 months?
 6. How much should you invest today to provide yourself a brand
new Toyota car worth P960, 00 as a gift 7 years from now if
money worth 11 ¼% compounded quarterly.
 By Formula:
 Any of the following will be used

𝑭
𝒍𝒐𝒈
𝑷
 𝒕= ÷𝒎 𝑙𝑜𝑔 𝐹 ÷ 𝑃 ÷ log(1 + 𝑟 ÷
𝒍𝒐𝒈 𝟏+𝒊
𝑚) =÷ 𝑚 =

𝑭
𝒍𝒐𝒈
𝑷
 𝒕= 𝑙𝑜𝑔 𝐹 ÷ 𝑃 ÷ (𝑚 × log(1 + 𝑟 ÷
𝒎 𝒍𝒐𝒈 𝟏+𝒊
𝑚 )) =

𝑭
𝒍𝒐𝒈
𝑷
 𝒕= 𝒎 𝑙𝑜𝑔 𝐹 ÷ 𝑃 ÷ log (1 + 𝑟 ÷ 𝑚 ∧ 𝑚) =
𝒍𝒐𝒈 𝟏+𝒊

 Given:
 𝑃 = 𝑃15,560 𝐹 = 𝑃24, 340 𝑟 = 0.105 𝑚=2
 Solution:
𝑟 0.105
 𝑖= =
𝑚 2
𝐹
𝑙𝑜𝑔 𝑃
 Using 𝑡 = ÷𝑚
𝑙𝑜𝑔 1+𝑖
𝑃24,340
𝑙𝑜𝑔 𝑃15,560
 𝑡= 0.105 ÷2
𝑙𝑜𝑔 1+
2
0.194310981
 = ÷2
0.022222104
 𝑡 = 4.37 𝑦𝑟𝑠.
𝐹
𝑙𝑜𝑔 𝑃
 Or using 𝑡=
𝑚 𝑙𝑜𝑔 1+𝑖
𝑃24,340
𝑙𝑜𝑔 𝑃15,560
 𝑡= 0.105
2 𝑙𝑜𝑔 1+ 2
 𝑡 = 4.37 𝑦𝑟𝑠.
 Given:
 𝑷 = 𝑷𝟑𝟓, 𝟏𝟓𝟔 𝑭 = 𝑷𝟒𝟖, 𝟏𝟑𝟓 𝒓 = 𝟎. 𝟏𝟏𝟐𝟓 𝒎 = 𝟏𝟐
 Solution:
𝑟 0.1125
 𝑖= =
𝑚 22 𝐹
𝑙𝑜𝑔
 Using 𝑡= 𝑃
÷𝑚
𝑙𝑜𝑔 1+𝑖
𝑃48,135
𝑙𝑜𝑔 𝑃35,156
 𝑡= 0.1125 ÷ 12
𝑙𝑜𝑔 1+ 12
0.13646152
 = ÷
12
0.00405244
 𝒕 = 𝟐. 𝟖𝟏 𝒚𝒓𝒔.
𝐹
𝑙𝑜𝑔 𝑃
 Or using 𝑡 =
𝑚 𝑙𝑜𝑔 1+𝑖
𝑃48,135
𝑙𝑜𝑔 𝑃35,156
 𝑡= 0.1125
12 𝑙𝑜𝑔 1+ 12
 𝒕 = 𝟐. 𝟖𝟏𝒚𝒓𝒔.

 1. How long will it take for P28, 280 amount to 37, 640 if
invested at 9.88% compounded quarterly? Semiannually?
Monthly?
 2. An investment of P34, 180 increases to P52, 904 if
invested at 12 ¼% compounded quarterly. Find the term of
investment. How long will take for the same the principal
increases to P65, 340 if invested at 13.2% compounded
monthly?
 3. Miguel deposits P135, 500 in a savings account that
pays 13% interest converted semiannually. If he decide to
withdraw his money when it grows to P225, 000. When
should his withdraw the money?
 4. On January 6, Rodrigo has P200, 200 in a fund, which
earns at 14% compounded quarterly. He plans to go into
business as soon as the fund contains P250, 000. On what
date will that amount be available?

By Formula:
𝟏Τ
𝑭 𝒏
 𝒓=𝒎 − 𝟏 × 𝟏𝟎𝟎%
𝑷

*𝐹 ÷ 𝑃 =∧ 1 ÷ 𝑛 = −1 =× 𝑚 =×
100 = %

𝒏 𝑭
 𝒓=𝒎 − 𝟏 × 𝟏𝟎𝟎%
𝑷


* 𝑛𝑆ℎ𝑖𝑓𝑡 ∧ 𝐹 ÷ 𝑃 = −1 =× 𝑚 =×
100 = %


 Given:
 𝑃 = 𝑃18, 970 𝐹 = 𝑃23, 850 𝑡 = 3 𝑦𝑒𝑎𝑟𝑠 𝑚 = 12


 Solution: 𝑛 = 𝑡 × 𝑚 = 3 × 12 = 36
1
𝐹 Τ𝑛
 Using 𝑟=𝑚 𝑃 − 1 × 100%
1
𝑃23,850 Τ36
 𝑟 = 12 −1 × 100%
𝑃18,970
 = 12 1.006379301 − 1 × 100%
 = 0.076551617 × 100%
 𝑟 = 7.66%
𝑛 𝐹
 Or using 𝑟 = 𝑚 − 1 × 100%
𝑃
𝟑𝟔 𝑃23,850
 𝑟 = 12 − 1 × 100%
𝑃18,970
 = 12 0.006379301435 × 100%
 = 0.076551617 × 100%
 𝑟 = 7.66%


 Given:
 𝑃 = 𝑃24, 600 𝐹 = 𝑃37, 890 𝑡 = 3 𝑦𝑟 & 9 𝑚𝑜𝑠 𝑚=4
 Solution:
 𝑛 = 𝑡 × 𝑚 = 3.75 × 4 = 15
 Using
1Τ
𝐹 𝑛
 𝑟=𝑚 − 1 × 100%
𝑃
1Τ
𝑃37,890 15
 𝑟=4 − 1 × 100%
𝑃24,600
 = 4 1.029214667 − 1 × 100%
 = 4 0.029214666 × 100%
 = 0.1168586678
 𝑟 = 11.69%
 Or using
𝑛 𝐹 15 𝑃37,890
 𝑟=𝑚 − 1 × 100% 𝒓=4 − 1 × 100%
𝑃 𝑃24,600
 = 4 0.029214666 × 100%
 = 0.1168586678
 𝒓 = 𝟏𝟏. 𝟔𝟗%
 1. At what interest rate will P30, 750 amount to P44, 875
in 4 years and 6 months, if interest is compounded semi-
annually?
 2. Sonny who invested P45, 800 had P82, 420 returned to
him 4 years and 4 months later. At what interest
converted monthly did his money earn?
 3. Apeng placed P34, 400 in an investment firm. If this
amounted to P52, 540 after 4 years and 8 months, find
the rate used if it is converted monthly.
 4. If P60, 000 earned an interest to P76, 400 in 3 years
and 3 months, what is the rate of interest compounded
quarterly.
 5. On April, 21, 2010 Coco Lisap invested P250, 000. If
he expects to receive P680, 000 on July 21, 2015, what
interest rate compounded quarterly is used?