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



Business Finance – Grade 12
Alternative Delivery Mode
Quarter 1 – Module 6: Calculation of Future and Present Value of Money
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work
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Every effort has been exerted to locate and seek permission to use these materials from
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ownership over them.

Published by the Department of Education, Division of Palawan

Schools Division Superintendent:
Natividad P. Bayubay, CESO VI
Assistant Schools Division Superintendents:
Loida P. Olavario, Ph.D.
Felix M. Famaran

Development Team of the Module

Writers: Grace C. Bundal
Language Editor: Marianne R. Valdez
Reviewers: Eric N. Quillip
Management Team: Aurelia B. Marquez
Rodgie S. Demalinao
Eric N. Quillip

Printed in the Philippines by ________________________

Department of Education – MIMAROPA Region – Schools Division of Palawan

Office Address: PEO Road, Bgy. Bancao-Bancao, Puerto Princesa City

Telephone: (048) 433-6392
E-mail Address: palawan@deped.gov.ph
Website: www.depedpalawan.com

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 12






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Introductory Message
For the facilitator:

Welcome to the Business Finance – Grade 12 Modular Distance Learning (MDL)

Self-Learning Module on the Calculation of Future and Present Value of Money!

This module was collaboratively designed, developed and reviewed by educators

from public institution to assist you, the teacher or facilitator in helping the
learners meet the standards set by the K to 12 Curriculum Most Essential Learning
Competencies (MELCs) in the “New Normal” situation while overcoming their
personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st-century skills while taking into consideration
their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

iv
For the learner:

Welcome to the Business Finance – Grade 12 Modular Distance Learning (MDL)

Self-Learning Module on the Calculation of Future and Present Value of Money!

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in
the module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways; a story, a
song, a poem, a problem opener, an activity
or a situation.

What is It This section provides a brief discussion of

the lesson. This aims to help you discover
and understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled in to process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or
skill into real life situations or concerns.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

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 Additional Activities In this portion, another activity will be given
to you to enrich your knowledge or skill of
the lesson learned.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know

This module was designed and written with you in mind. It is here to help you
master the concepts of calculating the present and future value of money. The
scope of this module permits it to be used in many different learning situations.
The language used recognizes the diverse vocabulary level of students. The lessons
are arranged to follow the standard sequence of the course. But the order in which
you read them can be changed to correspond with the textbook you are now using.

The module is composed of one lesson, namely:

• Lesson 1 – Calculate the Future Value and Present Value of Money

After going through this module, you are expected to:

1. Define the concepts regarding the time value of money.
2. Compute the present value and future value with the aid of formulas and
tables.
3. Apply the concepts in real-life scenarios.

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 What I Know

Directions: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

1. Which of the following is the concept of compound interest?

a. The process of gradually retiring a debt through periodic payments of
principal and interest
b. The process of serving a debt with regular interest payments followed
lump sum payment of principal and interest at the end of the loan term
c. The process of converting future lump sums and annuities into present
value at a stated interest rate.
d. The process of earning interest on an original amount, plus interest on
interest previously earned.

2. Which of the following is the amount your original funds will be worth in the
future, based on earning an interest rate over some time?
a. compounding c. opportunity cost
b. future value d. money invested

3. Interest paid (earned) on both the original principal borrowed (lent) and previous
interest earned is often referred to as _________________.
a. Present Value c. future value
b. Simple interest d. compound value

4. To an investor the most desirable compounding period is?

a. Annually c. Monthly
b. Semi-annually d. Daily

5. The higher the interest rate

a. the higher the present value
b. the interest rate did not affect the present value
c. the lower the present value
d. the lower the future vale

6. Which of the following type of value discounting basically?

a. Present Value c. Future Value
b. Finance Value d. Business Value

7. To increase a given future value, the discount rate should be adjusted

____________.
a. Upward c. first upward and then downward
b. Downward d. None of the above

8. Which of the following is an important role of time of money?

a. understanding the effective rate on a business lean
b. undertaking the composition of a mortgage payment
c. determining the true rate of return on an investment
d. all of the above.

