A rational function is a function that is a ratio of polynomials.

Any function of one variable, x, is called a

rational function if it can be represented as
p(x )
f (x)= ,
q (x)

where p(x ) and q (x) are polynomials and q (x)≠ 0.

2
x + x−2
For example, f (x)= 2
is a rational function, and here, 2 x 2−2 x−3≠ 0 .
2 x −2 x −3
We know that every constant is a polynomial, and hence the numerators of a rational function can be
1
constants also. For example, f (x)= is a rational function.
3 x +1
2 x+ 3
But note that the denominators of rational functions cannot be constants. For example, f (x)= is
4
NOT a rational function. Rather, it is a linear function.

HOW DO WE REPRESENT A RATIONAL FUNCTION?

Rational functions can be described and represented using an equation, table of values, or graph.

HOW TO GRAPH RATIONAL FUNCTION?

Graphing rational function can be easily demonstrated by using the ordered pairs in the table of values
generated from the rational function or by plugging in the function in desmos. It is important to note that
when graphing a rational function, finding the equation of its asymptotes is necessary.

A rational function can have three types of asymptotes: horizontal, vertical, and slant asymptotes. Apart
from these, it can have holes as well. Let us see how to find each of them.

2
x +5 x+6
Using Desmos, let us consider the graph of f (x)= 2 .
x + x−2
In the illustration above, there is a hole in the graph, that is, a single point at which the function has no
value. That is the point (-2, -⅓).

Recall that the asymptotes are an imaginary line to which the function graph appears very close but never
touches. In the graph above, the vertical asymptote is the line x=1 represented by the blue dashed line.
The horizontal asymptote is the line y=1 represented by the green dashed line. However, we do not
have a slant asymptote as illustrated above.

Now let us verify our graph by looking at the equations of the rational functions.

Holes of Rational Functions

The holes of a rational function are points that seem that they are present on the graph of the rational
function, but they are actually not present. They can be obtained by setting the linear factors that are
common factors of both the numerator and denominator of the function equal to zero and solving for x.
Every rational function does NOT need to have holes. Holes exist only when the numerator and
denominator have common linear factors.
2
x +5 x+6
Example: Find the holes of the function f (x)= 2
.
x + x−2
Solution:

Let us factorize the numerator and denominator and see whether there are any common factors.

(x+ 2)(x +3)

f (x)=
(x +2)¿ ¿

(̶ x̶ ̶ +̶ ̶ 2 ̶ )̶ (x+ 3)
¿
̶ (̶ x̶ ̶ +̶ ̶ 2̶ )̶ (x−1)

x+3
¿
x−1

−2+3 −1
Since (x +2) is a common factor, there is a hole when x=−2. Its y-coordinate is f (−2)= = .
−2−1 3

−1
Thus, there is a hole at (-2, ).
3

Vertical Asymptote of a Rational Function

A vertical asymptote (VA) of a function is an imaginary vertical line to which its graph appears to be very

close but never touch. It is of the form x = some number. Here, "some number" is closely connected to the

excluded values from the domain. But note that there cannot be a vertical asymptote at x = some number

if there is a hole at the same number. A rational function may have one or more vertical asymptotes. So to

find the vertical asymptotes of a rational function:

● Simplify the function first to cancel all common factors (if any).
● Equate the denominator to 0 and solve for x (or equivalently just get the excluded values
from the domain by avoiding the holes).
2
x +5 x+6
Example: Find the vertical asymptotes of the function f (x)= 2 .
x + x−2
Solution:

x +3
We have already seen that this function simplifies to f (x)= .
x−1
Setting the denominator to 0, we get

x-1=0

x=1
Thus, there is a VA of the given rational function is, x = 1.

Horizontal Asymptote of a Rational Function

A horizontal asymptote (HA) of a function is an imaginary horizontal line to which its graph appears to be
very close but never touched. It is of the form y = some number. Here, "some number" is closely
connected to the excluded values from the range. A rational function can have, at most, one horizontal
asymptote.

The easy way to find the horizontal asymptote of a rational function is by using the degrees of the
numerator (N) and denominators (D).

● If N < D, then there is a HA at y = 0.

● If N > D, then there is no HA.
● If N = D, then the HA is y = ratio of the leading coefficients.

2
x +5 x+6
Example: Find the horizontal asymptote (if any) of the function f (x)= 2
.
x + x−2

Solution:

Here, the degree of the numerator is N = 2, and the degree of the denominator is, D = 2.

leading coefficient of numerator 1

Since N = D, the HA is y= = =1.
leading coefficent of denominator 1

Thus, the HA is y = 1.

Slant (Oblique) Asymptotes of a Rational Function

A slant asymptote is also an imaginary oblique line to which a part of the graph appears to touch. A

rational function has a slant asymptote only when the degree of the numerator (N) is exactly one greater

than the degree of the denominator (D). Its equation is y = quotient which is obtained by dividing the

numerator by the denominator using the long division.

2
Example: Find the slant asymptote of the function f(x) =
x .
x+1

Solution:

Here, the degree of the numerator is 2, and that of the denominator = 1. So it has a slant asymptote.
Let us divide x2 by (x + 1) by long division.

Thus, the slant asymptote is y=x −1.

HOW TO FIND THE DOMAIN, RANGE, AND INTERCEPTS?

Any fraction is not defined when its denominator is equal to 0. This is the key point that is used in finding
the domain and range of a rational function.

