MAT 152: Mathematics in the Modern World

Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Lesson title: Mathematics of Finance: Computing Simple Materials: Student Activity Sheets,
Interest and Maturity value Calculator

Learning Targets:
At the end of the module, students will be able to: References:
1. Apply the concept of simple interest to real-world financial Basic Mathematics for Economist by Mike
scenarios, such as loans, investments, or savings accounts. Rosser (2003)
2. Solve problems involving simple interest to loans commonly https://www.splashlearn.com/math-
available to the community. vocabulary/simple-interest

Productivity Tip: Write down your priorities and review them weekly. Take ten minutes to write down your
priorities in life. Think about whether the way you spend your time is in line with these priorities. Repeat this
review process once a week to ensure that you stay on track.

A. CONNECT
A.1 Lesson Preview/Review

Welcome to the world of Business Mathematics! Today, we will explore the mathematical concepts and
techniques that form the backbone of various business operations and decision-making processes. Get ready to
enhance your analytical skills, solve real-world problems, and gain a deeper understanding of how mathematics
drives business success. Let's embark on this exciting journey together!

A.2 Introduction
In this course, we will learn how math is used in the world of business. Understanding simple interest will help
you see how your money can grow over time or how much you will need to pay back if you borrow money. As
we progress through this class, you will learn how these basic math concepts apply to real-world business
situations. Let’s get started and discover the exciting ways math can help us understand and improve the world
of business!

B. COACH

B. 1 Content Notes
Topic: Data Management: Mathematics of Finance: Computing Simple Interest and Maturity value
Reading Comprehension Strategy: Problem Solving.

In this lesson, you'll learn about simple interests. To help us understand, we will use the strategy of problem
solving. Let's adapt Polya's problem-solving framework to improve reading comprehension skills. I will show
you the steps using this strategy. Let's explore the steps together!

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
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 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

1. Understand the problem:

● Before you start reading, make sure you know what the passage is all about. Take a look at the
title and any introduction to get an idea of what you're going to read.
2. Make a Plan:
● Think about how you're going to read the text. You might decide to read it quickly at first to
figure out the main point, and then go back to understand it better.
3. Carry out the plan:
● Read the passage slowly and carefully. Pay attention to important information and any new
words you come across. You may underline important information.
4. Look back:
● Once you've finished reading, think about what you've learned. Did everything make sense to
you? If not, go back and reread the parts you found confusing, then answer the questions that
come after.

Simple interest is a type of interest that is calculated only on the original principal amount of a loan
or investment. It does not take into account any interest that accumulates over time.

In simple interest, the maturity value is what the lender or investor gets back at the end of the loan
or investment time. It's the total amount that includes the money originally borrowed or invested plus
the extra money earned as interest during the loan or investment period.

Key Points:
● Simple interest is straightforward to calculate and is commonly used for short-term loans or
investments.
● It is called simple because it is calculated only on the original principal amount.
● Simple interest is often used in situations where interest payments are made at regular periods,
such as monthly or annually.

Mathematical Formula:
● The formula to calculate simple interest is: I = P × r × t.
● The formula to calculate maturity value is: F = P + I or F = P(1 + rt).

● P is the principal or initial amount of money borrowed or invested.

● r is the annual interest rate, expressed as a decimal.
● t is the time or duration for which the money is borrowed or invested, usually in
years.

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Real-Life Applications:
● Simple interest is commonly used in personal loans, car loans, mortgages, and savings
accounts.
● Understanding simple interest helps borrowers and investors calculate the total amount they will
owe or earn over time.

Importance:
● Simple interest is an important idea in learning about money because it shows us how much it
costs to borrow money and how much we might make from investing it.

Let us answer some reflection questions on the concept of simple interest.

1. What is simple interest? Can you explain it in your own words?

Simple interest is a straightforward method used to calculate the interest on a loan or an investment.
It's called simple because it's based solely on the original amount of money, called the principal.

2. How do you calculate simple interest? What are the main things you need to know to figure it out?
Let's say you borrow some money, or you invest some money, and there's an agreed-upon interest rate
per year. With simple interest, you calculate the interest you owe or earn by multiplying three things: the
principal amount (the initial sum of money), the annual interest rate (expressed as a decimal), and the
time the money is borrowed or invested for (usually in years).

3. How might knowing about simple interest help you when you're dealing with money, like saving or
borrowing?
Understanding simple interests helps you make better decisions with your money. Whether you're
borrowing or saving, knowing how interest works gives you more control over your finances. It helps
you avoid surprises and unnecessary costs by allowing you to plan ahead more effectively.

4. How does changing the amount of money or the interest rate affect the total interest earned or paid?
When you borrow more money or put more money into an investment, or if the interest rate goes up,
you'll end up paying or earning more interest. But if you borrow less or invest less, or if the interest rate
goes down, you'll end up paying or earning less interest.

5. What do you think are the potential risks associated with loans or investments that involve simple
interest?
One problem with loans or investments using simple interest is that borrowers might not know they
have to pay back more money than they thought. Since simple interest doesn't change, borrowers
might be surprised by how much they owe later on. Also, if borrowers don't understand simple interest,
they might agree to loans with high interest rates, making it harder for them to repay what they owe.

And we’re done!

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Adapting Polya's problem-solving method to reading tasks can promote critical thinking, comprehension, and
strategic reading skills. You can use this strategy in any subject! Don't worry if it feels challenging at first; it
takes time to get used to, but it will help you study smarter and make things easier.