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9. To increase a given present value, the discount rate should be adjusted.
a. upward c. true
b. downward d. false

10. Which of the following I the BEST explain interest?

a. the price of money
b. the difference between the amount to be repaid and the amount paid
c. the current value of a stream of future payment
d. the rate of return of a financial asset

11. Time Value of Money helps you understand.

a. Present Value c. Only A
b. Future Value d. Both A and B

12. Interest paid (earned) on only the original principal borrowed (lent) id often
referred to as ________________.
a. Present value c. future value
b. Simple interest d. compound value

13. Which of the following interest rate use in time value of money calculations?
a. a discount rate, rate of return of money
b. a discount rate, accounting return, or yield
c. a compound rate, rate of return, or market return
d. a compound rate, accounting return, or yield

14. Which of the following is a type of value compounding?

a. Present Value c. Future Value
b. Finance Value d. Business Value

15. Which of the following formula is this?

a. PVIF c. PVIFA
b. FVIF d. FVIFA

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Lesson
Calculate the Present and
1 Future Value of Money

As the COVID-19 pandemics spread across the globe, cash has become important
again. Why? Because beyond the basic needs, money helps us achieve our life’s
goals and support.

Present Value and Future Value are very important to the investors for taking
crucial decisions regarding investment decisions.

What’s In

In the previous lesson, you have learned the compare and contrast the loan
requirements of the different banks and nonbank institutions and cite these
institutions in the locality

Notes to the Teacher

Begin the lesson by letting the students do Activity No 1. Let the
students answer the given activity which will help them to calculate the
future value and present value of money.
.

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 What’s New

The below activity will help you check how much you know how to calculate the
future value and present value of money.

Activity 1: FILL IN THE BLANKS

Direction: Choose the best answer in the box

Interest Compounding Principal Cash Earnings

Investment Rate Deposit Savings Time

1. _______________ a legal rights to participation in the advantages, profits, and

responsibility of something.
2. _______________ money or equivalent paid for goods or services at the time of
purchase or delivery.
3. _______________ to pay (interest) on both the accrued interest on the principal.
4. _______________ to commit (money) in order to earn a financial return.
5. _______________ capital.
6. _______________ to place especially for safekeeping or as a pledge.
7. _______________ an account on which interest is usually paid and from which
withdrawal can be made usually only by presentation of a passbook or by
written authorization on a prescribed form.
8. _______________ the balance of revenue after deduction of cost and expenses.
9. _______________ the measured of measurable period during which an action
process, or condition exits or continues.
10. _______________ an amount of payment or charged based on another amount.

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 What is It

In Activity 1, you were able to give some of the key terms relative to how to
calculate the future value and present value of money. In this part of the module,
you will find out further on how to calculate the future value and present value of
money to help individuals how to save money and earn interest.

Time Value of Money

The concept of your time value of cash states that a peso today, all things being
equal, has greater value than a peso within the future because of the chance to
take a position that pesos today earn as a result of the chance to take the position
that pesos today and earn interest.
In making a decision, choosing between buying a new car or choosing to build an
apartment. You need to be careful about the decision including the cost and what
are the benefits.
This concept holds true when spending your money. Because money is a limited
resource, you cannot spend money and save that money at the same time. If you
decide to save, the opportunity for you is to earn interest.
How do you determine the amount of interest that you will earn?
Simple Interest- it is a quick and easy method of calculating the interest.
Formula: Principal annual x interest rate x time= Interest earned for one year.
PAxIRxT= Interest earned for one year or Interest = P x r x T

Example: You deposited 5,000.00 in a savings account.

The interest of money in the bank that you save is 2% annually.
How much interest will this account earn in two years?

Solution:
Year Principal Rate Time Interest Cumulative Total
Interest
1 5, 000 2% 1 100 100 5, 100
2 5, 000 2% 1 100 200 5, 200

Answer: This account will earn P 100 for one year.