The Domain of Rational Function

The domain of a rational function is the set of all x-values that the function can take. To find the domain of
a rational function y = f(x):

1. The denominator must not be equal to zero. If this happens, the function will be
undefined. So, set the denominator ≠ 0.
2. Solve for x .
3. The domain is the set of real numbers except for the value you got in number 2.

2 x +1
Example: Find the domain of f (x)= .
3 x−2
Solution:
Step 1: We set the denominator not equal to zero. The function will be undefined if the denominator is
equal to zero.
3 x−2 ≠ 0
Step 2: Solve for x .
3 x−2+2 ≠ 0+2
3 x≠2
2
x≠
3
Step 3:
2
Thus, the domain = { x ∈ R | x≠ }. This refers to the set of real numbers except ⅔.
3
Range of Rational Function
The range of a rational function is the set of all outputs (y-values) that it produces. To find the range of a
rational function y= f(x):
1. If we have f(x) in the equation, replace it with y.
2. Solve for x. This means you need to have an equation of the form x = an expression.
3. Set the denominator of the resulting equation ≠ 0 and solve for y.
4. Set the range as all real numbers other than the values of y mentioned in the previous step.
2 x +1
Example: Find the range of f (x)= .
3 x−2
Solution:
2 x +1
Let us replace f(x) with y. Then y= . Now, we will solve for x.
3 x−2
Applying cross-multiplication, the result is
(3 x−2)( y )=2 x +1
Perform multiplication on the left side of the equation.
3 xy−2 y=2 x +1
The goal is to have x = an expression. So, apply the properties of equality to have all expressions with x
on one side.
3 xy−2 y−2 x=2 x−2 x+1
3 xy−2 y−2 x=1
3 xy−2 y +2 y−2 x=1+2 y
3 xy−2 x=1+2 y

Factor out x .

(x )(3 y−2)=1+2 y
1+2 y
x=
3 y−2
Now, the denominator should not be equal to zero.
3 y−2 ≠ 0
2
y≠
3

So, the range = {y ∈ R | y ≠ 2/3}. This refers to the set of real numbers except ⅔.
HOW TO FIND THE INTERCEPTS OF A RATIONAL FUNCTION?

The x-intercept of a line is the point where it cuts the x-axis of the graph, and the y-intercept of a line is
the point where it cuts the y-axis of the graph.

x +10
Let us consider a rational function given by f (x)= .
x−5
We will try to find the x-intercept and y-intercept for the given rational function.

To find the y-intercept, we must substitute x = 0 in f(x):

x +10
f (x)=
x−5
0+10 10
f (0)= = =−2
0−5 −5

After substituting the value of x as 0 in the function, we get, f(x) = -2

Therefore, the y-intercept of rational function f (x) is (0, -2).

To find the x-intercept, we must substitute y=0, that is, f(x) = 0, that is:

x +10
f (x)=
x−5
x +10
0=
x−5
0( x−5)=x+ 10
0=x+10
−10=x

After substituting the value of y as 0 in the function, we get, x = -10

Therefore, the x-intercept of the function f(x) is (-10, 0).

Hence, to find the x-intercept of a rational function, we substitute y = 0 in the function and find the
corresponding value of x, and to find the y-intercept of a rational function, we substitute x = 0 in the
function and find the corresponding value of y.

Note that we can also figure out the domain, range, and intercepts by looking at its graph. Watch
examples here to learn how to find these values from the graph of the rational function.

HOW DO WE SOLVE RATIONAL FUNCTIONS?

To solve rational function problems, you need to do the following:

1. Make a representation of the unknowns
2. Set up the working equation/function
3. Solve algebraically and simplify.
Consider the following example below:

You are planning to build a company that manufactures bags. The fixed monthly cost will be Php400,000,
and it will cost Php 550 to produce each bag. Find the average cost of producing 500 bags in a month.

Step 1: Make a representation

Let x be the number of bags produced
C(x) be the total monthly cost
A(x) be the average monthly cost

Step 2: Set up the working function

Since the fixed amount is given to be Php400,000 and the cost to produce a bag is Php550. This means
that the cost of producing x amount of bags is 550x. Hence the total monthly cost would be
C(x) = 550x + 400,000

Now, to find the average cost, we just divide it by the total number of bags produced which is x. Here the
average cost function would be

550 x + 400000
A(x) =
x

Step 3: Solve algebraically and simplify

Since we are asked to find the average cost of producing 500 bags in a month, then we can just
substitute x as the average cost function above, that is:

550(500)+ 400000 275,000+400,000 675,000

A(500)= = = =Php 1,350
500 500 500

Hence, the average cost of producing 500 bags is Php 1,350.

WHAT IS A BUSINESS LOAN?
A business loan is any kind offered to a commercial entity rather than an individual person. It is a lending
agreement between a lender and a business in which the lender gives money to the business, and the
business pays it back in an agreed-upon amount of time with an agreed-upon amount of interest. It may
be used to start a business or to have a business expansion.

WHAT IS A CONSUMER LOAN?

A consumer loan is defined as money, goods, or services provided to an individual without immediate
payment for personal or family use.

Related Loan Terms

Collateral – assets used to secure the loan. It may be real estate or other investments

Term of the loan – time to pay the entire loan

Guarantor – a person who guarantees to pay for someone else’s financial obligation if the borrowers fail
to do so.

WHAT IS THE DIFFERENCE BETWEEN BUSINESS AND CONSUMER LOANS?

Term of Reference Business Loan Consumer Loan

Collateral May require collateral (real May also require a collateral

estate, other investment,
equipment, fixtures, or furniture)

Guarantor Require the business owner to Does not usually require a

sign as a guarantor guarantor

Documents Some include a credit report, Some include credit reports,

income tax returns, and the bank statements, and income
company's financial statement. tax returns. If employed, a
certificate of employment and
pay slips will be submitted.

