SHS

General
Mathematics
Quarter 2 – Module 2a:
Simple Interest
General Mathematics – SHS
Quarter 2 – Week 2: Module 2a - Simple Interest

Republic Act 8293, section 176 states that: No copyright shall subsist in any work
of the Government of the Philippines. However, prior approval of the government agency or
office wherein the work is created shall be necessary for exploitation of such work for profit.
Such agency or office may, among other things, impose as a condition the payment of
royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this book are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from
their respective copyright owners. The publisher and authors do not represent nor claim
ownership over them.

Regional Director: Gilbert T. Sadsad

Assistant Regional Director: Jessie L. Amin

Development Team of the Module

Writer: Dolores Sapinoso Rull
Editor: Desiree R. Euste
Reviewers: Sarah Christine P. Godoy
Simeon D. Brillantes
Illustrator: Dolores Sapinoso Rull
Layout Artist: Jhomar B. Jaravata
Cover Art: Jed Adra

ii
 SIMPLE INTEREST

INTRODUCTION

In depositing or investing my money in a bank, I will gain an interest.

Whereas, borrowing any amount from a bank will cost me an interest. In real-life, like
investing and borrowing a certain amount of money, it is important that we know how
to compute interest, maturity value, and present value in simple interest
environment, and be able to solve problems involving simple interest.

OBJECTIVE

At the end of this module, you will be able to compute interest, maturity value,
future value, and present value in simple interest environment, and solve problems
involving simple interest. (M11GM-IIa-b-1)

VOCABULARY LIST

In exploring and performing the activities of this module, you will encounter
the following terms and concepts that will guide you in using them appropriately in
context:

Simple Interest (Is) is the interest that is computed on the principal and then
added to it.

Principal (P) is an amount of money borrowed or invested on the origin date.

Rate (r) is annual rate, usually in percent, charged by the lender, or rate of increase
of the investment.

Time or term(t) is the amount of time in years the money is borrowed or invested;
length of time between the origin and maturity dates.

Maturity value/Future Value refers to the amount after t years, that the lender
receives from the borrower on the maturity date.

Is
F P
r t

1
 PRE-TEST

Directions: This test will evaluate your knowledge and skills prior to starting this module.
Read and analyze each item carefully then write the letter of your answer. If your
answer is not in the given options, write E.

For items 1-3: Use the problem below to answer the following questions.

Teacher Alvin deposited an amount of PhP 10 000.00 in a bank that

offers 6% annual simple interest rate.

1. How much interest will be earned by Teacher Alvin after 2 years?

a. PhP 60.00 c. PhP 600.00
b. PhP 120.00 d. PhP 1 200.00

2. What is the future value of his investment after 2 years?

a. PhP 10 060.00 c. PhP 10 600.00

b. PhP 10 120.00 d. PhP 11 200.00
3. If after a year, the interest rate increases to 7.5%, how much interest will Teacher
Alvin earn after 3 years?

a. PhP 2 100.00 c. PhP 750.00

b. PhP 1 800.00 d. PhP 600.00
For items 4-5: Use the problem below to answer the following questions.

EJ borrowed PhP 50 000.00 from a lending institution that offers 12%

simple interest rate per annum.

4. How much interest will he pay for one year?

a. PhP 12 000.00 c. PhP 6 000.00

b. PhP 9 000.00 d. PhP 3 600.00
5. In how many years will the money accumulate to PhP 80 000.00 ?

a. 10 years c. 3 years
b. 5 years d. 1 year

- End of Pre-Test -

2
 LEARNING ACTIVITIES

This module will help you learn how to compute for the interest,
maturity/future value and present value in simple interest environment in simplest
way.

To solve problems involving simple interest you must be guided by these

steps:

Steps in Solving Problems Involving Simple Interest

1. What is/are given? (Identify the given data in the problem.)

2. What is asked? (Determine what the problem requires you to do.)
3. What is the appropriate formula to be used? (Determine the formula to be used.)
4. What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)
5. What is your final answer to the problem? (Determine the final answer to the
problem.)

