11

GENERAL
MATHEMATICS
Quarter II – Week 1
Simple and Compound Interests

CONTEXTUALIZED LEARNING ACTIVITY SHEETS

SCHOOLS DIVISION OF PUERTO PRINCESA CITY
General Mathematics – Grade 11
Contextualized Learning Activity Sheets (CLAS)
Quarter II - Week 1: Simple and Compound Interests
First Edition, 2020

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Name: Grade & Section:

Lesson 1
Simple Interest
MELC:
1. illustrates simple and compound interests. M11GM-IIa-1
2. distinguishes between simple and compound interests. M11GM-IIa-2
3. computes interest, maturity value, future value, and present value in simple interest
and compound interest environment. M11GM-IIa-b-1
4. solves problems involving simple and compound interests. M11GM-IIb-2

Objectives:
1. Define the terms used in simple interests.
2. Identify when simple interest is used.
3. Compute for the simple interest and maturity value.

Let’s Explore and Discover

Do you have any idea how lending companies or even banks earn
some money from those who loans or borrows money from
them? Maybe this topic would help you answer this question.

Before we proceed in solving interests, let us first define these

concepts or jargons that we use in solving interests.

Origin or Loan Date

the date on which money is received by the borrower
Time or Term (t)
the amount of time in years the money borrowed or loan is to
Unlocking of be completely repaid. (Note: When the term is expressed in
Difficulties 𝑴
months M, it should be converted in years by 𝒕 = )
𝟏𝟐

• Lender or Creditor Principal (P)

is the person (or
the amount of money borrowed or invested on the origin date.
institution who
invests the money or
Rate (r)
makes the funds the annual rate, usually in percent, charged by the lender, or
available. rate of increase of the investment
Interest (I)
• Borrower or Debtor
is the person (or
the amount paid or earned for the use of money.
institution) who owes Maturity Value or Future Values
the money or avails The amount after t years that the lender receives from the
of the funds from the borrower on the maturity date.
lender.
 We study this topic because there comes a time that you have your work by the future. For
you to have enough money to buy some things you want such as house and lot or even a
brand new car, you need to borrow some in a credible lender. This topic will help you
understand how much money you will pay in borrowing some.

Simple interest refers to the amount earned for a year calculated by multiplying
the principal and the interest rate. This kind of interest is usually applied for short-term
transactions that lasts for less than a year. Some lending and banking institutions
especially small companies use simple interest because it is the easiest way to compute
for the interest.

To compute for the annual simple interest, we use this formula:

𝑰𝒔 = 𝑷𝒓𝒕
where : 𝐼𝑠 is the simple interest,
𝑃 is the principal,
𝑟 is the simple interest, and
𝑡 is the term or time in years
Remember that if the term is expressed in months M, it should be converted in years by
𝑴
𝒕=
𝟏𝟐

To compute the maturity value (F), simply add the principal and the interest. That is:
𝑭 = 𝑷 + 𝑰𝒔

Can you still remember Polya’s Four-Step Rule on Problem-Solving? We will be using that
rule again in our problem solving.

Step 1: Explore What is asked?

Step 2: Plan What is/are the formula/s to be used?
What is/are the given?
Step 3: Solve What is the solution?
Step 4: Check What is the answer?

Example 1: Given a simple interest rate of 12%, compute the interest of Php 145,000
in 4 years.

Step 1: Explore What is asked?

What is the interest of Php 145,000 in 4 years with 12%
simple interest rate

Step 2: Plan What is/are the formula/s to be used?

𝑰𝒔 = 𝑷𝒓𝒕
What is/are the given?
𝑃 = 145,000, 𝑟 = 12% = 0.12, 𝑡 = 4

Step 3: Solve What is the solution?

𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = (145,000)(0.12)(4)
𝐼𝑠 = 69,600

Step 4: Check What is the answer?

The interest earned in 4 years is Php 69,600.00.

Note: Do not forget the unit since we are talking with money.
Example 2: A bank offers 5% annual simple interest rate for a particular deposit. How
much intersest will be earned if Php 200,000.00 is deposited in this savings
account for 2 years? What will be the maturity value in 2 years?

