Quarter 2 - Module 3: Solving Problems Involving Simple and Compound Interest

Lesson 1: Solving Problems Involving Simple Interest

*The text color of your answers should be in “BLUE”

What I Know Assessment

1. B 1. B
2. D 2. B
3. D 3. B
4. A 4. C
5. A 5. D
6. A 6. B
7. C 7. B
8. B 8. A
9. B 9. A
10. A 10. D
11. A 11. A
12. B 12. A
13. D 13. D
14. C 14. C
15. D 15. C

What’s New
𝑰𝒏𝒔𝒖𝒓𝒂𝒏𝒄𝒆 𝑩𝒂𝒏𝒌: 𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = (5000)(0.015)(3)
𝑰𝒔 = ₱𝟐𝟐𝟓
𝑰𝒏𝒔𝒖𝒓𝒂𝒏𝒄𝒆 𝑩𝒂𝒏𝒌: 𝐹 = 𝑃(1 + 𝑟𝑡)
𝐹 = ₱5,000(1 + (0.015 𝑥 3 𝑦𝑒𝑎𝑟𝑠))
𝐹 = ₱5,000(1.045)
𝑭 = ₱𝟓, 𝟐𝟐𝟓
𝑻𝒓𝒖𝒔𝒕 𝑩𝒂𝒏𝒌: 𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = (5000)(0.0175)(6)
𝑰𝒔 = ₱𝟓𝟐𝟓
𝑇𝑟𝑢𝑠𝑡 𝐵𝑎𝑛𝑘: 𝐹 = 𝑃(1 + 𝑟𝑡)
𝐹 = ₱5,000(1 + (0.0175 𝑥 6 𝑦𝑒𝑎𝑟𝑠))
𝐹 = ₱5,000(1.105)
𝑭 = ₱𝟓, 𝟓25

ANSWERS:
1. Security of funds, interest rates, and minimum balance requirements.
2. Interest rate value
3. Insurance bank = ₱225
Trust bank = ₱525
 4. If I were Febie, I will choose the Trust bank since it offered bigger interest
even though it will take 6 years. I also computed the value of interest of the
Insurance bank and I got ₱450 which only means the Trust bank’s value of
interest is bigger.
5. Insurance bank = ₱5,225
Trust bank = ₱5,525
6. My basis in choosing banks is the amount of interest or how big is the
interest rate and the time in years. I will choose the trust bank since it offers
a bigger interest rate even though it will take 6 years.

What’s More
Independent Practice 1

1. Principal amount or present value

2. F = ₱38,500.00, r = 1.12% or 0.0112, t = 6 years
3. F = P(1 + rt)
4. ₱36,075.71

Independent Assessment 1
𝟐𝟐𝟓𝟎
1. 𝑷 = (𝟎.𝟎𝟐𝟓)(𝟐) = ₱45,000
2. 1,450,500(0.01)(7) = 101,535
101,535 + 1,450,500 = ₱1,552,035

What I Have Learned

What I did What I learned How I can use it

I was opening an ATM
bank account recently
and was choosing
between 2 banks which
were BDO and BPI. For
BDO, the interest rate
was 0.25%, the initial
deposit was ₱5,000 and
the maintaining balance
was ₱10,000. While in
BPI, the interest was also
0.25%, the initial deposit
was ₱10,000 and the
maintaining balance was
also ₱10,000
One of the most common The first one which is
scenarios in our daily offered by BDO offers an
lives is engaging initial deposit which is
ourselves in a business smaller compared to BPI.
transaction. It is all but However, the
natural because many maintaining balance
actions that we covered by BDO is twice
undertake involve the amount of the initial
money. Moreover, when deposit as for BPI it
we are talking about remains the same. In the
money we usually end, I chose BPI since
involve ourselves with for me, it’s more
the different problems practical to pay for an
that need solutions initial deposit the same
especially when it comes as its maintaining
to the computation of balance in order to avoid
 interest and the total incurring any fees or
amount to be paid at the charges.
end of a particular term.