Here are some definitions or concepts that will help you compute simple
interest, maturity/future value, present value, rate of interest and time.

Definition 1:

Simple Interest (Is) – interest that is computed on the principal and then added to it.

It can be computed using the formula:

Is = Prt or I = F - P

where,
Is = simple interest
P =Principal
F = Future value/maturity value
r = rate
t =time (in years)

3
Definition 2:

Principal (P) – amount of money borrowed or invested on the origin date.

It can be computed using the formula:

𝐈𝐬 𝐅
P= or P=
𝒓𝒕 𝟏+ 𝒓𝒕

where,
P =Principal
Is = simple interest
F = future value/maturity value
r = rate
t = time (in years)

Definition 3:

rate (r) – annual rate, usually in percent, charged by the lender, or rate of
Increase of the investment.

It can be computed using the formula:

𝐈𝐬
r=
𝑷𝒕

where,
Is = simple interest
P =Principal
r = rate
t = time (in years)

Definition 4:

Time or term (t) – amount of time in years the money is borrowed or invested;
length of time between the origin and maturity dates.

It can be computed using the formula:

𝐈𝐬
t=
𝑷𝒓

where, Is = simple interest

P =Principal
r = rate
t = time (in years)

4
 Definition 5:

Maturity value/Future Value – amount after t years that the lender receives from
the borrower on the maturity date.

It can be computed using the formula:

F = P + Is or F = P(1 + rt)

where,
F = future valu/maturity value
Is = simple interest
P = Principal
r = rate
t = time (in years)

Remember:
For you to easily memorize the formula, you can use the triangular figure below with
the important variables( Is, P, r & t) used in simple interest.

How to use:
To get the formula for the rate(r),
just cover the variable r, then, copy the
Is remaining variables in their positions.

Therefore,
r = Is/Pt
P r t (Same procedure is applied for other
unknown)

Learn how to solve problems involving simple interest from the succeeding
examples.

Sample Problems:

Example 1:
A Cooperative offers 3% annual simple interest rate for a particular share. How
much will be earned if 150,000 pesos is invested for 2 years?

Follow the steps mentioned above to solve the problems:

Step 1: What is/are given? (Identify the given data in the problem.)

P = PhP 150 000.00

r = 3% or 0.03
t = 2 years

5
Step 2: What is asked? (Determine what the problem requires you to do.)

How much will be earned if 150,000 pesos is invested for 2 years? Or

What is the simple interest?

Step 3: What is the appropriate formula to be used? (Determine the formula to be used.)

Is = Prt

Step 4: What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)

Substitute the given to the formula

Is = Prt

= (150 000)(0.03)(2)

= PhP 9 000.00

Step 5: What is your final answer to the problem? (Determine the final answer of the
problem.)

Therefore, the interest earned is PhP 9 000.00.

Example 2:
A businessman invested a certain amount of money in a bank that offers 6%
simple annual interest. After five years his total investment is PhP 130 000.00 which gives
him an interest of PhP30 000.00. How much did the businessman invested at the start?

Step 1: What is/are given? (Identify the given data in the problem.)

F = PhP 130 000.00

Is = PhP 30 000.00
t = 5 years
r = 6% or 0.06

Step 2: What is asked? (Determine what the problem requires you to do.)

How much did the businessman invested at the start? or What is P?

6
Step 3: What is the appropriate formula to be used? (Determine the formula to be used.)

𝐈𝐬 𝐅
P= or P=
𝒓𝒕 𝟏+ 𝒓𝒕

Step 4: What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)

𝐈𝐬
Solution 1: Using the formula P =
𝒓𝒕

Substitute the given to the formula

𝟑𝟎 𝟎𝟎𝟎
P = (𝟎.𝟎𝟔)(𝟓)

𝟑𝟎 𝟎𝟎𝟎
= 𝟎.𝟑

= 100 000

𝐅
Solution 2: Using the formula P =
𝟏+ 𝒓𝒕

Substitute the given to the formula

𝟏𝟑𝟎 𝟎𝟎𝟎
P = 𝟏+ (𝟎.𝟎𝟔)(𝟓)

𝟏𝟑𝟎 𝟎𝟎𝟎
=
𝟏.𝟑

= 100 000

Step 5: What is your final answer to the problem? (Determine the final answer to the
problem.)