Step 1: Explore What is asked?

How much intersest will be earned in 2 years?
What will be the maturity value in 2 years?

Step 2: Plan What is/are the formula/s to be used?

𝑰𝒔 = 𝑷𝒓𝒕 ; 𝑭 = 𝑷 + 𝑰𝒔
What is/are the given?
𝑃 = 200,000, 𝑟 = 5% = 0.05, 𝑡 = 2

Step 3: Solve What is the solution?

𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = (200,00)(0.05)(2)
𝐼𝑠 = 20,000

𝐹 = 𝑃 + 𝐼𝑠
𝐹 = 200,000 + 20,000
𝐹 = 220,000

Step 4: Check What is the answer?

The interest earned in 2 years is Php 20,000.00
The maturity value in two years will be Php 220,000.00.

Example 3: Invested at an annual interest rate of 7%, the money to be loaned is

amounting to Php 350,000.00 to be paid in 18 months. What amount shall
be charged after 18 months if the loan is in simple interest?

Step 1: Explore What is asked?

What amount shall be charged after 18 months if the loan is in
simple interest?
Step 2: Plan What is/are the formula/s to be used?
𝑰𝒔 = 𝑷𝒓𝒕 ; 𝑭 = 𝑷 + 𝑰𝒔
What is/are the given?
𝑃 = 350,000, 𝑟 = 7% = 0.07,
𝑀 = 18
𝑀 18 3
𝑡= = =
12 12 2

Step 3: Solve What is the solution?

𝐼𝑠 = 𝑃𝑟𝑡
3
𝐼𝑠 = (350,000)(0.07)( )
2
𝐼𝑠 = 36,750

𝐹 = 𝑃 + 𝐼𝑠
𝐹 = 350,000 + 36,750
𝐹 = 386,750

Step 4: Check What is the answer?

The amount shall be charged after 18 month is Php
386,750.00.

(Source: Dr. Debbie Marie B. Versoza et al., General Mathematics: Learner’s Material, Pasig
City: Department of Education, 2016, 137-143.)
 Let’s Practice

Directions: Identify the simple interest in each number

Principal (𝑃, in pesos) interest rate (𝑟) term (𝑡, in years) Interest (𝐼𝑠)
1. 2,000 5% 3
2. 375000 12% 5
3. 88000 3% 4
4. 5000 7.50% 4 months
5. 225000 8% 5 years and 3 months

Directions: Solve the problem using Polya’s Rule in solving problem. Use the space
provided for your solutions.
Miko borrowed Php 25,000.00 at 10% annual simple interest rate. How much should he
pay after 3 years and 6 months?
Step 1: Explore What is asked?
How ch intersest will be earned in 2 years?
What will be the maturity value in 2 years?

Step 2: Plan What is/are the formula/s to be used?

𝑰𝒔 = 𝑷𝒓𝒕 ; 𝑭 = 𝑷 + 𝑰𝒔

What is/are the given?

𝑃 = _________, 𝑟 = __________, 𝑡 = _________

Step 3: Solve What is the solution?

Step 4: Check What is the answer?

Points to ponder:
• How can Activity 1 help you do the problem solving?
 • Do you think that solving the problem using Polya’s four-step rule in problem
solving helps you to get the correct answer?

Let’s Do More

Directions: Complete the crossword puzzle below. Use the definitions below to fill each
box with the letter of the word.

Across:
2. the amount after t years that the lender receives from the borrower on the maturity date.
3. the amount paid or earned for the use of money.

Down:
1. the amount of money borrowed or invested on the origin date.
4. the amount of time in years the money borrowed or loan is to be completely repaid.
5. the annual rate, usually in percent, charged by the lender, or rate of increase of the
investment.

Directions: Solve the problem using Polya’s Rule in solving problem. Use the space
provided or another sheet for your solutions.
If you deposit Php 5,500 in a bank that offers an annual simple interest of 1.5%, how much
money will you have in 12 years?