Term of Loan Typically shorter-term Typically longer-term

Interest Rate In most cases higher in interest In most cases lower in interest
rate rate

Examples:

1. Andrea recently finished her short course on hair and makeup. She is planning to put up her small
salon. She was advised by her friends to apply for a bank loan. Which loan will she apply for? A business
loan or a consumer loan?

Answer: Andrea needs a business loan since she plans to use the money to start her salon business.

2. Mr. Zion is an environmentalist planning to conduct a mangrove planting at Brgy. Barra. He wants to
cover all the expenses for this activity, but he realizes his money is insufficient. Hence, he needs to
borrow money to finance his advocacy. Is he going to apply for a business loan or a consumer loan?

Answer: Mr. Zion will apply for a consumer loan since the money he will borrow is for the finances of his
activity.

A mortgage is a business loan or consumer loan that is secured with collateral. Collaterals are assets
that can secure a loan. If a borrower cannot pay the loan, the lender has a right to collateral. The most
common collaterals are real estate property. For business loans, equipment, furniture, and vehicles may
also be used as collateral. Usually, the loan is secured by the property bought. For example, if a house
and lot are purchased, the purchased house and lot will be used as a mortgaged property or collateral.
During the term of the loan, the borrower in the mortgage still has the right to possess and use the
mortgaged property. In the event that the borrower does not make regular payments on the mortgage, the
lender in a mortgage can repossess the mortgaged property.
Amortization is paying a loan and its interest through a series of regular equal payments. A monthly
amortization would refer to your regular monthly payments to pay off your loan or debt.

Here are some examples of problems involving loans.

Example 1: Mr. Garcia borrowed P1,000,000 for the expansion of his business. The effective rate of
interest is 7%. The loan is to be repaid in full after one year. How much is to be paid after one year?

Solution:

𝑃 = 1,000,000. This is the amount borrowed.

Given:

𝑛 = 1 , which represents 1 year for the loan term

r = 0.07 or 7%. This is the interest rate

Find A. Applying the interest formula,

A=P¿
A=1,000,000 ¿
A=1,000,000(1.07)
A=1,070,000

Therefore, the amount paid after one year is Php 1,070,000.

Example 2: A person borrowed Php 1,200,000 for the purchase of a car. If his monthly payment is Php
31,000 on a 5-year mortgage, find the total amount of interest.

Solution:
P = 1,200,000
Monthly payment = 31, 000
The total amount paid is given by

Total Amount = (31,000)(12 months)(5 years) = 1,8600,000

Thus, the total interest is the difference between the total amount paid and the amount of mortgage;

Total Interest = 1,860,000 – 1,200,000 = 660,000

Therefore, the total interest of the 5-year mortgage is 660,000.

Example 3: A house is sold for P 3,000,000, and the bank requires a 20% down payment. Find the
amount of the mortgage.

Solution:
To determine the amount of the downpayment, find the 20% of the price of the house. Thus,
(0.20)(3,000,000) = 600,000

You will need to pay Php 600,000 as the down payment.

The remaining amount will be,
3,000,000 - 600,000 = 2,400,000

The mortgage amount is Php 2,400,000.

HOW TO DETERMINE LOAN AMORTIZATIONS?

The periodic payment R for an amortized loan P at an interest rate i to be paid in n installments is given
by the formula

P¿

For more details as to how this formula was derived you can watch it here.

Consider the examples below.

Example 1: An amortized car loan of P1,000,000 for purchasing a brand-new car is granted to Mr.
Enriquez by a bank. If the loan is to be paid in 5 years at an annual interest rate of 12%, find the monthly
amortization.

Solution:
The number of payments to be made is n=(12)(5)=60 .

12 %
The monthly interest rate is i= =1 %=0.01.
12

The principal is P = P1, 000, 000.

Substituting these values to the formula for finding payments on an amortized loan gives P¿
(1 , 000 , 000)¿
1 , 816,696.699=𝑅 (81.66966986)
1 , 816 , 696.699
R=
81.66966986
𝑅 ≈ 22, 244.45

People pay installments in insurance, loans, educational plan, retirement plan, or major purchases (e.g.,
appliances, property). Payments by installments are made periodically and in equal amounts. This
payment scheme is called an annuity.

An annuity is a sequence of payments made at equal, fixed intervals or periods of time.

WHAT IS A SIMPLE ANNUITY?

A simple annuity is an annuity in which the payment period is the same as the interval period (interest
conversion/compounding period).

For example,
If you invest Php 20 000 at the end of each year for 5 years in an account that pays interest at 10 %
compounded annually.

In this scenario,

Php 20,000 is the regular or periodic payment, R. This refers to the fixed monthly payments that must
be contributed yearly. Contributing every year refers to the payment interval/period. The payment
period is the time between successive payments.

The investment annuity has a term of 5 years. The term of an annuity, t refers to the time between the
first payment interval and the last payment interval.

The interest is compounded annually. This means that the interest conversion or compounding period
is every year. The interest conversion/period is when the interest earns interest.

The periodic payment is made at the end of each year. This type of annuity is classified as an ordinary
annuity. Ordinary annuities are regular payments made at the end of each payment interval. On the other
hand, if the payments are made at the beginning of each payment interval, it is called annuity due.

The above example illustrates a simple annuity because the payment period and interest period are the
same, which is every year.

HOW TO SOLVE SIMPLE ANNUITY PROBLEMS?

