Republic of the Philippines

Department of Education
Region III
DIVISON OF MABALACAT CITY

Name: __________________________________ Grade & Section: ________________

School: ____________________________________________ Date: ________________

LEARNING ACTIVITY SHEET

General Mathematics – SIMPLE INTEREST

I. Introduction

Compound interest is the addition of interest to the principal sum of a loan

or deposit, or in other words, interest on interest. It is the result of
reinvesting interest, rather than paying it out, so that interest in the next
period is then earned on the principal sum plus previously accumulated
interest.

II. Learning Competency

This Learning Activity Sheets was designed and written with you in mind. It
is here to help you illustrate compound interest, computes compound
interest, maturity value, future value, and present value in compound
interest environment and solves problems involving compound interest.

III. Objectives

After going through this Learning Activity Sheets, you are expected to:

1. Illustrate compound interest.

2. Computes compound interest, maturity value, future value, and
present value in compound interest environment.
3. Solves problems involving compound interest.

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IV. Discussion

Compound Interest (Ic)

- interest is computed on the principal and also on the accumulated
past interests.

The following table shows the amount at the end of each year if
principal P is invested at an annual interest rate r compounded annually.
Computations for the particular example P = P100,000 and r = 5% are also
included.

Principal = P Principal = Php100 000

Year Int. rate = r, compounded
(t) annually
Amount at the end of the year
1 P × ( 1+r )=P (1+ r)
2 P(1+r )× ( 1+r )=P(1+r )2
3 P(1+r )2 × ( 1+ r )=P(1+r )3
4 P(1+r )3 × ( 1+ r )=P(1+r )4
Int. rate = 5%, compounded
annually
Amount at the end of the year
100 000 x 1.05 = 105 000
105 000 x 1.05 =110 250
110 250 x 1.05 = 121 550.63
121 550.63 x 1.05 = 127 628.16

Example 1. Find the maturity value and the compound interest if P10,000
is compounded annually at an interest rate of 2% in 5 years.

Solution
Given: P = 10,000
r = 2% = 0.02
t = 5 years

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Find: (a) maturity value F
F= P(1+r)t
F = (10,000)( 1 + 0.02)5
F = 11,040. 081

Answer: The future value F is P11,040. 81.

Find: (b) compound interest Ic

Ic = F – P
Ic = 11,040.81 – 10,000
Ic = 1,040.81

Answer: The interest is P1,040.81.

Example 2. Find the maturity value and interest if P 50,000 is invested at

5% compounded annually for 8 years.

Solution
Given: P = 50,000
r = 5% = 0.05
t = 8 years

Find: (a) maturity value F

F= P(1+r)t
F = (50,000)( 1 + 0.05)8
F = 73,872.77

Answer: The maturity value F is P73,872.77.

Find: (b) compound interest Ic

Ic = F – P
Ic = 73,872.77 – 50,000
Ic = 23,872.77

Answer: The compound interest is P23,872.77.

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Example 3. Suppose your father deposited in your bank account P10,000 at
an annual interest rate of 0.5% compounded yearly when you
graduate from kindergarten and did not get the amount until
you finish Grade 12. How much will you have in your bank
account after 12 years?
Solution
Given: P = 10,000
r = 0.5% = 0.005
t = 12 years

Find: maturity value F

The future value F is calculated by:

F= P(1+r)t
F = (10,000)(1 + 0.005)12
F = 10,616.78

Answer: The amount will become P10,616.77 after 12 years.

Present Value P at Compound Interest

The present value or principal of the maturity value F due in t years

any rate r can be obtained from the maturity value formula F= P(1+r) t.

Solving for the present value P,

t P ( 1+r )t F P= F or equivalently, F= P(1+r)-t

P ( 1+ r ) =F t
= t t
( 1+r ) ( 1+r ) (1+ r)

Example 4. What is the present value of P50,000 due in 7 years if money is

worth 10% compounded annually?

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Solution
Given: F = 50,000
r = 10% = 0.1
t = 7 years

Find: present value P

The present value P can be obtained by

F 50 000
P= t
P= P=25 657.91
( 1+r ) ( 1+0.1 )7

Answer: The present value is P25,657.91.

Example 5. How much money should a student place in a time deposit in a

bank that pays 1.1% compounded annually so that he will have
P200,000 after 6 years?

Solution
Given: F = 200,000
r = 1.1% = 0.011
t = 6 years

Find: maturity value P

The present value P can be obtained by

F 200 000
P= t
P= P=187 293.65
( 1+r ) ( 1+0.11 )6

Answer: The student should deposit P187,293.65 in the bank.