Compound Interest- simply earning interest on interest.

Formula: A= P (1 + r ) nt
n
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applies per time period

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t = number of time periods elapsed

Example: If an amount of P 10, 000 is deposited into a savings account at an

annual interest rate of 5%, compounded monthly, the value of the investment after
5 years can be calculated as follows:

Solution:

Year Principal + Rate Time Interest Cumulative Total

Cumulative Interest
interest
1 P 10, 000 5% 1 P 500 P 500 P 10, 500
2 P 10, 500 5% 1 P 525 P 1, 025 P 11, 025
3 P 11, 025 5% 1 P 551.25 P 1, 576.25 P 11, 576.25
4 P 11, 576.25 5% 1 P 578.81 P 2, 155.06 P 12, 155.06
5 P 12, 155.06 5% 1 P607.75 P 2, 762.81 P 12, 762.81

The interest for 5 years is P 2, 762.81. This is the sum of the increasing interest for
five years period.( 500 + 525 + 551.25 + 578.81 + 607.75).

Future Value of Money

In the previous example, the value of the investment at the end of one year is equal
to P 5, 100 computed as follows:

Value at the end of one year = P 5, 000 + ( P5, 000 x 2% x 1 year)

P 5, 000 = P 5, 000 x (1 + 2%)

Therefore, that given an interest rate of 2%, the future value of P5, 000 after
one year is P 5, 100.

Also, the future value of the P 5, 000 at the end of 2 years will be equal to
the value at the end of year 1 plus the compound interest earned in year 2 as
shown below:

Value at the End of Year 2 = P 5, 100 + (P 5, 100 x 2% x 1 year)

P 5, 202 = P 5, 100 x (1 x 2%)
P 5, 202 = P 5, 000 x (1 + 2%) x (1 + 2%)
P 5, 202 = P 5, 000 x ( 1 + 2%)2

The future value of P 5, 000 invested for 2 years at a rate of 2% is equal to P

5, 202.00.

Then, the general formula below to determine the future value:

Future Value = Initial Value x (1 + R)T

Where:
R= Interest Rate
T= Time Period

To get the future value, we multiply the initial value by (1 + R )T which is referred to
as the future value interest factor (FVIF).

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Using our example, the FVIF given 2 years and a rate of 2% is equal to 1.0404. This
is the intersection of time period= 2 and interest rate + 2% in the FVIF table.