Solving simple annuity problems involves calculating the present and future value.

The future value of an annuity is the total accumulation of the payments and interest earned.

The present value of an annuity is the principal that must be invested today to provide the regular
payment of an annuity. It is the total amount a future value (series of future payments) is worth now. It can
also be the total amount of money needed at the current time to produce the target future value. Most of
the time, you can also solve for the cash value/price of a certain property loan by adding the present
value and the downpayment, if any.

The following formulas are used in solving simple ordinary annuity problems:
Present Value Future Value

P=R 1−¿ ¿ F=R ¿ ¿

Where Where

P - Present value F - Future value

R - regular payment R - regular payment

Simple Annuity r r
i - interest rate per period ; (i = , r is i - interest rate per period ; (i = , r is
f f
the annual rate, f is the number of the annual rate, f is the number of
 conversion period in a year) conversion period in a year)

n = total number of conversion periods ; n = total number of conversion periods ;

( n=t(f ), t is the term of the annuity) ( n=t(f ), t is the term of the annuity)

Consider the following examples below:

Example 1: You decided to join a Kabataan Savers Club which aims for financial growth of the youth
nowadays. If you pay Php 1,000.00 at the end of each month for 5 months on an account that pays
interest at 12% compounded monthly, how much money will you have after 5 months? How much money
must be contributed as a one-time payment in the first month to produce the same future value?

Solution:
We will use a simple annuity since the interest conversion is equal to or the same as the payment period.

Identifying the given, we have

R = Php 1,000
r 12 %
i= = =1 %=0.01
f 12
5
t=
12
5
n=t(f )=( )(12)=5
12

To find the amount of money after 5 months, we will use the formula:

F=R ¿ ¿

Then substituting all the given facts, we will obtain:

F=1,000 ¿ ¿
F=1000 ¿ ¿
F=Php 5,101.01
Hence, the amount of money after 5 months will be Php 5,101.01.

On the other hand, to find the amount of money needed to be contributed as a one-time payment to
produce the same future value, we use the formula for the present value:

P=R 1−¿ ¿

Substituting the same given above, we yield:

P=1000 1−¿ ¿
P=1000 1−¿ ¿
P=Php 4,853.43

This means that you pay a one-time payment at the first month of Php 4,853.43, you will have the future
value of Php 5,101.01.

It is important to note that the total sum of the periodic payments or the total amount invested by
installments is not the same as the present value. This is because the present value can be worth more
and earn much more interest than the amount of money contributed by installment in a later month.

In the example above, the future value of Php 5101.01 (5 months later) is just worth Php 4853.43 at the
present time.

As you notice, the future value is higher than the present value. This is because of the time value of
money. But the concept is that any given sum is worth more now than it will be in the future because it
can be invested in the present.

Example 2: Mr. Tura paid Php 200,000.00 as a downpayment for a car. The remaining amount is to be
settled by paying Php 16,200.00 by the end of each month for 5 years. If interest is 10.5% compounded
monthly, what is the cash price of his car?

Solution:

To solve this, let us identify the given:

Downpayment = Php 200,000.00

R = Php 16,200
r 10.5 % 0.105
i= = = =0.00875
f 12 12
n=t(f )=5(12)=60

Since this problem is asking for the cash price of the car, this is asking for the cash value. So, we use the
formula:
 P=R 1−¿ ¿

Plugging in the given values, we obtain:

P=16,200 1−¿ ¿
P=16,200 1−¿ ¿
P=753,702.20

To get the cash value, simply add the obtained present value and the downpayment made, so;

CV= 200,000 + 753,702.20 = 973,702.20

Hence, the total cash value/price of the car is ₱ 973,702.20.

General Annuity is a type of annuity in which the payment period is not the same as the interval period
(conversion period).

Consider the example below:

1. A monthly installment of a car with an interest rate compounded annually.

2. Paying a debt semi-annually when the interest is compounded monthly

In example 1, the payment period is monthly. However, the interest period is annually or per year.
Likewise, example 2 has a semi-annual payment period, but the interest period is monthly. The payment
period differs from the interest/conversion period. Hence, these are both general annuities.

The terms used in the simple annuity are similar to the general annuity.

HOW TO SOLVE GENERAL ANNUITY PROBLEMS?

For this module, we will only be working on general ordinary annuities.

Solving simple annuity problems involves calculating the present and future value of an investment or
loan.

The following formulas are used in solving general ordinary annuity problems:

Present Value Future Value

P=R 1−¿ ¿ F=R ¿ ¿

Where Where

P - Present value F - Future value

R - regular payment R - regular payment

 General Annuity i - interest rate per payment period i - interest rate per payment period
converted from the interest rate per converted from the interest rate per
period. period.
i=¿ , i=¿ ,
r is the annual rate, f is the number of r is the annual rate, f is the number of
compounding periods in a year, p is compounding period, p is the payment
the number of payment periods in a interval
year
n = total number of payments ; (
n = total number of payments ; ( n=t( p), t is the term of annuity)
n=t( p), t is the term of annuity )

Consider the following examples below:

Example 1: Annual payments of ₱1,000.00 at the end of each term for 8 years with an interest rate of 6%
compounded quarterly. Find the present and the future value

If you will notice, the interest conversion period is different from the payment interval. Since this is the
case, we will refer to the general annuity.

We have the given values as:

R = ₱1,000.00
r = 6%
f=4
p=1
t=8
n =t(p) = 8(1) = 8

Now find the interest rate per payment period, that is:
i=¿
i=¿
i=¿
i=0.06136355062

Now we solve first the future value using the formula:

F=R ¿ ¿
Substituting the given values, we obtain:
F=1,000 ¿ ¿
F=1,000 ¿ ¿
F=9,946.04

Hence, the future value is Php 9,946.04.

