GENERAL MATHEMATICS REVIEWER

MODULE 9: SIMPLE AND COMPOUND INTEREST Formula for Simple Interest

Interest is the amount paid or earned for the use of money. An

amount of money that is borrowed for a period of time is called
loan. A person or institution who invests the money or makes the
funds available is called lender or creditor while the person or
institution who owes or avails the fund from the lender is called
borrower or debtor.

Simple Interest is an interest that is computed on the principal and

then added to it while compound interest is an interest on the
principal amount and also on the accumulated past interest.
MODULE 10: SOLVING PROBLEMS INVOLVING SIMPLE
INTEREST AND COMPOUND INTEREST
Compound Interest
Compounding More than Once a Year
MODULE 11: ANNUITY
Annuity is a series of equal payments at regular intervals.
Literally, annuity means payment made annually. But it can also
refer to payment made at different segmental payment period.

Classification of Annuity based on Payment Schedule

1. Simple Annuity – is an annuity where the payment
interval coincides with interest conversion period.
For example, ₱ 10,000 invested at the end of every six months
for 2 years and that 15 % is paid compounded semiannually.
1. General Annuity – is an annuity where the payment
interval does not coincide with the interest conversion
period.
For example, every 3 months a father deposited ₱ 15, 000 in a
trust fund for the son’s education for 8 years. The money earns
12% compounded monthly. The payment period is not equal to
the interest period.

Classifications of Annuity based on Payment Schedule

1. Annuity Due – is an annuity that is paid or received at the
beginning of the time period.
2. Ordinary Annuity – is an annuity that is paid or received
at the end of a time period
3. Deferred Annuity – the periodic payment is not made at
the beginning nor at the end of each payment interval, but
at some later date.
MODULE 12: FAIR MARKET VALUE OF A CASH FLOW
STREAM AND DEFERRED ANNUITY

Fair Market Value of Cash Flow Steam that includes an Annuity

A cash flow refers to any type of payments done. Cash inflow
happens when a person receives the payment and a cash outflow
are payments or deposits made by a person. Cash inflows can be
represented by positive numbers and cash outflows can be
represented by negative numbers.
Fair market value (FMV) is the price that two parties are willing
to pay for an asset or liability, given the following conditions:
 Both parties are well informed about the condition of the
asset or liability.
 Neither party is under undue pressure to buy or sell the item.
 There is no time pressure to complete the deal.
The fair market value concept is used for many purposes, including
the following:
 Establishing the replacement value of an insured asset;
 Establishing the tax basis upon which property will be
assigned a property tax; and
 Establishing the basis for damages in a court award.
The fair market value or economic value of a cash flow (payment
stream) on a particular date refers to a single amount that is
equivalent to the value of the payment stream at that date. This
particular date is called the focal date.

Fair Market Value is computed by adding the Down Payment and

Present Valur or “Fair Market Value = Down payment + Present
Value”.
In computing for the present value of the given problem, the formula
to be used are the following:
Present Value and Period of Deferral of a Deferred Annuity
Deferred is a type of annuity that does not begin until a given time
interval has passed or payments are done at some later date of a
period of time. In this type of annuity, we also consider a very
important concept which is the period of deferral, this refers to time
between the purchase of an annuity and the start of the
payments for the deferred annuity.
MODULE 13: STOCKS AND BONDS
STOCKS
Stocks are shares in the owners of the company. Owners of stocks
may be considered as part owners of the company. There are two
types of stocks: common stocks and preferred stock. Both will
receive dividends or share of earnings of the company. Dividends The Stock Index can be a standard by which investors can compare
are paid first to preferred shareholders. the performance of their stocks.

Stocks can be bought or sold at its current price called market value.
When a person buys some shares, the person receives a certificate
with the corporation’s name, owner’s name, number of shares and
par value per share.

BONDS The bond market index is a measure of a portion of the bond

Bonds are interest bearing security which promises to pay an market.
amount of money on a certain maturity date as stated in the bond
certificate. Unlike the stockholders, bondholders are lenders to the
institution which may be a government or private company.
 right to take possession of the assets pledge by the borrower. On the
other hand, an unsecured loan is a loan that is approved without
the need for collateral.

Loans also differ in form. The two most common types of loans are
business and consumer loans.

What us the difference between a consumer loan and business

loan?
A business loan is a money lent specifically for a business
purpose. It may be used to start a business or to have a business
expansion. On the other hand, a consumer loan is a money lent to
an individual for personal or family purposes. The most popular
examples of consumer loan are mortgages, home equity, and credit
card.

Amortization. It is the process of paying a loan over time in a

regular equal payment.
MODULE 14: BUSINESS LOANS AND CONSUMER LOANS
Mortgage. It is a type of secured loan secured by a collateral that the
FINANCIAL LOAN
borrower is obliged to pay at specified terms.
It is a forms of debt contract entered into by two parties, an
organization or an individual. The lender which is usually a financial
Amortization schedule. It is a complete table of periodic loan
institution advances a sum of money to the borrower. In return, the
payments that shows the principal, interests and the outstanding
borrower agrees to certain set of terms which includes the principal
balance after each payment is made.
amount, interest rate, finance charges, and other conditions.

Loans can be classified as secured or unsecured loan.

What us the difference between secured and unsecured loans?

In a secured loan, the borrower pledged some assets as collateral

for the loan. Collateral could be real-estate or other investments. In
case the borrower fails to pay his/her obligations, the lender has the
AMORTIZATION SCHEDULE
MODULE 15: PROPOSITIONS, LOGICAL OPERATORS, AND
TRUTH VALUES
MODULE 16: VALID ARGUMENTS AND FALLACIES