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General Mathematics
Second Quarter
Module 1: Simple and
Compound Interest
 Republic of the Philippines
Department of Education
REGION VII-CENTRAL VISAYAS
SCHOOLS DIVISION OF SIQUIJOR

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Published by the Department of Education

OIC-Schools Division Superintendent: Dr. Neri C. Ojastro
Assistant Schools Division Superintendent: Dr. Edmark Ian L. Cabio

Development Team of Learning Module

Writer: Georgie D. Antiquina

Evaluators: Marilou C. Gulahab Mera M. Tuangco
Alma B. Panzo Alberta S. Bato

Management Team: D Dr. Marlou S. Maglinao o

CID - Chief

___________Neddy G. Arong g
Education Program Supervisor (MATHEMATICS)

E Edesa T. Calvadores s
Education Program Supervisor (LRMDS)

Printed in the Philippines

Department of Education – Region VII, Central Visayas, Division of Siquijor
Office Address: Larena, Siquijor
Telephone No.: (035) 377-2034-2038
E-mail Address: deped.siquijor@deped.gov.ph

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 11
General Mathematics
Second Quarter
Module 1: Simple and
Compound Interest

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 INTRODUCTION
This module is written in support of the k to 12 Basic Education
Program to ensure attainment of standards expected of you as a learner.
This aims to equip you with essential knowledge on simple and
compound interests.

This includes the following activities/tasks:

 Expected Learning Outcome – This lays out the learning outcome
that you are expected to have accomplished at the end of the
module.
 Pre-Test – This determines your prior learning on the particular
lesson you are about to take.
 Discussion of the Lesson – This provides you with the important
knowledge, principles and attitude that will help you meet the
expected learning outcome.
 Learning Activities – These provide you with the application of the
knowledge and principles you have gained from the lesson and
enable you to further enhance your skills as you carry out
prescribed tasks.
 Post-test – This evaluates your overall understanding about the
module.

With the different activities provided in this module, may you find this
material engaging and challenging as it develops your critical thinking skills.

What I Need to Know

At the end of the lesson, you will be able to:
 illustrate simple and compound interests (M11GM-IIa-1)
 distinguish between simple and compound interests (M11GM-
IIa-2)

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 What I Know

I. Match column A with Column B. Choose the correct word that

corresponds to each item and write it on your activity notebook.

A B
1. A person (or institution) who Lender or creditor
invests the money or makes the
funds available Borrower or Origin or loan date
debtor – person (or institution)
who owes the money or avails of Maturity date
the funds from the lender
2. A date on which money is Time
received by the borrower
3. A date on which the money Principal
borrowed or loan is to be
completely repaid Rate
4. An amount of time in years the
money is borrowed or invested; Interest
length of time between the origin
and maturity dates Simple interest
5. An amount of money borrowed or
invested on the origin date Compound interest
6. An annual rate, usually in
percent, charged by the lender, or Maturity value
rate of increase of the investment
7. An amount paid or earned for the
use of money
8. An interest that is computed on
the principal and then added to it
9. An interest is computed on the
principal and also on the
accumulated past interests
10. An amount after t years that the
lender receives from the borrower
on the maturity date

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B. Label each picture below whether it is simple or compound. Write your
answer in your activity notebook.

11. _____________________________ 12. ________________________________

13._____________________________ 14. _______________________________

15. ______________________________
16. _____________________________

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What’s In
Directions: Do what is asked and write answers in your assessment
notebook.

A. Change the following decimal numbers to percent.

1. 0.05
2. 0.10
3. 0.20
4. 0.33

B. Change the following percent to decimal numbers.

1. 25%
2. 6%
3. 43%
4. 75%

C. Answer the following.

1. 5% of 1,000 = ________
2. 10% of 5,000 = _______
3. 7.5% of 10,000 = ______
4. 8% of 50,000 = ________

What’s New

Have you heard of somebody saying that he/she lends money from a
certain lending investor or in the banks? Or investing money in the banks or
any cooperative banks? Do you have any idea about simple and compound
interest?

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 What Is It

DEFINITION OF TERMS:

Lender or creditor – person (or institution) that invests the money or

makes the funds available.

Borrower or debtor – person (or institution) who owes the money or

avails of the funds from the lender.

Origin or Loan Date – date on which money is received by the

borrower.

Repayment date or maturity date – date on which the money

borrowed or loan is to be completely repaid

Time or term (t) – amount of time in years the money is borrowed or

invested; length of time between the origin and
maturity dates.