Points to ponder:
 • In what way do you think you can apply these learning s in our daily life?

Let’s Sum It Up
Directions: Complete the statement by filling out the blanks with the words in the box
below.

Today, I learned that (1)___________________ refers to the amount earned

for a year calculated by multiplying the principal and the interest rate. In finding
simple interests, we should have the (2)____________ (the amount of money borrowed
or invested), the (3)_____________ (the percentage of increase of the investment), and
the (4)_____________ (the amount of time in years the money borrowed or loan is to
be completely repaid.) to compute the interest by multiplying them. The
(5)____________ or the future value is the The amount after t years that the lender
receives from the borrower on the given date.

simple interest rate origin interest

maturity value compound interest principal term

Name: Grade & Section:

Lesson 2
Compound Interest

MELC: Illustrates simple and compound interests. (M11GM-IIa-1)

Computes interest, maturity value, future value, and present value in simple interest and
compound interest environment. (M11GM-IIa-b-1)
Solves problems involving simple and compound interests. (M11GM-IIb-2)
Objectives: 1. Describe compound interests.
2. Perform computations on interest, maturity value, future value, and present value
of compound interest.
3. Solve real-life situation problems involving compound interest.

Let’s Explore and Discover

Have you ever saved a portion of your daily allowance? Were you
Unlocking able to spend your money wisely? How does it feel being able to save
of Difficulties your allowance for future use?
• Compound
interest, interest I had been saving P50 daily from my allowance. Then, I
computed on the heard about opening a student’s savings account in ZXY
principal amount Bank. Would it be worth it if I would put my savings in a
loaned or bank?
deposited and
also on the Yes, that is a great idea! I had
accumulated been saving there since last
past interest. year. Your savings will earn
• Interest, an additional amount since they
amount earned offer compounding interest.
or paid for the That would help your money
use of money. grow.

In real life, financial management is necessary in sustaining our daily needs for survival.
Having knowledge about possibilities on saving will help you keep a stable balance between
spending and saving.

Compound interest is an interest earned on a loan or deposit. It is computed based

on both the principal amount and the interest accumulated during previous periods. It
 calculated by multiplying the principal amount by one plus the annual interest rate
raised to number of terms or time in years.

Before we begin, let us first familiarize ourselves with the following terms:

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

Rate (r)- usually in percent, charged by the lender, or rate of increase of the
investment.
Time or term (t)- amount of time in years the money is borrowed or
invested.

Interest- amount paid or earned for the use of money.

1. Compound Interest
Maturity (Future) Value and Compound Interest
Maturity (Future) Value is the amount received by the lender from the borrower on a
maturity date.
𝐹 = 𝑃(1 + 𝑟)𝑡
where
P = principal/present value
F = Maturity (future) value at the end of a term
r = interest rate
t = term/time in years
Compound interest 𝐼𝑐 ,
𝐼𝑐 = 𝐹 − 𝑃

Example: Find the maturity value and compound interest of Php15,000 compounded
annually at 2% for 7 years.
Given: 𝑃 = 15,000 𝑟 = 2% = 0.02 𝑡 = 7 𝑦𝑒𝑎𝑟𝑠
Find:
(a) Maturity value F
(b) Compound interest 𝐼𝑐
Solution:
(a) 𝐹 = 𝑃(1 + 𝑟)𝑡
𝐹 = (15,000)(1 + 0.02)7
𝐹 = 17,230

(b) 𝐼𝑐 = 𝐹 − 𝑃
𝐼𝑐 = 17,230 − 15,000
𝐼𝑐 = 2,230
Answer: The future value F is Php17,230.00 and the compound interest is
Php 2,230.00.
Present Value P at Compound interest
Present value refers to the amount of money borrowed or invested on the origin date.
𝐹
𝑃= = 𝐹(1 + 𝑟)−𝑡
(1 + 𝑟)𝑡
where
P = principal/present value
F = Maturity (future) value at the end of a term
r = interest rate
t = term/time in years

2
 Example: Find the present value of Php86,356.99 due in 10 years if money is 8%
compounded annually.
Given: 𝐹 = 86,357 𝑟 = 8% = 0.08 𝑡 = 10 𝑦𝑒𝑎𝑟𝑠
Find: P
Solution: The present value P can be computed by
𝐹
𝑃=
(1 + 𝑟)𝑡
86,357
𝑃=
(1 + 0.08)10
𝑃 = 40,000
Therefore, the present value is Php 40,000.00.
2. Compounding more than once a year
Sometimes, interest may also be compounded for more than once a year.