What I Can Do
Components Plan 1 Plan 2
Present Value ₱56,000 ₱77,000
Rate 8% 6%
Time 10 years 5 years
Simple Interest ₱44,800 ₱23,100
Maturity Value ₱100,800 ₱100,100

Plan 1:
𝐹
𝑃=
(1 + 𝑟𝑡)
𝟏𝟎𝟎,𝟎𝟎𝟎
𝑷 = (𝟏+(𝟎.𝟎𝟖×𝟏𝟎)) = ₱56,000

𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = (56,000)(0.08)(10)
𝑰𝒔 = ₱𝟒𝟒, 𝟖𝟎𝟎

Plan 2:
𝐹
𝑃=
(1 + 𝑟𝑡)
𝟏𝟎𝟎,𝟎𝟎𝟎
𝑷= = ₱77,000
(𝟏+(𝟎.𝟎𝟔×𝟓))

𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = (77,000)(0.06)(5)
𝑰𝒔 = ₱𝟐𝟑, 𝟏𝟎𝟎

Plan Chosen: Plan 1

Reason for Choice: the reason I chose Plan 1 is because it has bigger interest rate
even though it will take 10 years. In my case, I will reserve the money for building
my dream house that’s why it is okay for me if it will take 10 years. I will invest
bigger money so that after 10 years, I will have a money that can help me provide
for the construction of my dream house. In plan 1, my ₱56,000 investment will have
₱44,800 interest in 10 years and I think that it is enough for me.
Quarter 2 - Module 3: Solving Problems Involving Simple and Compound Interest

Lesson 2: Solving Problems Involving Compound Interest

*The text color of your answers should be in “BLUE”

What’s New
𝐹 = 𝑃(1 + 𝑗)𝑛
0.0115
𝐹 = 50,000(1 + 2 )6
𝑭 = ₱𝟓𝟏, 𝟕𝟒𝟕. 𝟗𝟗
𝐼𝑐 = 𝐹 − 𝑃
𝐼𝑐 = ₱51,747.99 − ₱50,000
𝑰𝒄 = ₱𝟏, 𝟕𝟒𝟕. 𝟗𝟗

𝐹 = 𝑃(1 + 𝑟)𝑡
𝐹 = 50,000(1 + 0.0125)3
𝑭 = ₱𝟓𝟏, 𝟖𝟗𝟖. 𝟓𝟒
𝐼𝑐 = ₱51,898.54 − ₱50,000
𝑰𝒄 = ₱𝟏, 𝟖𝟗𝟖. 54

ANSWERS:

1. Interest rate and the conversion period.

2. The differences are the rate and the conversion period. The first option
has an interest rate of 1.15% and it is compounded semi-annually while
the second option has an interest rate of 1.25% and it is compounded
annually.
3. 1.15% = ₱ 1,749.99
1.25% = ₱ 1,898.54
4. In choosing the terms, it is important to analyze first the component and
the conditions presented so that you can arrive in wise decision. So,
interest wise it is better to apply for a loan with 1.15% interest
compounded semi – annually for 3 years since he will pay less than in the
1.25% interest.

What’s More
Independent Practice 1
1. Explore:
𝒊(𝟒) = 𝟎. 𝟎𝟐𝟏
𝑭 = ₱𝟓𝟎, 𝟎𝟎𝟎
𝒕=𝟓
𝒎=𝟒
 2. Plan: the required variable is the principal or the present value. The
formula is
𝑭
𝑷=
(𝟏 + 𝒋)𝒏
𝒓
𝒋=
𝒎
𝒏 = 𝒎𝒕