Principal (P) – amount of money borrowed or invested on the original

date

Rate (r) – annual rate, usually in percent, charged by the lender, or

rate of increase of the investment

Interest (I) – amount paid or earned for the use of money

Simple Interest (Is) – interest that is computed on the principal and

then added to it

Compound Interest (Ic) – interest is computed on the principal and

also on the accumulated past interests

Maturity value or Future value (F) – amount after t years that the
lender receives from the borrower on the maturity
date

Simple and Compound Interest

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Example 1:

“Suppose you won 10,000 pesos and you plan to invest it for 5 years.
A cooperative group offers 2% simple interest rate per year. A bank offers
compounded annually. Which will you choose and why?

Solution:

Investment 1: Simple Interest (Annual)

Amount after t years
Tim Principal Interest
Simple Interest (Maturity Value)
e (t) (P) Rate (r)
Solution Answer
1 2% (10000)(0.02)(1) 200 10 000 + 200 = 10 200.00
2 2% (10000)(0.02)(2) 400 10 000 + 400 = 10 400.00
3 10,000 2% (10000)(0.02)(3) 600 10 000 + 600 = 10 600.00
4 2% (10000)(0.02)(4) 800 10 000 + 800 = 10 800.00
5 2% (10000)(0.02)(5) 1 000 10 000 + 1 000 = 11 000.00

In the first year, the interest gained of the investor is ₱200, in the
second year ₱400, in the third year ₱600, in the fourth year ₱800 and in the
fifth year ₱1,000. In the fifth year, the interest gained by the investor is
₱1,000. In order to get the interest, the principal is multiplied by the interest
rate and the number of time it has invested.

Investment 2: Compound Interest (Annual)

Amount after t years
Tim Principal Interest
Simple Interest (Maturity Value)
e (t) (P) Rate (r)
Solution Answer
1 10 000 2% (10000)(0.02)(1) 200 10 000 + 200 = 10 200.00
2 10 200 2% (10200)(0.02)(1) 204 10 200 + 204 = 10 404.00
3 10 404 2% (10404)(0.02)(1) 208.08 10 404 + 208.08 = 10 612.08
4 10 612.08 2% (10612.08)(0.02)(1) 212.24 10 612.08 + 212.40 = 10 824.32
5 10 824.32 2% (10824.32)(0.02)(1) 216.49 10 824.32 + 216.49 = 11 040.81

In compound interest, in the first year, the principal is multiplied by the

interest rate (2%), times the time (in year), you get ₱200. Then add the interest to
the principal, you get ₱10,200. In the second year, the principal is ₱10,200 already,
multiplied it by the interest rate (2%), times the time (in year), then you get ₱204 as
an interest. Add ₱204 to the principal which is ₱10,200. So you get ₱10,404. In the
third year, the principal is ₱10,404 already. Multiply it by 2%, times the time (in
year), so you get ₱208.08. Add ₱208.08 to ₱10,404 in order to get ₱10,612.08 that
will be the principal in the fourth year. And so on...in the fifth year, the
principal gained an interest ₱1,040.81

Example 2:

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 Ms. Kate plan to invest ₱30,000 for 5 years. A cooperative group offers
5% simple interest rate per year. A bank offers compounded annually.
Analyze the illustrations below.

Investment 1: Simple Interest (Annual)

Amount after t years
Tim Principal Interest
Simple Interest (Maturity Value)
e (t) (P) Rate (r)
Solution Answer
1 (30000)(0.05)(1) 1500 30 000 +1 500 = 31 500.00
2 (30000)(0.05)(2) 3000 30 000 +3 000 = 33 000.00
3 30,000 5% (30000)(0.05)(3) 4500 30 000 +4 500 = 34 500.00
4 (30000)(0.05)(4) 6000 30 000 +6 000 = 36 000.00
5 (30000)(0.05)(5) 7500 30 000 +7 500 = 37 500.00

Investment 2: Compound Interest (Annual)

Amount after t years
Time Principal Interest
Simple Interest (Maturity Value)
(t) (P) Rate (r)
Solution Answer
1 30 000 5% (30000)(0.05)(1) 1500 30 000 + 1500 = 31 500.00
2 31 500 5% (31500)(0.05)(1) 1575 31 500 + 1575 = 33 075.00
3 33 075 5% (33075)(0.05)(1) 1653.75 33 075 + 1653.75 = 34728.75
34728.75 + 1736.44 = 36
4 34728.75 5% (34728.75)(0.05)(1) 1736.44
465.19
36465.19 + 1823.26 = 38
5 36465.19 5% (36465.19)(0.05)(1) 1823.26
288.45

In the illustration of simple interest, the investor gained 7,500.00 only

while in the illustration of compound interest, the investor gained 8,288.45
only. Simple interest remains constant throughout the investment term. In
compound interest, the interest from the previous year also earns interest.
Thus, the interest grew every year.