B.2 Skill Building Activity

This time, let us solve problems involving simple interest using Polya's four steps in problem solving. We have
learned using this strategy in our SAS# 3. Now, let us maximize its use to solve simple interest loans
commonly available to the community.

1. Maria, who lives in a barangay in the Philippines, took out an SME loan from her local bank to expand
her sari-sari store. She borrowed PHP 50,000 at a simple interest rate of 12% per year. If the loan
needs to be repaid in 3 years, calculate the total interest Maria will pay, and the total amount she needs
to repay at the end of the 3 years.

I. Understand the problem: Understanding the problem means carefully reading it to know what
it's about. We find the important information and be able to identify the given and what is being
asked.
P = Maria took out an SME loan of PHP 50,000 from her local bank.
r = The loan has an annual simple interest rate of 12% which is 0.12 in decimal.
t = The loan needs to be repaid in 3 years.
What is being asked = We need to find out the total interest (I) Maria will pay and the total
amount she needs to repay at the end of 3 years.

II. Make a plan: We will use the formula for simple interest and the formula for the total repayment
amount or the maturity value.
Simple Interest (I) formula: I = P × r × t
Maturity value (F) formula: F = P + I

III. Carry out the plan: Let's use the given values to calculate the total interest and total amount
Maria needs to repay.
a. Solve the simple interest (I).
I = P × r × t = PHP 50,000 x 0.12 x 3
= PHP ___________
b. Calculate the total repayment amount or the maturity value (F).
F=P+I
= PHP 50,000 + PHP ___________
= PHP ___________

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

IV. Look back: We check at our solution and see if it makes sense and if it answers the problem
correctly. Lastly, interpret our answer.

By following Polya's four-step method, we have solved the problem methodically and
accurately. Maria will pay PHP ___________ in interest, and the total amount she needs to
repay at the end of 3 years is PHP ___________.

You may also use an online calculator to check your answers. Check the link below for an example of an
online calculator that you may use. Explore it and compare your answers in the SAS.
https://goodcalculators.com/simple-and-compound-interest-calculator/

C. CHECK

C.1 Check for Understanding

Alright, everyone! Today, we'll tackle simple interest problems step-by-step using Polya's method and answer
the 3Cs questions - Concerns, Connections, and Considerations, based on the given problem.

Note: This activity is going to count for 20% of your quiz 3 grade while the remaining 80% is completed
through pen and paper tasks. Let's make every moment count and dive right in!

1. An employee takes out an SSS salary loan of ₱30,000 at an annual interest rate of 10% for 2 years.
Determine the interest charged and the total repayment amount.
Solution:
I. Understand the problem:

II. Make a plan:

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

III. Carry out the plan:

IV. Look back:

Concern:
How might the annual interest rate of 10% for a loan impact the employee's overall financial stability
and ability to repay the loan?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

Connections:
How does the idea of simple interest in this loan situation relate to bigger ideas about knowing interest
rates and loan conditions?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

Considerations:
How might the repayment period (in this case, 2 years) affect the total repayment amount and the
employee's ability to manage loan payments?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

2. Maria is a member of the Pangasinan Development Cooperative (PANDENCO) and decides to invest
₱150,000 with the cooperative. PANDENCO offers an annual simple interest rate of 4.5%. Maria plans
to keep her investment for 4 years and 3 months. Calculate the interest Maria will earn and the total
amount she will have at the end of the investment period.

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Solution:
I. Understand the problem:

II. Make a plan:

III. Carry out the plan:

IV. Look back:

Concern:
How might the duration of Maria's investment (4 years and 3 months) impact her financial plans and
overall investment strategy?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

Connections:
How does Maria choosing to invest her money with PANDENCO relate to important money rules like
spreading out her investments, being careful about risks, and planning for the future?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Considerations:
How could the duration of time Maria keeps her investment affect how much extra money she makes
from interest and how well her investments grow over time?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

D. CONCLUDE

D.1 Summary / Frequently Asked Questions

1. What is simple interest, and how does it apply to real-life financial scenarios?

Simple interest is a straightforward method of calculating interest based on the initial principal
amount, interest rate, and time period. It's commonly used in loans, investments, and savings
accounts to determine how much interest is earned or owed over time.

2. How do you calculate simple interest for loans available in the community?

To calculate simple interest for loans, you multiply the principal amount by the interest rate and
the time period (usually in years). The formula is: Interest = Principal × Rate × Time. This helps
borrowers understand how much they'll owe in interest over the loan term.

3. How can simple interest calculations help individuals make better financial decisions?

Simple interest calculations provide clarity on the cost of borrowing or the return on investment.
By understanding how interest accrues over time, individuals can assess the affordability of
loans, compare investment opportunities, and manage their finances more effectively.

D.2 Thinking about Learning

Never give-up! Keep exploring! Let’s talk about your learning experience.

1. What routines, behaviors, actions help you work better? Describe how it helps.
__________________________________________________________________________________
__________________________________________________________________________________

2. What could you have done better to improve your learning today?
__________________________________________________________________________________
__________________________________________________________________________________

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.
 MAT 152: Mathematics in the Modern World
Module #13

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

D.3. Glossary of Terms

Accumulates - refers to the gradual growth of the total amount of money over time due to the
addition of interest.

Mortgage - a type of loan used to finance the purchase of real estate, such as a home or
property.

Regular periods - typically refers to consistent intervals of time during which interest is
calculated.

SME loan - a loan intended to help small and medium-sized businesses (SMEs) grow and
handle their daily operations.

Learning Modules by PHINMA Education is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International License.