3. Solve:
𝑭
𝑷=
(𝟏 + 𝒋)𝒏
𝟓𝟎, 𝟎𝟎𝟎
𝑷=
𝟎. 𝟎𝟐𝟏
(𝟏 + ( 𝟒 ))(𝟒)(𝟓)
𝑷 = ₱𝟒𝟓, 𝟎𝟐𝟖. 𝟓𝟗

4. Check:
𝑭 = 𝑷(𝟏 + 𝒋)𝒏
𝟎. 𝟎𝟐𝟏 𝟐𝟎
𝟓𝟎, 𝟎𝟎𝟎 = ₱𝟒𝟓, 𝟎𝟐𝟖. 𝟓𝟗(𝟏 + )
𝟒

Independent Assessment 1
1. Explore
𝒊(𝟐) = 𝟎. 𝟎𝟏𝟏𝟓
𝑭 = ₱𝟖𝟎, 𝟎𝟎𝟎
𝒕=𝟓
𝒎=𝟐

2. Plan
We need to find the present value.
𝑭
𝑷=
(𝟏 + 𝒋)𝒏
𝒓
𝒋=
𝒎
𝒏 = 𝒎𝒕

3. Solve
𝑭
𝑷=
(𝟏 + 𝒋)𝒏
𝟖𝟎, 𝟎𝟎𝟎
𝑷=
𝟎. 𝟎𝟏𝟏𝟓
(𝟏 + ( 𝟐 ))(𝟐)(𝟓)
𝑷 = ₱𝟕𝟓, 𝟓𝟒𝟐. 𝟏𝟗
 4. Check
𝑭 = 𝑷(𝟏 + 𝒋)𝒏
𝟎. 𝟎𝟏𝟏𝟓 𝟏𝟎
𝟖𝟎, 𝟎𝟎𝟎 = ₱𝟕𝟓, 𝟓𝟒𝟐. 𝟏𝟗(𝟏 + )
𝟐

What I Have Learned

What I did What I learned How I can use it

I solved real life I learned to solve I can use it when I want

problems involving problems involving to loan or deposit in the
compound interest in compound interest and future for whatever
this lesson and I also apply the different reason there might be. I
classified whether a formulas involved in a can also use it when I’m
number is the principal, compound interest an adult and encounter
maturity value, rate, environment in solving problems that involve
nominal rate, and problems. compound interest.
interest. Finally, after
exploring, planning,
solving, and checking, I
resolved the issues step
by step.
What I Can Do

LOAN PROPOSAL

Name: Chelsea Nicole R. Bitera

Business to put up: Sea salt coffee house
Brief Description of Business: Sea salt coffee house will provide a friendly,
comfortable atmosphere where the customer can receive quality food, service
and entertainment at a reasonable price. The coffee house will offer a variety
of choices to the customers. Coffee and tea of all sorts will be offered. Juice,
soda, and non-alcoholic beverages also will be available. Both wine and beer
will be on sale. Sea salt coffee house will serve breakfast, lunch and dinner.
Source of Funds: Earning from previous work and Loan from the bank
Amount of Loan: ₱500,000
Nominal rate: 6%
Frequency of Conversion: Quarterly
Time in years: 5 years
Compound Interest: ₱173,430
𝑭 = 𝑷(𝟏 + 𝒋)𝒏

𝟎. 𝟎𝟔 𝟐𝟎
𝑭 = 𝟓𝟎𝟎, 𝟎𝟎𝟎 (𝟏 + )
𝟒
𝑭 = ₱𝟔𝟕𝟑, 𝟒𝟑𝟎
Additional Activities (optional)
*Answer 1 of these problems correctly in order to have 5 points incentive.

1. (a.)
𝟎. 𝟎𝟐𝟓 (𝟐)(𝟒)
𝑭 = 𝟏𝟓𝟎, 𝟎𝟎𝟎(𝟏 + )
𝟐
𝑭 = 𝟏𝟓𝟎, 𝟎𝟎𝟎(𝟏. 𝟎𝟏𝟐𝟓)(𝟖)
𝑭 = ₱𝟏𝟔𝟓, 𝟔𝟕𝟐. 𝟗𝟐

(b.)
𝟎. 𝟎𝟐𝟓 (𝟐)(𝟖)
𝑭 = 𝟏𝟓𝟎, 𝟎𝟎𝟎(𝟏 + )
𝟐
𝑭 = 𝟏𝟓𝟎, 𝟎𝟎𝟎(𝟏. 𝟎𝟏𝟐𝟓)(𝟏𝟔)
𝑭 = ₱𝟏𝟖𝟐, 𝟗𝟖𝟑. 𝟒𝟑

(c.)
(𝒂)𝑰𝒄 = 𝟏𝟓, 𝟔𝟕𝟐. 𝟗𝟐
(𝒃)𝑰𝒄 = ₱𝟑𝟐, 𝟗𝟖𝟑. 𝟒𝟑
𝟑𝟐, 𝟗𝟖𝟑. 𝟒𝟑 − 𝟏𝟓, 𝟔𝟕𝟐. 𝟗𝟐 = ₱𝟏𝟕, 𝟑𝟏𝟎. 𝟓𝟏