Note:
Frequency of conversion (m) – number of conversion periods in one year.
Conversion or interest period – time between successive conversions of
interest
Total number of conversion periods
𝑚𝑡 = (𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 𝑜𝑓 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛) × (𝑡𝑖𝑚𝑒 𝑖𝑛 𝑦𝑒𝑎𝑟𝑠)
Nominal rate (𝑖 𝑚 ) – annual rate of interest

Maturity Value, Compounding m times a year

𝑚𝑡
𝑖𝑚
𝐹 = 𝑃 (1 + )
𝑚
where
F = maturity (future) value
P = principal
𝑖 𝑚 = nominal rate of interest (annual rate)
m = frequency of conversion
t = term/time in years

Example: Carl borrows Php40,000 and promises to pay the principal and interest at
12% compounded monthly. How much must he repay after 8 years?
Given: 𝑃 = 40,000. 𝑖12 = 12% = 0.12. 𝑡 = 8. 𝑚 = 12
Find: F
Solution 1: Here, we will be using our formula in finding the maturity value.
𝑚𝑡
𝑖𝑚
𝐹 = 𝑃 (1 + )
𝑚
0.12 (12)(8)
𝐹 = (40,000) (1 + )
12
𝐹 = (40,000)(1.01)96
𝐹 = (40,000)(1.01)96
𝐹 = 103,970.92
Thus, Carl will pay Php 103,970.92 after 8 years.
Present value P at Compound Interest
𝐹
𝑃=
𝑖 𝑚 𝑚𝑡
(1 + )
𝑚
where
F = maturity (future) value
3
P = principal
𝑖 𝑚 = nominal rate of interest (annual rate)
 Example: Find the present value of Php 60,000 due in 5 years if money is invested at
12% compounded semi-annually.
Given: 𝐹 = 60,000 𝑡=5 𝑖 (2) = 12% = 0.12
Find: P
Solution: Let us use the formula in finding present value,
𝐹
𝑃= 𝑚𝑡
𝑖 (2)
(1 + )
𝑚
60,000
𝑃=
0.12 (2)(5)
(1 + )
2
60,000
𝑃=
(1 + 0.06)10
60,000
𝑃=
(1.06)10
𝑃 = 33,503.69
Thus, the present value is Php 33,503.69.

(Source: General Mathematics: Learner’s Material, Pasig City,

Department of Education, 2016, 144)

Let’s Practice

Directions: Read and solve the given problems.

1. Mr. Santiago invested Php100,000 at 9% compounded annually. He will get this
amount after 7 years for his daughter’s college fund. (a) How much will he get? (b)How
much interest will his money gain?

2. Mrs. Peres aims to have her investment grow to Php600,000 in 6 years. How much
should she invest in her account that pays 4% compounded annually?

Directions: Analyze and solve the given problems.

1. Find the (a) maturity value and (b) interest if Php20,000 is deposited in a bank at
2.5% compounded monthly for 5 years.

2. What is the present value of Php30,000 due in 3 years and 6 months if money is
worth 10% compounded quarterly?

How will “interest” be useful in your everyday life?