Now to solve for the present value, we use the formula:

P=R 1−¿ ¿

Substituting the given values, we obtain:

P=1,000 1−¿ ¿
P=1,000 1−¿ ¿
P=6,176.42

Hence the present value is Php 6,176.42.

Example 2: Mrs. Marzo would like to buy a television set payable monthly for 6 months starting at the
end of the month. How much is the cost of the TV set if the downpayment is Php 6,500 and her monthly
payment is Php 3,000 with 9% interest compounded semi-annually?

Solution:
This problem is asking for the cost of the tv set this means we are looking for the cash value of the TV
set. Note that the cash value can be determined by adding the downpayment and its present value, that
is:

CV = downpayment + present value

Now we are given the following:

Downpayment = P6,500
R = ₱3,000.00
r = 9%
f=2
p = 12
6
t=
12
6
n =t(p) = (12)=6
12

Now find the interest rate per payment period, that is:
i=¿
¿¿
¿ 1.00736312303−1
¿ 0.00736312302

Now to solve for the present value, we use the formula:

P=R 1−¿ ¿

Then we can obtain:

P=3,000 1−¿ ¿
¿ 3,000 1−¿ ¿
 1−0.95693779907
¿ 3000
0.00736312302
0.04306220092
¿ 3000
0.00736312302
¿ 3000 ¿)
P=17545.08

The cost of the TV set is:

Cash Value = 17545.08 + 6500 = Php 24, 045.08

WHAT IS A CASH FLOW?

A cash flow is a term that refers to payments received (cash inflows) or payments or deposits made
(cash outflows). Cash inflows can be represented by positive numbers, and cash outflows can be
represented by negative numbers.

The cash flow report is important because it informs the reader of the business's cash position. For a
business to be successful, it must always have sufficient cash. It needs cash to pay its expenses, pay
bank loans, pay taxes, and purchase new assets.

WHAT IS A FAIR MARKET VALUE?

The fair market value or economic value of a cash flow (payment stream) on a date refers to a single
amount equivalent to the value of the payment stream at that date. This date is called the focal date.

HOW TO CALCULATE THE FAIR MARKET VALUE OF A CASH FLOW?

The concepts of the present and future values of an ordinary annuity are necessary to determine the fair
market value of a cash flow.

Remember the following formulas:

Future Value of Ordinary Annuity Present Value of Ordinary where:

Annuity

F=R ¿ ¿ P=R 1−¿ ¿ R = is the regular payment

i = is the equivalent rate per
payment.
r
i= (for simple)
f
i=¿ (for general)
n = is the total number of
payments

To better visualize the fair market value of a cashflow we use a time diagram as follows:
Payment R R R R ... R
__________________________________________________
Period 0 1 2 3 4 ... n

The above time diagram describes a cash flow with regular payments R that has n-payments. It is
important to note that this is an ordinary annuity, the regular payments start at the end of the payment
period.

Consider the following example below:

Example: Your mom receives an offer from 2 companies for the lot that she is selling. Company A offers
₱150,000 at the end of 3 years plus ₱300,000 at the end of 5 years. Company B offers ₱25,000 at the
end of each quarter for the next 5 years. Assume that money is worth 8% compounded annually. Which
offers have a better market value?

Given:
Company A Company B

₱150,000 at the end of 3 years ₱25,000 at the end of each quarter for the next 5
₱300,000 at the end of 5 years years
8% compounded annually 8% compounded annually

Find: the fair market value of each offer

Solution:
We can use a time-diagram to visualize each of the offers easily:

Company A:

Payment 150,000 300,000

___________________________________________________
Period 0 1 2 3 4 5
Company B:

Payment 25,000 25,000 25,000 ... 25,000

___________________________________________________
Period 0 1 2 3 ... 20

The number of payment periods is 20 since regular payments must be made every quarter so there are 4
payments in a year then a total of 20 payments in 5 years.

Choose a focal date and determine the values of the two offers at that focal date. We can choose the
focal date at the start of the term if we want to compare the present value of the investment or offers. On
the other hand, we can also choose the focal date at the end of the term if we want to compare its future
value. Either way, we can make a sound decision about which offer or investment is preferable.

Say, for example, we choose the focal date as the date at the start of the term.
Since the focal date is at t=0, we have to compute and compare the present value of each other.

Company A offer:

The present value of ₱ 150,000 three years from now that has 8% interest compounded annually can be
determined using the compound interest formula:

A=P¿

Substitute the given values

150,000=P 1 ¿
150,000=P 1 ¿
150,000
¿¿
119074.84=P1

The present value of ₱300,000 five years from now that has 8% interest compounded annually is:

300,000=P 2 ¿
300,000=P 2 ¿
300,000
¿¿
204174.96=P2

Fair Market Value=P1 + P2

¿ 119074.84 + 204174.96
¿ ₱ 323,249.8

Hence, the fair market value of company A is Php 323, 249.8. This means that Company A is
buying the lot property of your mom at present for Php 323, 249.8.

Company B:

Since the payment period (quarterly) is not the same as the interest conversion period (annually), then we
use the general annuity to find its market value.