Future Value Interest Factor

Period, 1% 2% 3% 4% 5% 6% 7% 8% 9% 10 % 11% 12 % 13 % 14 %
n
1 1.0 10 1.0 2 0 1.0 3 0 1.0 4 0 1.0 50 1.0 6 0 1.0 70 1.0 8 0 1.0 9 0 1.10 0 1.110 1.12 0 1.13 0 1.14 0
2 1.0 2 0 1.0 4 0 1.0 6 1 1.0 8 2 1.10 2 1.12 4 1.14 5 1.16 6 1.18 8 1.2 10 1.2 3 2 1.2 4 5 1.2 77 1.3 0 0
3 1.0 3 0 1.0 6 1 1.0 9 3 1.12 5 1.158 1.19 1 1.2 2 5 1.2 6 0 1.2 9 5 1.3 3 1 1.3 6 8 1.4 0 5 1.4 4 3 1.4 8 2
4 1.0 4 1 1.0 8 2 1.12 6 1.170 1.2 16 1.2 6 2 1.3 11 1.3 6 0 1.4 12 1.4 6 4 1.518 1.574 1.6 3 0 1.6 8 9
5 1.0 51 1.10 4 1.159 1.2 17 1.2 76 1.3 3 8 1.4 0 3 1.4 6 9 1.53 9 1.6 11 1.6 8 5 1.76 2 1.8 4 2 1.9 2 5
6 1.0 6 2 1.12 6 1.19 4 1.2 6 5 1.3 4 0 1.4 19 1.50 1 1.58 7 1.6 77 1.772 1.8 70 1.9 74 2 .0 8 2 2 .19 5
7 1.0 72 1.14 9 1.2 3 0 1.3 16 1.4 0 7 1.50 4 1.6 0 6 1.714 1.8 2 8 1.9 4 9 2 .0 76 2 .2 11 2 .3 53 2 .50 2
8 1.0 8 3 1.172 1.2 6 7 1.3 6 9 1.4 77 1.59 4 1.718 1.8 51 1.9 9 3 2 .14 4 2 .3 0 5 2 .4 76 2 .6 58 2 .8 53
9 1.0 9 4 1.19 5 1.3 0 5 1.4 2 3 1.551 1.6 8 9 1.8 3 8 1.9 9 9 2 .172 2 .3 58 2 .558 2 .773 3 .0 0 4 3 .2 52
10 1.10 5 1.2 19 1.3 4 4 1.4 8 0 1.6 2 9 1.79 1 1.9 6 7 2 .159 2 .3 6 7 2 .59 4 2 .8 3 9 3 .10 6 3 .3 9 5 3 .70 7
11 1.116 1.2 4 3 1.3 8 4 1.53 9 1.710 1.8 9 8 2 .10 5 2 .3 3 2 2 .58 0 2 .8 53 3 .152 3 .4 79 3 .8 3 6 4 .2 2 6
12 1.12 7 1.2 6 8 1.4 2 6 1.6 0 1 1.79 6 2 .0 12 2 .2 52 2 .518 2 .8 13 3 .13 8 3 .4 9 8 3 .8 9 6 4 .3 3 5 4 .8 18
13 1.13 8 1.2 9 4 1.4 6 9 1.6 6 5 1.8 8 6 2 .13 3 2 .4 10 2 .72 0 3 .0 6 6 3 .4 52 3 .8 8 3 4 .3 6 3 4 .8 9 8 5.4 9 2
14 1.14 9 1.3 19 1.513 1.73 2 1.9 8 0 2 .2 6 1 2 .579 2 .9 3 7 3 .3 4 2 3 .79 7 4 .3 10 4 .8 8 7 5.53 5 6 .2 6 1
15 1.16 1 1.3 4 6 1.558 1.8 0 1 2 .0 79 2 .3 9 7 2 .759 3 .172 3 .6 4 2 4 .177 4 .78 5 5.4 74 6 .2 54 7.13 8
16 1.173 1.3 73 1.6 0 5 1.8 73 2 .18 3 2 .54 0 2 .9 52 3 .4 2 6 3 .9 70 4 .59 5 5.3 11 6 .13 0 7.0 6 7 8 .13 7
17 1.18 4 1.4 0 0 1.6 53 1.9 4 8 2 .2 9 2 2 .6 9 3 3 .159 3 .70 0 4 .3 2 8 5.0 54 5.8 9 5 6 .8 6 6 7.9 8 6 9 .2 76
18 1.19 6 1.4 2 8 1.70 2 2 .0 2 6 2 .4 0 7 2 .8 54 3 .3 8 0 3 .9 9 6 4 .717 5.56 0 6 .54 4 7.6 9 0 9 .0 2 4 10 .575
19 1.2 0 8 1.4 57 1.754 2 .10 7 2 .52 7 3 .0 2 6 3 .6 17 4 .3 16 5.14 2 6 .116 7.2 6 3 8 .6 13 10 .19 7 12 .0 56
20 1.2 2 0 1.4 8 6 1.8 0 6 2 .19 1 2 .6 53 3 .2 0 7 3 .8 70 4 .6 6 1 5.6 0 4 6 .72 8 8 .0 6 2 9 .6 4 6 11.52 3 13 .74 3
24 1.2 70 1.6 0 8 2 .0 3 3 2 .56 3 3 .2 2 5 4 .0 4 9 5.0 72 6 .3 4 1 7.9 11 9 .8 50 12 .2 3 9 15.179 18 .79 0 2 3 .2 12
25 1.2 8 2 1.6 4 1 2 .0 9 4 2 .6 6 6 3 .3 8 6 4 .2 9 2 5.4 2 7 6 .8 4 8 8 .6 2 3 10 .8 3 5 13 .58 5 17.0 0 0 2 1.2 3 1 2 6 .4 6 2
30 1.3 4 8 1.8 11 2 .4 2 7 3 .2 4 3 4 .3 2 2 5.74 3 7.6 12 10 .0 6 3 13 .2 6 8 17.4 4 9 2 2 .8 9 2 2 9 .9 6 0 3 9 .116 50 .9 50
40 1.4 8 9 2 .2 0 8 3 .2 6 2 4 .8 0 1 7.0 4 0 10 .2 8 6 14 .9 74 2 1.72 5 3 1.4 0 9 4 5.2 59 6 5.0 0 1 9 3 .0 51 13 2 .78 2 18 8 .8 8 4