__________________________________________________________________________

4
What is the importance of calculating maturity (future) and present value?
_________________________________________________________________________

Let’s Do More

Directions: Find the unknown principal P, rate r, time t, and compound interest 𝐼𝑐 by
completing the table.
Principal P Rate (r) Time (t) Compound interest Maturity Value (F)
(𝐼𝑐 )
13,000 5% 9 (1) (2)
11,500 6.5% 5 years and (3) (4)
2 months
(5) 9.75% 10 months (6) 64,837
23,551.14 (7) 6 (8) 25,000
300,000 7.5% (9) (10) 535043.35

Directions: Complete the table by computing the maturity values, compound interests
and present values.
Present Nominal Interest Interest Time Total Compound Maturity
Value Rate im Compounded rate per in number of interest Value
period years conversions
30,000 6% Semi- (1) 7 (2) (3) (4)
annually
(5) 10% quarterly 3.5% 5 (6) (7) 100,000
I. Solve.
1. Richard wants to compare the compound interest on a Php60,000 investment.
a. Find the interest if funds earn 8% compounded annually for 1 year.
b. Find the interest if funds earn 8% compounded quarterly for 1 year.

Based on the activities above, which do you think will yield higher interest; Compounding
annually or compounding more than once a year? Why? ____________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

5
 Let’s Sum It Up

Activity 1
Directions: Complete the crossword puzzle. Use the hints indicated at the right side.
Across:

2. amount of money borrowed or invested on the

origin date

5. amount paid or earned for the use of money

7. amount after t years that the lender receives

from the borrower on the maturity date

8. annual rate of interest

Down:
1. a percentage increase, charged by the lender, or
rate of increase of the investment

3. amount of time in years the money is borrowed

or invested.

4. interest is computed on the principal and also

on the accumulated past interests.
6. amount of value of money borrowed or invested
on the origin date.

Activity 2
Directions: Match the given mathematical variables in Column A into the term it stands for
in Column B. Reveal the hidden code below.
A B
1. P B. Maturity Value
2. r E. Interest
3. t M. Term or time
4. F N. Principal
5. 𝐼𝑐 R. Frequency of conversion
6. 𝑚 S. Nominal rate of interest
7. 𝑖 𝑚 U. Rate

1 2 3 4 5 6 7

6
 Let’s Assess

Directions: Read and analyze the questions carefully. Write your answers on the
space provided before the number.

_______1. What is defined as the amount of time in years the money borrowed or loan is
to be completely repaid?
A. Rate B. maturity value C. term D. principal
_______2. What is the amount after t years that the lender receives from the borrower
on the maturity date?
A. Interest B. maturity value C. rate D. term
_______3. What is the amount paid or earned for the use of money?
A. Principal B. rate C. interest D. maturity value
_______4. What refers to the amount of money invested or borrowed on the origin date?
A. Rate B. Principal C. Term D. Interest
_______5. What term refers to the percentage charged by the lender, or rate of increase
of investment?
A. Rate B. Principal C. Term D. Interest
_______6. What type of interest is computed on the principal and the accumulated past
interests?
A. Simple Interest C. Maturity Value
B. Compound Interest D. Present Value

For numbers 7 to 8, use the given problem below.

If an entrepreneur applies for a loan amounting to Php 500,000.00 in a bank, what will be
his total payment after 2 years and 6 months if the annual simple interest is 7.5%?

_______7. What is the interest?

A. Php 93,750 C. Php 9,750,000
B. Php 9,375,000 D. Php 97,500
_______8. What is the maturity value?
A. Php 593,750 C. Php 595, 000
B. Php 597, 500 D. Php 550,000
_______9. How much should you invest in a fund earning 9% compounded quarterly if
you want to accumulate P300,000 in 3 years and 3 months?
A. Php207,923.67 C. Php215,760.92
B. Php213,990.66 D. Php224,645.71
_______10. Xion deposited Php15,000 in a bank which gives 1% compounded quarterly
and let it stay there for 10 years. How much would be the interest?
A. Php1,575.50 C. Php1,982.77
B. Php1,786.09 D. Php2,032.87

1
Answer Key

2
LESSON 2

3
 References
Book

Verzosa, Debbie Marie B., Paulo L. Apolinario, Regina M. Tresvalles, Francis Nelson M.
Infante, Jose Lorenzo M. Sin, Len Patrick Dominic M. Garces, et al., General
Mathematics Learner’s Material. Pasig City: Department of Education, 2016

4
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