We need to convert first the interest rate per payment period:

i=¿

We have the following given above:

R = 25,000 (quarterly)
r = 8% = 0.08
f = 1 (compounded annually)
t = 5 years
p = 4 (quarter payments)
n = t(p) = 5(4) = 20

Now we got:

i=¿ 0.0194265469

Substituting in the General Ordinary Annuity formula for finding the present value, we obtain:
P=R 1−¿ ¿
P=25,000 1−¿ ¿
P=411,057.10

Hence the fair market value for Company B is Php 411,057.10. This means that Company B is
buying the lot property of your mom at present for Php 411,057.10.

Therefore, Company B's offer is preferable since its market value is larger.

NOTE: When there is a downpayment, then the fair market value is the sum of the present value
and the downpayment. Otherwise, it is just the present value.

Recall that you can also solve the fair market value by choosing the focal date as the end of the term. In
that case, you use the future value instead of the present value. When a downpayment is given, you can
find the fair market value by adding the future value of the downpayment and the future value of the
regular payments.

Solving for the fair market value with the focal date at the end of the term is left as an exercise for you to
practice.

WHAT IS A ONE-TO-ONE FUNCTION?

Before learning about the inverse of a function, it is important to determine what type of function you’re
dealing with.

Example 1: Suppose Kidzoona charges Php 300 for an hour of play. Your baby brother wants to play in
the said location.

The amount of payment f(x) depends on the number of hours x. The function can be defined as f(x)=300x.
This is a one-to-one function because every hour has a corresponding unique value or payment.

The function f is one-to-one if for any x1, x2 in the domain of f then 𝑓(x1) ≠ 𝑓(x2). That is the same y-
value is never paired with two different x values.

A function has an inverse if and only if it is one-to-one.

WHAT IS AN INVERSE FUNCTION OF A FUNCTION?
A function and its inverse can be described as the "DO" and the "UNDO" functions. A function takes a
starting value, performs some operation on this value, and creates an output answer. The inverse function
takes the output answer, performs some operation on it, and arrives back at the original function's starting
value.

The inverse of f(x) is denoted as f-1(x).

Refer to the illustration below.

f-1

HOW TO DETERMINE THE INVERSE FUNCTION OF A FUNCTION?

Let’s consider some examples.

Example: Find the inverse of f(x)=3x+1.

In this function, the variable x is multiplied by 3. Then, the product is added to 1. Refer to the illustration
below.
x → 3x → 3x+1

To get the inverse, we perform the inverses of the operations starting from the last operation.
x → x-1 → x-13
The variable x is subtracted by 1. Then, the expression is divided by 3.
So, the inverse function is
f-1(x)=x-13

As functions look more complicated, you will need a better way to find their inverses. You may follow the

write the function in the form 𝑦 = 𝑓(𝑥)

following steps.

interchange the x and y variables

solve for y in terms of x. This is because we are interchanging the input and output values of a function.

write the function in the form 𝑦 = 𝑓(𝑥)

An alternative is to

solve for x in terms of y

interchange the x and y variables

Example: Find the inverse of f(x) = 3x + 1

1. write the function in the form 𝑦 = 𝑓(𝑥). → 𝑦 = 3𝑥 + 1

Solution 1:

→ 𝑥 = 3𝑦 + 1
→ 𝑥 = 3𝑦 + 1
2. interchange the x and y variables.
3. solve for y in terms of x.
 𝑥 − 1 = 3𝑦 (Add (-1) both sides)
x-13=y (Divide 3 both sides)

Therefore, the inverse of f(x)=3x+1 is f-1(x)=x-13 .

1. write the function in the form 𝑦 = 𝑓(𝑥). → 𝑦 = 3𝑥 + 1

Solution 2:

2. solve for x in terms of y

y=3x+1
y-1=3x+1-1
y-1=3x
y-13=x

3. interchange the x and y variables

x-13=y

Therefore, the inverse of f(x)=3x+1 is f-1(x)=x-13

HOW TO REPRESENT INVERSE FUNCTION?

We can represent inverse functions just like any function by an equation, table of values, and graphs. To
represent the equation of the inverse of a one-to-one function, just follow the steps in determining the
inverse function above.

Example: Find the inverse of the function 𝑓(𝑥) = 2𝑥 + 1. Present a table of values, the graph of the
original function, and its inverse.
Just like solving any other functions, we evaluate inverse functions by substituting the given input values
or output values for the given function.

Consider the example below:

−1 x−15,000
The inverse function f (x)= describes the distance traveled by a car in kilometers as a
8
function of car rental charge (x).

a. Determine the distance traveled for a car rental charge worth Php 19,000.
b. How much should be charged for a 100 km distance traveled?

SOLUTION:
Note that, x represents the car rental charge
−1
f (x) represents the distance traveled in kilometers

a. Determine the distance traveled for a car rental charge worth Php 19,000.

Substitute PhP19 000.00 as the value of x in the given inverse function.

 That is,

−1 x−15,000 −1 19,000−15,000 4,000

f (x)= → f (x )= = =500 km
8 8 8
Therefore, the distance traveled for a car rental charge of Php19,000 will be 500
kilometers.

b. How much should be charged for a 100 km distance traveled?

Substitute 100 km as the value of f −1 (x) and obtain:

x−15,000
100=
8
100( 8)=x−15,000
800+15,000=x
Php 15,800=x
Hence, the car rental charge for a 100 km distance traveled will be Php 15,800
Logarithm (log) is another way of expressing exponents and can be used to solve problems that cannot
be solved using the concept of exponents only.

Logarithm and exponent are inverse forms of each other.

HOW TO REPRESENT A LOGARITHM?

A logarithm is defined using an exponent. The equation b x =a is the same as lo g b a=x .

b =a ⇔ lo g b a=x
x

Here, "log" stands for logarithm. The right side part of the arrow is read to be "logarithm of a to the
base b is equal to x".