Therefore, the businessman had invested PhP 100 000.00 or

the principal amount invested by the businessman is PhP 100 000.00

Example 3:
How much do you need to invest today if you plan to accumulate a total
amount of ₱200,000 on a saving account with 2% simple interest within 10 years?

Step 1: What is/are given? (Identify the given data in the problem.)

F = PhP 200 000.00

r = 2% or 0.02
t = 10 years

7
Step 2: What is asked? (Determine what the problem requires you to do.)

What is the principal amount?

Step 3: What is the appropriate formula to be used? (Determine the formula to be used.)

𝐈𝐬 𝐅
P= or P=
𝒓𝒕 𝟏+ 𝒓𝒕

Step 4: What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)

Substitute the given to the formula:

𝟐𝟎𝟎 𝟎𝟎𝟎
P = 𝟏+ (𝟎.𝟎𝟐)(𝟏𝟎)

𝟐𝟎𝟎 𝟎𝟎𝟎
= 𝟏.𝟐

= 166 666.67

Step 5: What is your final answer to the problem? (Determine the final answer to the
problem.)

Therefore, you need to invest PhP 166 666.67.

Example 4:
A businessman invested PhP 100 000.00 in a bank and earned PhP30 000.00
for 5 years. What is the simple interest rate?

Step 1: What is/are given? (Identify the given data in the problem.)

P = PhP 100 000.00

Is = PhP 30 000.00
t = 5 years

Step 2: What is asked? (Determine what the problem requires you to do.)

What is the simple interest rate? or What is r?

8
Step 3: What is the appropriate formula to be used? (Determine the formula to be used.)

𝐈𝐬
r=
𝑷𝒕

Step 4: What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)

Substitute the given to the formula

𝟑𝟎 𝟎𝟎𝟎
r =
(𝟏𝟎𝟎 𝟎𝟎𝟎)(𝟓)

𝟑𝟎 𝟎𝟎𝟎
= 𝟓𝟎𝟎 𝟎𝟎𝟎

= 0.06

= 6%

Step 5: What is your final answer to the problem? (Determine the final answer to the
problem.)

Therefore, the interest rate is 6%.

Example 5:
The businessman invested PhP 100 000.00 in a bank that offers 6% annual
interest rate. After some years, his investment earned a total amount of PhP30 000.00.
How long did he invest his money?

Step 1: What is/are given? (Identify the given data in the problem.)

P = PhP 100 000.00

r = 6% or 0.06
Is = PhP 30 000.00

Step 2: What is asked? (Determine what the problem requires you to do.)

How long did he invest his money? or What is t?

Step 3: What is the appropriate formula to be used? (Determine the formula to be used.)

𝐈𝐬
t=
𝑷𝒓

9
Step 4: What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)

Substitute the given to the formula

𝟑𝟎 𝟎𝟎𝟎
t =
(𝟏𝟎𝟎 𝟎𝟎𝟎)(𝟎.𝟎𝟔)

= 5 years

Step 5: What is your final answer to the problem? (Determine the final answer to the
problem.)

Therefore, the businessman invested his money for 5 years.

Example 6:
A Cooperative offers 3% annual simple interest rate for a particular share. If you
invested PhP 150 000.00 for 2 years, what is the future value of your investment?

Step 1: What is/are given? (Identify the given data in the problem.)

P = PhP 150 000.00

r = 3% or 0.03
t = 2 years

Step 2: What is asked? (Determine what the problem requires you to do.)

