Welcome to the

Second Quarter!
Main Units:
1. Basic Business Mathematics
2. Logic and Proof
 Activity 1: Million Dollar Question
You just won 10 million pesos. You are given the following
options:
Option A: Pay off all your loans and invest the rest in a
diversified portfolio of stocks and bonds.
Option B: Purchase insurance and life plans.
Option C: Use the money to start your own business.
Option D: Deposit in a bank
 Content Standard
The students will understand the key
concepts of simple and compound
interests, and simple and general
annuities, loans, stocks and bonds.
 Performance Standard
The students will be able to solve real life
problems in the community by modeling and
interpreting data using functions, recognizing
and applying appropriate financial tools, in
order to arrive at a logically sound decision.
Define simple and compound
interests.
Solve problems involving simple
and compound interest.
 INTEREST (I)
•When a person invests or lends money,
he gets or pays an additional amount on
top of the original investment or loan.
This amount is called interest.
PRINCIPAL AMOUNT (P)
•refers to the amount of money extended
for credit or the amount of money
deposited in a bank for safekeeping.
 INTEREST RATE (r)
•refers to the charged amount for using
the money over a certain period. It is
commonly expressed in percent, but is
converted to decimal.
TIME/LOAN PERIOD (t)
•refers to the period covered from the
time that the money (principal) is
borrowed until its due date.
 MATURITY VALUE (M)
•refers to the sum of the principal and
interest.
Number of compounding periods (m)
m Period
1 Annually
2 Semi-annually
4 Quarterly
6 Bimonthly
12 Monthly
360 Daily
Activity 4: Investment Decision

Pair activity. Notebook

 Suppose you received Php 10 ,000 bonus commission for selling 5 house and lot in one
quarter. Then you plan to invest it for 5 years.
NAGMA HAL COOPERATIVE: 2% PER YEAR NASAK TAN BANK: 2% COMPOUNDED ANNUALLY
Given: P=Php 10,000 r= 2% or 0.02 t=5 years Given: P=Php 10,000 r= 2% or 0.02 t=5 years m=1

Interest Maturity Interest Maturity

Time Principal Time Principal
(2%) Value (2%) Value

0 10,000 0 10,000 0 10,000 0 10,000

1 10,000 200 10,200 1 10,000 200 10,200

2 10,200 200 10,400 2 10,200 204 10,404

3 10,400 200 10,600 3 10,404 208.08 10,612.08

4 10,600 200 10,800 4 10,612.08 212.24 10,824.32

5 10,800 200 11,000 10,824.32 216.49 11,040.81

5
 Simple Interest
•refers to an interest that is
computed on the original
principal during the whole period
or time of borrowing.
 Simple Interest
I=Prt
I P
M=P+I
M
R T
N R A
T
E
I
N
A
T
I
M
T
U
= P + Prt
R C E E R
E I I
S
T
P
A
T
Y
= P (1+rt)
L
 Suppose you received Php 10 ,000 bonus commission for selling 5 house and lot in one
quarter. Then you plan to invest it for 5 years.
NAGMA HAL COOPERATIVE: 2% PER YEAR
Given: P=Php 10,000 r= 2% or 0.02 t=5 years

Interest Maturity
Time Principal
(2%) Value

0 10,000 0 10,000

1 10,000 200 10,200

2 10,200 200 10,400

3 10,400 200 10,600 M=10,000+1,000

4 10,600 200 10,800 M=11,000
5 10,800 200 11,000
Example
John invested 50,000 in a fixed deposit account
with a bank that offers an annual interest rate of
6%. He left the money untouched for three years.
At the end of the three years, he received the
interest on his deposit, but he decided to reinvest it
in the same account for another two years. How
much money will John have in his account after
the five years if he doesn't make any additional
deposits or withdrawals during this time?
Example
•Alice deposited 100,000 in a savings
account that earns an annual interest rate of
8%. After one year, she withdrew 20,000
from the account. Two years later, she
withdrew an additional 30,000. How much
money does Alice have left in her account
after the second withdrawal?
 Compound Interest
•refers to the sum of interests of prior
periods computed on the original or
principal amount and each of the
successive periods on both the
principal and the interest.
 Compound Interest

I = C-P
Where C = Compound Amount
P = Principal Amount
r = rate/interest rate
m=the number of compounding periods per year
t = time in years.
I=Compound interest
 Suppose you received Php 10 ,000 bonus commission for selling 5 house and lot in one
quarter. Then you plan to invest it for 5 years.
NASAK TAN BANK: 2% COMPOUNDED ANNUALLY
Given: P=Php 10,000 r= 2% or 0.02 t=5 years m=1

Interest Maturity
Time Principal
(2%) Value

0 10,000 0 10,000 C = 10 000 [1+0.02] 5

1 10,000 200 10,200 C = 10 000 [1.02] 5
2 10,200 204 10,404 C = 11 040.81
3 10,404 208.08 10,612.08

4 10,612.08 212.24 10,824.32

5 10,824.32 216.49 11,040.81

LET’S PRACTICE!
1. Angela borrowed ₱200,000 for additional working capital from
Prime Lending at 2% interest rate. If Angela wishes to pay in 3
years, how much would she pay?
2. JM has ₱45,000 which he wants to invest. He has two options: a
5%, 2-year portfolio and a 4%, 21-month portfolio. If the rates
given are on an annual basis, which portfolio should he invest in?
3. An investor has ₱240,000 which he intends to invest equally in
two portfolios. One earns a 15% interest compounded
semiannually, while the other earns 9% interest compounded
monthly. How much will his money be after 2 years?
What do you think is the best
interest to use?
If you are going to invest your
money, will you choose those
offering simple interest or
compound interest?
 If you are going to borrow a
money, will you choose lending
companies/investment
institutions offering simple or
compound interest?
Define Simple Annuity.