A simple way to remember this is "base stays as the base in both forms" and "base doesn't stay with
the exponent in log form". Notice that 'b' is the base both on the left and right sides of the implied
symbol, and in the log form, see that the base b and the exponent x don't stay on the same side of the
equation.

Here,
a and b are two positive real numbers.
x is a real number.
a , which is inside the log is called the "argument".
b , which is at the bottom of the log is called the "base".

Here is a table to understand the conversions from one form to the other.
Exponential Form Logarithmic Form

25 = 32 lo g 2 32=5
 62 = 36 lo g 6 36=2

3-2 = 1/9 1
lo g 3 =−2
9

e2 = 7.389 lo g e 7.389=2

103 = 1000 lo g 10 1000=3

Observe the last two rows of the above table. They have lo g e and lo g 10. These two logs have specific
importance and names in logarithms.

lo g e is called the natural log. But it is not usually represented as lo g e. Instead, it is represented as ln .
i.e.,

lo g e =ln
Examples:
e =2 ⇒ lo g e 2=x∨ln 2=x .
x
●
● e x =7 ⇒ lo g e 7=x∨ln 7=x .

lo g 10 is called the common log. But usually, writing "log" is sufficient instead of writing log10. i.e.,
lo g 10=log

Hence, if there is no base for a log it means that it's lo g 10. In other words, it is a common logarithm.

Examples:
● 1 02=100 ⇒ lo g 10 100=2∨log 100=2
1 0 =0.01 ⇒ lo g 10 0.01=−2∨log 0.1=−2
−2
●

LAWS OF LOGARITHMS
The rules of logs are used to simplify a logarithm, expand a logarithm, or compress a group of logarithms
into a single logarithm. Here are the rules (or) properties of logs.
 `

If you want to see how all these rules are derived with examples, click here.
Recall that we also have laws of exponents which are parallel to these laws
You may be able to look at an equation like 4 x =16 and solve it by asking yourself, “4 to what power is
16? 42 is 16, so x=2.”

Equations like 4x = 17 are a bit more difficult. You know x must be a little more than 2, because 17 is just
a little more than 16. One way to find x with more precision, though, is by using logarithms.

When you have solved other algebraic equations, you often rely on the idea that you can change both
sides of the equation in the same way and still get a true equation. This is true with logarithms, too: If x =
y, then logbx = logby, no matter what b is.

Consider the example below:

Solve: 4 x =17

x
4 =17 Take the common logarithm of both sides.

x Use the power property of logarithms to simplify

log 4 =log 17 the logarithm on the left.

Divide both sides by log 4 to get x by itself.

x log 4=log 17
 log 17
x= Use a calculator to evaluate the logarithms and
log 4
the quotient.
1.230 ...
x= =2.043.. .
0.602 ...

Hence, the value of x ≈2.043 .

How to Solve Logarithmic Equations?

There are several strategies you can use to solve logarithmic equations. The first is one you have used
before: Rewrite the logarithmic equation as an exponential equation.

Example 1: Solve ln x = 4.657. Give x to the thousandth place.

ln x = 4.657 Remember that natural logarithms have a base of

loge x = 4.657 e. Rewrite this logarithm as an exponential
e4.657 = x equation.

105.3196… = x Use a calculator to evaluate e 4.657, and round to

x ≈ 105.320 the nearest thousandth.

This works regardless of the base.

Example 2: Solve log7 x = 3.843. Give x to the thousandth place.

log7 x = 3.843 Rewrite this logarithm as an exponential equation.

73.843 = x
Use a calculator to evaluate 73.843 and round to the
1768.9345…= x nearest thousandth
x ≈ 1768.935
To better understand how the graph of a logarithmic function is formed, consider the two equations and
table of values below.

Equation 1: y = 2x Equation 2: x = 2y
Table 1 Table 2

x y x y

-3 1 1 -3
8 8

-2 1 1 -2
4 4
 -1 1 1 -1
2 2

0 1 1 0

1 2 2 1

2 4 4 2

3 8 8 3

Note that the values are reversed in each table. The point (1, 2) taken from the first table will be the point
(2, 1) in the second table. Thus, these equations are inverses of each other.

The graphs of these two relationships should have the same general shape. As shown in the graph
below, the two curves are symmetrical about the line y = x. Another way to put it is if you rotate the red
curve about the line y = x, it will coincide with the blue curve. (This makes sense because y in the first
table becomes x in the second table, and vice versa.)

The equation x = 2y is often written as a logarithmic function (called log function for short). The logarithmic
function for x = 2y is written as y = log2 x or f(x) = log2 x. The number 2 is still called the base. In general, y
= logb x is read, “y equals log to the base b of x,” or more simply, “y equals log base b of x.” As with
exponential functions, b > 0 and b ≠ 1.

You can see from the graph that the range (y values) of the exponential function (in red) is positive real
numbers. Since the input and output have been switched, the domain (x values) of the logarithmic
function (in blue) is positive real numbers.

Similarly, the domain of the exponential function (in red) is all real numbers. The range of the logarithmic
function (in blue) is all real numbers.
HOW TO GRAPH A LOGARITHMIC FUNCTION?

Look at the graph below. It should look familiar. You saw it earlier on this topic. The blue graph is the
logarithmic function, and the red graph is the corresponding exponential function.

When graphing logarithmic functions, it’s important to remember the following:

● The graph can only appear to the right of the y-axis. This is because the domain is restricted to
positive values of x.
● The graph gets close to the y-axis for small values of x (close to x = 0), which is known as the
vertical asymptote.