Present Value of Money

Present value – money now is more valuable than money later on. Most decision-
makers choose to get the present value.
To get the present value, we go back to the Future Value Formula
Future Value = Initial Value x (1 + R)T
The future value in the formula is the expected amount while the initial value is the
present value.
The Present Value formula

1. C = Future sum
2. I= Interest rate (where ‘1’ is 100%)
3. N = number of periods

Present Value = Future Value/ (1 + interest rate) number of periods

or, using a notation

PV = FV/ (1 + r)t

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Example:
Problem: Suppose you are depositing an amount today in an account that earns
5% interest, compounded annually. If your goal is to have P 5, 000 in the account
at the end of 6 years, how much must you deposit in the account today?
Solution:
Future Value= P5, 000
Interest Rate = 5%
Number of periods = 10

PV = P 5, 000/ (1 + 0.05)6
PV = P 5, 000/ (1.3401)
PV= P 3, 731
We can use the present value table ( or table of discount factors to solve for the
present value.
PV= FV (discount factor for r and t)
The discount factor, from the table, is 0.7462. Therefore
PV = P5,000 (0.7462)
PV = 3.731

Present Value Interest Factor

Perio d , 1% 2% 3% 4% 5% 6% 7% 8% 9% 10 % 11% 12 % 13 % 14 %
n
1 0 .9 9 0 0 .9 8 0 0 .9 71 0 .9 6 2 0 .9 52 0 .9 4 3 0 .9 3 5 0 .9 2 6 0 .9 17 0 .9 0 9 0 .9 0 1 0 .8 9 3 0 .8 8 5 0 .8 77
2 0 .9 8 0 0 .9 6 1 0 .9 4 3 0 .9 2 5 0 .9 0 7 0 .8 9 0 0 .8 73 0 .8 57 0 .8 4 2 0 .8 2 6 0 .8 12 0 .79 7 0 .78 3 0 .76 9
3 0 .9 71 0 .9 4 2 0 .9 15 0 .8 8 9 0 .8 6 4 0 .8 4 0 0 .8 16 0 .79 4 0 .772 0 .751 0 .73 1 0 .712 0 .6 9 3 0 .6 75
4 0 .9 6 1 0 .9 2 4 0 .8 8 9 0 .8 55 0 .8 2 3 0 .79 2 0 .76 3 0 .73 5 0 .70 8 0 .6 8 3 0 .6 59 0 .6 3 6 0 .6 13 0 .59 2
5 0 .9 51 0 .9 0 6 0 .8 6 3 0 .8 2 2 0 .78 4 0 .74 7 0 .713 0 .6 8 1 0 .6 50 0 .6 2 1 0 .59 3 0 .56 7 0 .54 3 0 .519
6 0 .9 4 2 0 .8 8 8 0 .8 3 8 0 .79 0 0 .74 6 0 .70 5 0 .6 6 6 0 .6 3 0 0 .59 6 0 .56 4 0 .53 5 0 .50 7 0 .4 8 0 0 .4 56
7 0 .9 3 3 0 .8 71 0 .8 13 0 .76 0 0 .711 0 .6 6 5 0 .6 2 3 0 .58 3 0 .54 7 0 .513 0 .4 8 2 0 .4 52 0 .4 2 5 0 .4 0 0