ACTIVITY 1
Identify the following:

Mary deposits Php650 000 in a savings account and leaves it there for
5 years to accumulate interest at 3% compounded annually. Give the term
for each value in relation to the problem.

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1. Php753 528.15
2. Php650 000
3. 3%
4. Php103 528.15
5. 5 years

ACTIVITY 2
Complete the table by finding the maturity value and interest of Php200 000
compounded annually.
Time (t) Compound Interest Maturity Value
Rate (r)
in years (Ic) (F)
5% 3 (1)_________ (2) _________
2.8% 10 (3) _________ (4) _________
1.25% 12 (5) _________ (6) _________
8% 8 (7) _________ (8) _________
4.02% 15 (9) _________ (10) _________

ACTIVITY 3
A. Find the present value that will generate the indicated maturity value.

1. Php50 000 at 4% compounded annually for 9 years.

2. Php80 000 at 0.2% compounded annually for 5 years.
3. Php250 000 at 3.5% compounded annually for 11 years.
4. Php125 000 at 10% compounded annually for 2 years.
5. Php48 000 at 5.75% compounded annually for 10 years.

B. Find the future of the indicated principal.

1. Php60 000 at 9% compounded annually for 4 years.

2. Php750 000 at 1% compounded annually for 13 years.
3. Php93 000 at 0.25% compounded annually for 6 years.
4. Php147 000 at 4.2% compounded annually for 8 years.
5. Php310 000 at 3.4% compounded annually for 1 year.
ASSESSMENT:
A. Solve the following problems. Show your complete solution.

1. Mr. Ocampo invested Php150,000 at 10% compounded annually. He

plans to get this amount after 6 years for his son’s college education.
How much will he get?

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 2. What is the interest of Php25 000 if invested at 4.5% compounded
annually in 3 years and 2 months?

3. Mr. Bautista aims to have his investment grow to Php500,000 in 4

years. How much should he invest in an account that pays 5%
compounded annually?

B. Complete the table by finding the unknown. Write your answer on a

sheet of paper.

Principal Rate Time (t) Compound Maturity Value

(P) (r) in years Interest (Ic) (F)
Php120 000 10.5% 5 (1) ____________ (2) ____________
(3) ____________ 8.25% 10 (4) ____________ Php123 875
Php500 000 12% 6 (5) ____________ (6) ____________
Php480 100 1.1% 15 (7) ____________ (8) ____________
(9) ____________ 5.75% 12 (10) ____________ Php654 000

V. Reflection

1. Give the difference between simple interest and compound interest.

2. If a sum of money placed at compound interest doubles itself in 5 years,

how long will it become 10 times itself at the same rate of interest?

VI. Reference

BOOK SOURCES:

Department of Education. 2016. General Mathematics Learners Materials

Oronce, Orlando A. 2016. General Mathematics, REX Bookstore

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VII. Answer Key

Activity 1 Activity 3

1. Maturity value 1. Php35 129.34

2. Principal 2. Php79 204.78
3. Interest rate
3. Php171 236.43
4. Compounded
interest 4. Php103 305.43
5. Terms 5. Php27 443.47
6. Php84 694.90
7. Php852 569.96
Activity 2 8. Php94 403.75
9. Php204 295.63
1. Php31 525
10. Php320 540
2. Php232 525
3. Php63 609.55
Assessment
4. Php263 609.55
5. Php32 150.90 A.

6. Php232 150.90 1. Php265 734.15

7. Php170 186.04 2. Php3 739.22

8. Php370 186.04 3. Php411,351.24

9. Php161 229.11
10. Php361 229.11 B.
1. Php77 693.61
2. Php197 693.61
3. Php59 066.65
4. Php67 808.35
5. Php486 911.34
6. Php986 911.34
7. Php85 616.75
8. Php565 716.75
9. Php334 359.17
10. Php319 640.83

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VIII. Development Team

Development Team of the Learning Activity Sheets

Writer: Lloyd F. Mallari

Editor:
Reviewer:
Illustrator:
Layout Artist:
Management Team: Engr. Edgard C. Domingo, PhD, CESO V
Leandro C. Canlas, PhD, CESE
Elizabeth O. Latorilla, PhD
Sonny N. De Guzman, EdD
EPS of the Learning area
Elizabeth C. Miguel, EdD
Remedios C. Gerente

For inquiries or feedback, please write or call:

Department of Education – Division of Mabalacat

P. Burgos St., Poblacion, Mabalacat City, Pampanga

Telefax: (045) 331-8143

E-mail Address: mabalacatcity@deped.gov.ph