Remember that logarithmic functions almost act like exponential functions. You just have to switch the x
and y values. For example, the second bulleted item above is like the exponential function getting close to
the x-axis (close to y = 0) or its horizontal asymptote.

Hence, if we use the horizontal asymptote to find the range of an exponential function, we use the vertical
asymptote of the logarithmic function to identify the domain. Likewise, in the exponential function, there is
no vertical asymptote this would imply having no horizontal asymptote in the logarithmic function.

HOW TO FIND THE DOMAIN AND RANGE OF A LOGARITHMIC FUNCTION?

Let us consider the basic (parent) common logarithmic function f(x) = log x (or y = log x). We know that
log x is defined only when x > 0 (try finding log 0, log (-1), log (-2), etc, using your calculator. You will
come up with an error). So the domain is the set of all positive real numbers. Now, we will observe some
of the y-values (outputs) of the function for different x-values (inputs).
● When x = 1, y = log 1 = 0
● When x = 2, y = log 2 = 0.3010
● When x = 0.2, y = -0.6990
 ● When x = 0.01, y = -2

We can see that y can be either a positive or negative real number (or) it can be zero as well. Thus, y can
take the value of any real number. Hence, the range of a logarithmic function is the set of all real
numbers. Thus:
● The domain of log function y = log x is x > 0 (or) (0, ∞).
● The range of any log function is the set of all real numbers ®

Example: Find the domain and range of the logarithmic function f(x) = 2 log (2x - 4) + 5.
Solution:
For finding the domain, set the argument of the function greater than 0 and solve for x.
2 x−4 >0
2 x−4 +4 >0+ 4
2 x> 4
x >2
Thus, domain = (2, ∞) and the vertical asymptote is x = 2.
As we have seen earlier, the range of any log function is R. So the range of f(x) is R.

THE INTERCEPTS OF A LOGARITHMIC FUNCTION

We have already seen that the domain of the basic logarithmic function y=lo gb x is the set of positive
real numbers and the range is the set of all real numbers. We know that the exponential and log functions
are inverses of each other, and hence their graphs are symmetric with respect to the line y = x. Also, note
that y = 0 when x = 0 as y=lo gb 1=0 for any 'b'. Thus, all such functions have an x-intercept of (1,
0). A logarithmic function doesn't have a y-intercept as lo g b 0 is not defined. Summarizing all these,
the graphs of exponential functions and logarithmic graphs look like below.

PROPERTIES OF A LOGARITHMIC GRAPH

● b > 0 and b ≠ 1
 ● The logarithmic graph increases when b > 1, and decreases when 0 < b < 1.
● The domain is obtained by setting the argument of the function greater than 0.
● The range is the set of all real numbers.
Much of the power of logarithms is their usefulness in solving exponential equations. Some examples of
this include sound (decibel measures), earthquakes (Richter scale), the brightness of stars, and chemistry
(pH balance, a measure of acidity and alkalinity).

Measuring Earthquake Magnitude

The Richter scale is a common method used to measure the intensity of an earthquake. The scale
converts seismographic readings into numbers that offer an easy reference for measuring the magnitude
(M) of an earthquake. All earthquakes are compared to a zero-level earthquake (xo) whose seismographic
reading measures 0.001 millimeters at a distance of 100 kilometers from the epicenter.

The formula used to find the measure of the magnitude of an earthquake is

x
M (x)=log
x0

In the formula, x stands for the intensity of the earthquake, and x represents the seismographic reading in
millimeters. The xo represents a zero-level earthquake the same distance from the epicenter.

Consider the chart below for the Richter scale descriptions:

Example: Suppose you wanted to find the magnitude of the Surigao City Earthquake given the data that a
seismographic reading of 7,943 millimeters was registered 100 kilometers from the center.

First, we will need to use the logarithmic model's formula for finding the magnitude of an
earthquake:

x
M (x)=log
x0

In the formula, we substitute 7943 mm for the value of x, and 0.001 for the value of xo:

7943
M (x)=log
0.001

7943
Now, we type log into a calculator to evaluate the function and find M(x):
0.001
 M (x)=6.9
Therefore, the magnitude of the earthquake that hit Surigao City is 6.9. It can be described
as a strong earthquake.

You can also learn how to compare the intensity of the 2 earthquakes by watching them here.

Measuring Acidity Level

Acidic and basic are two extremes that describe a chemical property. Mixing acids and bases can cancel
out or neutralize their extreme effects. A substance that is neither acidic nor basic is neutral. The pH scale
measures how acidic or basic a substance is. The pH scale ranges from 0 to 14. A pH of 7 is neutral. A
pH less than 7 is acidic. A pH greater than 7 is basic. The pH level of a water-based solution is defined as

𝑝𝐻 = − 𝑙𝑜𝑔[ 𝐻 +]

where [𝐻 +] is the concentration of hydrogen ions in moles per liter.

Example: A 1-liter solution contains 0.01 moles of hydrogen ions. Determine and describe its pH level.

Solution:
Since there are 0.01 moles of hydrogen ions in 1 liter, then the concentration of hydrogen ions is 1 0−2
moles per liter. Now, we have:

−2
pH=−log (1 0 )

Using the definition of the common log, log 1 0−2 is the exponent by which the base 10 must be raised to
x
obtain 1 0−2 , so lo g 10−2=−2, This is also one of the properties of logarithm: lo g a a =x

pH=−(−2)=2

Therefore, the pH level is 2 Since the pH level is less than 7, then it is acidic.