8 0 .9 2 3 0 .8 53 0 .78 9 0 .73 1 0 .6 77 0 .6 2 7 0 .58 2 0 .54 0 0 .50 2 0 .4 6 7 0 .4 3 4 0 .4 0 4 0 .3 76 0 .3 51
9 0 .9 14 0 .8 3 7 0 .76 6 0 .70 3 0 .6 4 5 0 .59 2 0 .54 4 0 .50 0 0 .4 6 0 0 .4 2 4 0 .3 9 1 0 .3 6 1 0 .3 3 3 0 .3 0 8
10 0 .9 0 5 0 .8 2 0 0 .74 4 0 .6 76 0 .6 14 0 .558 0 .50 8 0 .4 6 3 0 .4 2 2 0 .3 8 6 0 .3 52 0 .3 2 2 0 .2 9 5 0 .2 70
11 0 .8 9 6 0 .8 0 4 0 .72 2 0 .6 50 0 .58 5 0 .52 7 0 .4 75 0 .4 2 9 0 .3 8 8 0 .3 50 0 .3 17 0 .2 8 7 0 .2 6 1 0 .2 3 7
12 0 .8 8 7 0 .78 8 0 .70 1 0 .6 2 5 0 .557 0 .4 9 7 0 .4 4 4 0 .3 9 7 0 .3 56 0 .3 19 0 .2 8 6 0 .2 57 0 .2 3 1 0 .2 0 8
13 0 .8 79 0 .773 0 .6 8 1 0 .6 0 1 0 .53 0 0 .4 6 9 0 .4 15 0 .3 6 8 0 .3 2 6 0 .2 9 0 0 .2 58 0 .2 2 9 0 .2 0 4 0 .18 2
14 0 .8 70 0 .758 0 .6 6 1 0 .577 0 .50 5 0 .4 4 2 0 .3 8 8 0 .3 4 0 0 .2 9 9 0 .2 6 3 0 .2 3 2 0 .2 0 5 0 .18 1 0 .16 0
15 0 .8 6 1 0 .74 3 0 .6 4 2 0 .555 0 .4 8 1 0 .4 17 0 .3 6 2 0 .3 15 0 .2 75 0 .2 3 9 0 .2 0 9 0 .18 3 0 .16 0 0 .14 0
16 0 .8 53 0 .72 8 0 .6 2 3 0 .53 4 0 .4 58 0 .3 9 4 0 .3 3 9 0 .2 9 2 0 .2 52 0 .2 18 0 .18 8 0 .16 3 0 .14 1 0 .12 3
17 0 .8 4 4 0 .714 0 .6 0 5 0 .513 0 .4 3 6 0 .3 71 0 .3 17 0 .2 70 0 .2 3 1 0 .19 8 0 .170 0 .14 6 0 .12 5 0 .10 8
18 0 .8 3 6 0 .70 0 0 .58 7 0 .4 9 4 0 .4 16 0 .3 50 0 .2 9 6 0 .2 50 0 .2 12 0 .18 0 0 .153 0 .13 0 0 .111 0 .0 9 5
19 0 .8 2 8 0 .6 8 6 0 .570 0 .4 75 0 .3 9 6 0 .3 3 1 0 .2 76 0 .2 3 2 0 .19 4 0 .16 4 0 .13 8 0 .116 0 .0 9 8 0 .0 8 3
20 0 .8 2 0 0 .6 73 0 .554 0 .4 56 0 .3 77 0 .3 12 0 .2 58 0 .2 15 0 .178 0 .14 9 0 .12 4 0 .10 4 0 .0 8 7 0 .0 73
24 0 .78 8 0 .6 2 2 0 .4 9 2 0 .3 9 0 0 .3 10 0 .2 4 7 0 .19 7 0 .158 0 .12 6 0 .10 2 0 .0 8 2 0 .0 6 6 0 .0 53 0 .0 4 3
25 0 .78 0 0 .6 10 0 .4 78 0 .3 75 0 .2 9 5 0 .2 3 3 0 .18 4 0 .14 6 0 .116 0 .0 9 2 0 .0 74 0 .0 59 0 .0 4 7 0 .0 3 8
30 0 .74 2 0 .552 0 .4 12 0 .3 0 8 0 .2 3 1 0 .174 0 .13 1 0 .0 9 9 0 .0 75 0 .0 57 0 .0 4 4 0 .0 3 3 0 .0 2 6 0 .0 2 0
40 0 .6 72 0 .4 53 0 .3 0 7 0 .2 0 8 0 .14 2 0 .0 9 7 0 .0 6 7 0 .0 4 6 0 .0 3 2 0 .0 2 2 0 .0 15 0 .0 11 0 .0 0 8 0 .0 0 5