Solve problems involving Simple

Annuity.
 Definition
An annuity is a sum of money that
is paid in regular equal payments.
 Simple Annuity
It is an annuity certain whose compounding period is the
same as the payment interval.
Example: A deposit of P5000 was made at the end of every
three months to an account that earns 5.6% interest
compounded quarterly.
 Simple Annuity
It is an annuity certain whose compounding period is the
same as the payment interval.
Example: A deposit of P5000 was made at the end of every
three months to an account that earns 5.6% interest
compounded quarterly. Three months
 Classifications of Simple Annuity

1. Ordinary Annuity
It is an annuity in which the periodic payment
is made at the end of each payment interval.
(mortgage, car loans, retirement savings,
insurance)
 Classifications of Simple Annuity

Annuity Due
It is an annuity in which the periodic payment is made
at the beginning of each payment interval. (Rent, leases,
prepaid subscription, loan interest payment, annual
tuition fees)
Future Value and Present Value of a Simple Ordinary Annuity
FV= Future Value of an ordinary annuity

PV=Present Value of an ordinary annuity

R = regular payment

t = time in years

r= interest rate

m=number of compounding periods within

a year
✔ Present value problems involve ✔ Future value problems involve
expenses or cash loans. income or revenue.

Future Value and Present Value of a Simple Annuity Due

R = regular payment

t = time in years

r= interest rate

m=number of compounding periods within

a year
LET’S PRACTICE!
❖ 1. Dr. Alagos is considering a 30-year money loan at 6%
interest compounded monthly. He can make payments of
₱5,000 every end of the month. How much is the largest loan
that he can afford?

❖ 2. Suppose Mr. and Mrs. Bautista deposits ₱10,000 at the

beginning of each year for 5 years in an
investment that earns 9% per year compounded annually.
What is the amount or future value of the annuity?
Use CER: Explain the type of annuity
involved. Then, solve the problem.
Tom is saving for his child's college education. He plans
to deposit 50,000 at the beginning of each year into an
education fund that earns 6% interest per year,
compounded annually. If he makes these deposits for 10
years, what will be the total amount in the education
fund at the end of the 10-year period?
 General Annuity
It is an annuity certain whose compounding period is NOT
the same as the payment interval.
Example: Payments are made at the end of each month for a
loan that charges 1.05% interest compounded quarterly.
 General Annuity
It is an annuity certain whose compounding period is NOT
the same as the payment interval.
Example: Payments are made at the end of each month for a
loan that charges 1.05% interest compounded quarterly.
Three months
Example: Sheldon buys a brand-new TV with installment payment at the
end of each quarter with interest compounded annually.
 General Annuity
It is an annuity certain whose compounding period is NOT
the same as the payment interval.
Example: Payments are made at the end of each month for a
loan that charges 1.05% interest compounded quarterly
Three months
Example: Sheldon buys a brand-new TV with installment payment at the
end of each quarter with interest compounded annually.
 Classifications of General Annuity
1. Ordinary Annuity
It is an annuity in which the periodic
payment is made at the end of each
payment interval.

2. Annuity Due
It is an annuity in which the periodic
payment is made at the beginning of each
payment interval.
 Solving for the Future Value and
Present Value of a General Annuity
1. Identify the given information from the problem.
We need to identify the following values.
𝑅 = regular or periodic payment,
𝑝 = number of regular or periodic payments per year,
𝑟 is the interest rate
𝑚 is the number of compounding periods within a year
𝑛 = total number of payments, given by 𝑛 = 𝑡 ∙ 𝑝, where 𝑡 is the length of the
term in years, and 𝑝 is the number of payments per year.
 Solving for the Future Value and
Present Value of a General Annuity
1. Identify the given information from the problem.
2. Solve for 𝑐.
We introduce another value 𝑐, which is equal to the number of compounding periods over the
number of payments per year. This process transforms the compounding period to the payment
period. It is given by

where 𝑚 is the number of compounding periods, and

𝑝 is the number of payments per year.
 Solving for the Future Value and
Present Value of a General Annuity
1. Identify the given information from the problem.
2. Solve for 𝑐.

This is the periodic interest rate per payment period. It is given by

 Solving for the Future Value and
Present Value of a General Annuity
1. Identify the given information from the problem.
2. Solve for 𝑐.

4. Compute for the Future Value or Present Value.

The following formulas are used in finding the future value and present value of an
ORDINARY GENERAL ANNUITY.
 Solving for the Future Value and
Present Value of a General Annuity
1. Identify the given information from the problem.
2. Solve for 𝑐.

4. Compute for the Future Value or Present Value.

The following formulas are used in finding the future value and present value of a
GENERAL ANNUITY DUE.
 Guide:
1. Determine the COMPOUNDING PERIOD AND
PAYMENT INTERVAL. If the same, SIMPLE ANNUITY.
If not, GENERAL ANNUITY.
2. Future Value: Income or revenue like investment, future funds
and savings.
Present Value: Expenses like loans, cash price, installment.
3. Ordinary Annuity – End
Annuity Due - Beginning
Let’s Practice!
1. Joana is planning to save ₱1,500 every end of the month for the next
four years in a savings account at 2.5% compounded quarterly. Find the
accumulated value of the investments at the end of four years.
Fill in the purple ellipse with
FV (Future Value) or PV (Present Value).

FV (Future Value)

Identify the compounding

period (m) and write it in Write the payment period
Quarterly Monthly (p)
the red ellipse.
Ordinary in the yellow ellipse.

Write the classification of

General Annuity in the
brown ellipse.