What is the future value of your investment?

Step 3: What is the appropriate formula to be used? (Determine the formula to be used.)

F = P + Is or F = P(1 + rt) by definition 5

Step 4: What is/are the solution/s to the problem? (Determine the solution/s of the given
problem.)

Solution 1: Using the formula F = P + Is

a. First, compute the simple interest (Is)

Is = Prt
= (150 000)(0.03)(2)
= PhP 9 000.00
b. Second, find the future value by substituting to the formula

10
 F = P + Is

= 150 000 + 9 000

= 159 000.00

Solution 2: Using the formula F = P(1 + rt)

Substitute the given to the formula
F = P(1 + rt)

= 150 000 [1 + 0.03(2)]

= 159 000.00

Step 5: What is your final answer to the problem? (Determine the final answer to the
problem.)

Therefore, the future value of the investment is PhP 159 000.00 .

Let us take another set of problems.

Complete the table by finding the unknown.

Principal Rate (r) Time (t) Interest (Is)

(P) (year)
1
(a) 1.5% 3 1,350

2
24,000 (b) 2 1,440

3
250,000 0.5% (c) 6,250

4
500,000 3% 4 (d)

Solutions:

a. P = Is/ rt b. r = Is/Pt
P = 1,350/(0.015)(3) r = 1,440/(24,000)(2)
P = 1,350/0.045 r = 1,440/48,000
P = ₱30,000 r = 0.03 = 3%

11
 c. t = Is/Pr d. Is = Prt
t = 6,250/(250,000)(0.005) Is = (500,000)(0.03)(4)
t = 6,250/1,250 Is = ₱60,000
t = 5 years

Let us test your understanding!

Practice Task 1

Solve the following problems.

1. Jenai is investing PhP 24,000.00 in a cooperative giving 5% simple annual interest.

How much interest will she earn after 2 years?

For items 2-3, use the problem below.

A teacher made an investment in a bank that offers 3.5% interest rate per
annum. After 5 years, she earned a total interest of PhP 7000.00.

2. How much was her original investment?

3. What will be her total amount of money after 5 years?

For items 4-5, use the problem below.

Teacher Jonah got a loan of PhP 150 000 to buy a used car. The interest rate
is 7.5% and she paid an interest of PhP 33 750.00.

4. How many years did it take her to pay off her loan?

12
5. What is the annual interest?

Practice Task 2

Compute for the unknown in each of the following.

1. Mark borrowed ₱8, 500.00 with 5% annual simple interest rate. How much interest
will be earned if Mark pays after 3 years?
Answer: The interest earned is __________.

2. When invested at annual interest rate of 6%, an amount earned PhP11,500.00

simple interest in two years. How much money was originally invested?
Answer: The amount invested is __________.

3. If an entrepreuner applies for a loan amounting to PhP 400,000.00 in a bank, the

simple interest of which is PhP125,500.00 for 9 months, what interest rate is being
charged?
Answer: The bank charged an annual simple interest rate of __________.

4. How long will a principal amount earn an interest equal to half of it at 4% simple
interest?
Answer: It will take __________ years for a principal to earn half of its value at 4%
simple annual interest rate.

13
 Practice Task 3

Solve the following problems. Show your solutions.

1. Sophia invested a certain amount at 10% annual rate. After a year, the interest she
received amounted to PhP 1,500.00. How much did she invest?

2. If you deposit PhP 7,500 in a bank at an annual rate of 0.5%. How much money will
you have after 15 years?

3. How much money should you deposit in a bank so that it will accumulate to
PhP 100,000.00 at 1% simple interest for 10 years?

- End of Practice Tasks -

Good luck for the next

POST-TEST

Directions: This test will evaluate your knowledge and skills after completing this module.
Read and analyze each item carefully then write the letter of your answer. If your
answer is not in the given options, write E.