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 What’s More

Activity 2: Think of It
Directions: Answer the following questions.
1. What are the differences between future value and present value?
2. What is the relationship between future value and present value?
3. Why is future value important?
4. How is the present value and future value calculations related?
5. Why is present value important?

Rubrics: Activity 2 and 4

Category 10 8 6 4 Score
Content Shows a full Shows a good Shows a good Does not
understanding understanding understanding seem to
of the topic. of the topic of parts of the understand
with detail. topic, conveys the topic
connections very well
Subject The student The student The student The
knowledge can accurately can accurately can accurately student is
answer almost answer most answer a few unable to
all questions questions questions accurately
answer
questions

Notes to the Teacher

Activities 2 and 4 are designed to develop and enrich students’
knowledge on how to calculate future value and present value of
money. The activities ensure that students’ full understanding of
the lesson is achieved. The scoring rubrics will guide the students
in doing the activities.

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 What I Have Learned

At this point, let us see how much you have gained from the discussions and
activities you have undergone.

Activity 3: Let’s Calculate

Direction: Compute for the future value at the end of the term for each
scenario using the simple interest and compound interest assumption.

1. Find the present value. You need to save up to 2, 000.00 in 1 year. How
much should you save now if the bank offers a rate of 10%?

2. Grace deposited P 3, 500.00 in a bank with an interest rate of 5% for 1 year.

What is the future value of your deposit?

Simple Interest Assumption

3. Karen invested P 15, 000 in a bank. If the bank pays 4% interest, how much
interest will you accumulate in your account after 2 years?

4. Alona borrowed P8, 000 from a lending company to buy a new Laptop. The
Lending Company charged 5% for the borrowed amount payable after 5
years.

Compound Interest Assumption

5. Alona borrowed P8, 000 from a lending company to buy a new Laptop. The
Lending Company charged 5% for the borrowed amount payable after 5
years.

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 What I Can Do

This activity will help you transfer into real-life situations the knowledge and skills
you have gained or learned from this module.

Activity 4: Give an Application

Directions: Read the scenario below and answer the corresponding questions on a
separate sheet of paper.

One day, PCSO called you that you won a cash prize. They tell you that you
have two payment options: First, receive P20, 000 now or second, receive P 20,
000 in two years.

1. Which option would you choose? Why?

2. How would you relate this situation in your daily life?

Activity 5: Exit slip

Directions: Complete the sentences on the Exit Slip (Fisher and Frey, 2004).
1. Write one you learned today………
2. I didn’t understand in…..
3. I enjoyed doing it in…..
4. I would like to learn more about ….
5. Please explain more about ….
6. The thing that surprised me the most today was…..