Compare the interests gained in the two investments. (simple and

compound interests)

In the illustration of simple interest, the investor gained 1,000.00 only

while in the illustration of compound interest, the investor gained 1,040.00
only. If you are the investor, which do you prefer?

Now, can you distinguish between simple and compound interests

based on the illustrations?

Based on the illustrations above, Simple interest remains constant

throughout the investment term. In compound interest, the interest from the
previous year also earns interest. Thus, the interest grew every year.

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 What’s More

Directions: Study the illustrations of simple and compound interest below.

Based on the illustrations, you can now derived formula from it.

“Mr. Chao borrowed money from the bank worth ₱ 50,000 and he plan to
pay it for 5 years. A cooperative bank offers 4% simple interest rate per year.
A bank offers compounded annually. Which will you choose and why?

Investment 1: Simple Interest

Amount after t years
Tim Principal Interest
Simple Interest (Maturity Value)
e (t) (P) Rate (r)
Solution Answer
1 (50000)(0.04)(1) 2000 50 000 + 2000 = 52 000.00
2 (50000)(0.04)(2) 4000 50 000 + 4000 = 54 000.00
3 50,000 4% (50000)(0.04)(3) 6000 50 000 + 6000 = 56 000.00
4 (50000)(0.04)(4) 8000 50 000 + 8000 = 58 000.00
5 (50000)(0.04)(5) 10000 50 000 + 10000 = 60 000.00

Investment 2: Compound Interest (Annual)

Amount after t years
Tim Principal Interest
Simple Interest (Maturity Value)
e (t) (P) Rate (r)
Solution Answer
1 50 000 4% (50000)(0.04)(1) 2000 50 000 + 2000 = 52 000.00
2 52 000 4% (52000)(0.04)(1) 2080 52 000 + 2080 = 54 080.00
54 080 + 2163.20 = 56
3 54 080 4% (54080)(0.04)(1) 2163.20
243.20
5 6243.20 + 2249.73 = 58
4 56243.20 4% (56243.20)(0.04)(1) 2249.73
492.93
58492.93 + 2339.72 = 60
5 58492.93 4% (58492.93)(0.04)(1) 2339.72
832.65

Questions:
1. If you are planning to invest money, which do you prefer simple
interest or compound interest? Justify your answer
2. When borrowing money from a bank or a certain lending investor,
which do you prefer simple or compound interest?

In the simple interest, you can use the formula I =Prt and A=P+ I
while in compound interest you can use A=P(1+r )t

What I Have Learned

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 I learned that:

 simple interest remains constant throughout the investment

term using the formula I =Prt

where: I = interest
P = principal
r = rate
t = time
 in compound interest, the interest from the previous year also
earns interest. Thus, the interest grew every year.
Using the formula:
A=P(1+r )t
where: A = amount
P = principal
r = rate
t = time

What I Can Do

Directions: Read and analyze the problem and answer the questions that
follow. Write answer in your assessment notebook.

1. Angel deposited ₱20,000.00 in a bank with an interest of 0.5% which she

received ₱20,600.00 after 6 years. Determine what type of interest illustrated
in the problem? (simple and compound). Explain your answer.

Assessment
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Directions: Determine which of the following situations illustrates simple or
compound interest. Justify your answer. (3 points each
problem; 1 for the answer and 2 for the justification)

1. Shirlee deposited a certain amount which is ₱89,632.37 in a bank

peso bond fund which pays 1.0% interest to have ₱100,000.00 on her
daughter’s birthday.

2. Gail’s father deposited in his bank account ₱10,000 at an annual

interest of 5% which the future value is ₱18,000 after 12 years.

3. Justin borrowed ₱5,000 at 5% and decided to pay in 1 year and 3

months his ₱5,312.50.

4. A person borrowed ₱88,800 at an annual interest rate of 10¼% for 18

months and pay his interest ₱13,653.

Key Answer
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What I Know
A.
1. Lender or creditor
2. Origin or loan date
3. Maturity date
4. Time
5. Principal
6. Rate
7. Interest
8. Simple interest
9. Compound interest
10. Maturity value

B.
11. Compound interest
12. Compound interest
13. Compound interest
14. Simple interest
15. Simple interest
16. Simple interest

ASSESSMENT
1. Compound interest
2. Compound interest
3. Simple interest
4. Simple interest

REFERENCES

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Verzosa, Debbie Marie B., Infante, Francis Nelson M., Crisologo, Leo Andrei
A., Hao, Lester C., Mindaña, Mary Ann A., Gonzales, Quincy D.
General Mathematics Learner’s Manual. Pasig City, Philippines:
First Edition 2016 Lexicon Press Inc.

https://www.google.com.ph/search?q=illustration+of+simple+interest&source

https://www.google.com.ph/search?q=illustration+of+compound+interest&source

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