1. Alisha has a savings account in a bank which earn an interest rate of 4.5%. If she
deposited PhP 75 000.00 to the savings account, how much money will she have
after 8 years?
a. PhP 3 375.00 c. PhP 78 375.00
b. PhP 27 000.00 d. PhP 102 000.00

2. Mother applied for a loan amounting to PhP 25 000.00. If the rate of interest is 5%
per annum and she has to pay a total interest of PhP 7 500.00. How long will it take
her to pay the loan?
a. 10 years c. 6 years
b. 8 years d. 4 years

14
 For items 3-5, use the problem below.

Given a = PhP 125,000 and b = PhP 25,000. If a businessperson applies for a

loan amounting to (3a – 5b) pesos in a cooperative and earned simple interest of
(a/2) pesos for 5 years?

3. What is the principal amount of loan applied by the businessperson?

a. PhP 375 000.00 c. PhP 125 000.00
b. PhP 250 000.00 d. PhP 75 000.00

4. How much is the annual interest of the loan?

a. PhP 62 500.00 c. PhP 12 500.00
b. PhP 25 000.00 d. PhP 6 250.00

5. What is the rate of interest for the loan?

a. 12.5% c. 4.5%
b. 5% d. 3%

- End of Post-Test -

ASSIGNMENT

Solve.

1. If x = 25,000 and y = 50,000, how much interest will be earned if (x + 2y) pesos is
deposited in a bank for 3 years at an annual simple interest rate of 2%?

2. Mr. M invested an amount of PhP 50 000.00 divided in two different schemes 1 and 2
at the simple interest rate of 5% per annum and 6% per annum respectively. If the total
amount of simple interest earned in 2 years be PhP 5 400.00. What was the amount
invested in Scheme 1? How about in scheme 2?

15
References:

Bacani, J.B. and Soriano, J.M., (2017) General Mathematics for Grade 11, 151 Quezon City:
Ephisians Publishing Inc.
DepEd (2016). General Mathematics Learners Material First Edition. Department of
Education.
Orence, O.A. (2016). RBS General Mathematics First Edition, Sampaloc, Manila: Rex
Book Store, Inc.
Reyes A., and Sulit, R. (2016), General Mathematics, Jimcyville Publications

Answer Key
Pre-Test
1. d
2. d
3. a
4. c
5. b

Practice Task 1
1. Is = PhP 2 400.00
2. P = PhP 40 000.00
3. F = PhP 47 000.00
4. T = 3 years
5. Annual Interest = PhP 11 250.00

Practice Task 2
1. The interest earned is PhP 1,275.00
2. The amount invested is PhP 95,833.33
3. The bank charged an annual simple interest rate of 41.83%.
4. It will take 12.5 years for a principal to earn half of its value at 4% simple
annual interest rate.

Practice Task 3
1. P = Is/rt
P = 1,500/(0.1)(1)
P = PhP 15,000.00

2. F = P(1 + rt)
F = 7,500[1 + (0.005)(15)]
F = 7,500(1.075)
F = PhP 8,062.50

3. P = F__
1 + rt
P = ___100,000___

16
 1 + (0.01)(10)
P = 100,000
1.1
P = PhP 90,909.10
Post-Test
1. d
2. c
3. b
4. c
5. b

Assignment
1. Is = PhP 7 500.00

2. Let
x = the sum of money invested in Scheme 1

50 000 – x = the sum of money invested in Scheme 2

Then,

[x(0.05)(x)] + [(50 000 - x)(0.06)(2)] = 5 400

0.1x + (6 000 - 0.12x) = 5 400

- 0.02x + 6 000 = 5 400

- 0.02x = 5 400 – 6 000

- 0.02x = -600
−𝟎.𝟎𝟐𝒙 −𝟔𝟎𝟎
=
−𝟎.𝟎𝟐 −𝟎.𝟎𝟐

x = 30 000

Therefore, PhP 30 000.00 was invested in scheme 1 and

PhP 20 000.00 is invested in scheme 2.

17