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 Assessment

Directions: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

1. To increase a given future value, the discount rate should be adjusted

____________.
c. Upward c. first upward and then downward
d. Downward d. None of the above

2. Interest paid (earned) on only the original principal borrowed (lent) id often
referred to as ________________.
a. Present value c. future value
b. Simple interest d. compound value

3. Interest paid (earned) on both the original principal borrowed (lent) and previous
interest earned is often referred to as _________________.
c. Present Value c. future value
d. Simple interest d. compound value

4. Which of the following type of value discounting basically?

a. Present Value c. Future Value
b. Finance Value d. Business Value

5. Which of the following is a type of value compounding?

a. Present Value c. Future Value
b. Finance Value d. Business Value

6. To increase a given present value, the discount rate should be adjusted.

a. upward c. true
b. downward d. false

7. Which of the following I the BEST explain interest?

a. the price of money
b. the difference between the amount to be repaid and the amount paid
c. the current value of a stream of future payment
d. the rate of return of a financial asset

8. The higher the interest rate

a. the higher the present value
b. the interest rate did not affect the present value
c. the lower the present value
d. the lower the future vale

9. Which of the following interest rate use in time value of money calculations?
a. a discount rate, rate of return of money
b. a discount rate, accounting return, or yield
c. a compound rate, rate of return, or market return
d. a compound rate, accounting return, or yield

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10. Which of the following is an important role of time of money?
a. understanding the effective rate on a business lean
b. undertaking the composition of a mortgage payment
c. determining the true rate of return on an investment
d. all of the above.

11. Time Value of Money helps you understand.

a. Present Value c. Only A
b. Future Value d. Both A and B

12. To an investor the most desirable compounding period is?

a. Annually c. Monthly
b. Semi-annually d. Daily

13. Which of the following is the amount your original funds will be worth in the
future, based on earning an interest rate over a while?
a. compounding c. opportunity cost
b. future value d. money invested

14. Which of the following formula is this?

c. PVIF c. PVIFA
d. FVIF d. FVIFA

15. Which of the following is the concept of compound interest?

a. The process of gradually retiring a debt through periodic payments of
principal and interest
b. The process of serving a debt with regular interest payments followed
lump sum payment of principal and interest at the end of the loan term
c. The process of converting future lump sums and annuities into present
value at a stated interest rate.
d. The process of earning interest on an original amount, plus interest on
interest previously earned.

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 Additional Activities

Let us reinforce the skills/knowledge that you have gained from this lesson by
doing the next activity.

Activity 6: Focus
• How does a corporation determine the present value (PV) and the future
value (FV) of financial assets?

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 22
What I Know Activity 1 Activity 2
1. B 1. Interest
2. D 2. Cash Students’ answers might vary.
3. D 3. Compoun Scoring will be based on the
4. C ding Rubrics
5. A 4. Investmen
6. A t
7. D 5. Principal
Activity 4 - Students’ answers
8. B 6. Deposit
might vary. Scoring will be based
9. B 7. Savings on the Rubrics
10. D 8. Earnings
11. B 9. Time
12. A 10. Rate Activity 5 Students’ answers
13. C might vary. Refer to the Rubrics
14. B for the scoring.
15. B
Activity 3 Activity 6 Students’ answers
might vary. Refer to the Rubrics
1. PV= 2,000/(1+ 0.10) = 1,998.90
for the scoring.
2. FV= 3, 500 x (1+ 0.50) = 3, 657
3. P1, 200 Assessment
1. A
4. P14, 000 2. B
5. P15, 525 3. D
4. A
5. C
6. B
7. B
8. C
9. A
10. D
11. D
12. D
13. B
14. B
15. D
16.
Answer Key
References
Cayanan, A., Borja, DVN. Business Finance: The Rex Printing Company, Inc 2017
Teacher Guide for Senior High School, Business Finance Published by the
Commission on Higher Education, 2016
Yumang, K., Pao, TPC, Benito P. Business Finance: The Phoenix Publishing House,
Inc., 2016

For inquiries or feedback, please write or call:

Department of Education – SDO Palawan

Curriculum Implementation Division Office

2nd Floor Deped Palawan Building
Telephone no. (048) 433-6392

Learning Resources Management Section

LRMS Building, PEO Compound
Telephone no. (048) 434-0099

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