Lesson 3.

Down Payment,
Gross Balance, and
Current Increased
Balance

Business Mathematics
Accountancy, Business, and Management

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Learning Objectives

In this lesson, you should be able to do the following:

● Define down payment, gross balance, and current
increased balance.
● Illustrate how to obtain down payment, gross
balance, and current increased balance.
● Solve problems involving down payment, gross
balance, and current increased balance.

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 Down payment, gross balance, and current increased balance

In buying and selling transactions, understanding down

payment, gross balance, and current increased balance is
important. How are they related to each other?

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 Down Payment

● the initial payment made

when purchasing
something costly
● a portion of the total Down payment
price that has been paid
for

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 Down Payment

DP = P x DP%
where,
DP = down payment
P = unit price
DP% = down payment rate

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 Down Payment (Example 1)

Closer L
o ok

What is the down payment of a property worth

₱2,800,000, if it requires a down payment rate of 5%?

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 Down Payment

Closer L
o ok

Solution:
Down Payment = Price x Down Payment Rate
Down Payment = ₱2,800,000 x 0.05
Down Payment = ₱140,000

Therefore, the down payment is ₱140,000.

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 Down Payment (Example 2)

Closer L
o ok

How much Rey has to pay in order to own a brand new

car which asks for a 30% down payment from its total
value of ₱1,590,000?

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 Down Payment

Closer L
o ok

Solution:
Down Payment = Price x Down Payment Rate
Down Payment = ₱1,590,000 x 0.30
Down Payment = ₱477,000

Rey has to pay ₱477,000 as a down payment for a brand

new car.

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 Check Your Progress

Compute for the down payment of a land property with a

1 total value of ₱6,000,000 and a required 25% down
payment.

Answer area

₱1,500,000
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 Check Your Progress

Calculate the total down payment for a property that has a

2 total value of ₱3,500,000 and requires an 18% down
payment.

Answer area

₱630,000
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 Gross Balance

● the amount left after the

down payment is
deducted from the
purchase price Gross Balance
● the total outstanding
balance before interests
and fees are applied

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 Gross Balance

GB = P – DP
where,
GB = gross balance
P = price
DP = down payment

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 Gross Balance (Example 1)

Closer L
o ok

What is the gross balance when a 20% down payment is

paid for a property with a total value of ₱2,150,000?

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 Gross Balance (Example 1)

Closer L
o ok

Solution:
Down Payment = Price x Down Payment Rate
Down Payment = ₱2,150,000 x 20%
Down Payment = ₱2,150,000 x 0.20
Down Payment = ₱430,000

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 Gross Balance (Example 1)

Closer L
o ok

Solution: (continuation)
Gross Balance = Price – Down Payment
Gross Balance = ₱2,150,000 – ₱430,000
Gross Balance = ₱1,720,000

Therefore, the gross balance is ₱1,720,000.

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 Gross Balance (Example 2)

Closer L
o ok

How much is the remaining balance (before interest and

fees) if a 5% initial payment is paid for a property with a
value of ₱12,000,000?

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 Gross Balance (Example 2)

Closer L
o ok

Solution:
Down Payment = Unit Price x Down Payment Rate
Down Payment = ₱12,000,000 x 5%
Down Payment = ₱12,000,000 x 0.05
Down Payment = ₱600,000

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 Gross Balance (Example 2)

Closer L
o ok
Solution: (continuation)
Gross Balance = Unit Price – Down Payment
Gross Balance = ₱12,000,000 – ₱600,000
Gross Balance = ₱11,400,000

Therefore, the remaining balance (before interest and

fees) is ₱11,400,000.

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 Check Your Progress
A commercial lot is up for sale. Jenny is interested and plans
to acquire the property. How much will her gross balance be
3 if the total value of the lot is ₱5.5 million and a 30% down
payment is required to be paid?
Answer area

₱3,850,000
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 Current Increased Balance

● the remaining balance

after a down payment
was paid Current Increased
● includes the interests, Balance
fees, or penalties
incurred

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 Current Increased Balance

CIB = PD (1 + I/P%)

where,
CIB = current increased balance
PD = periodic due
I/P% = interest or penalty rate

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 Current Increased Balance (Example 1)

Closer L
o ok

How much is the current increased balance of a ₱6,500

monthly contribution if the bank charges a penalty rate
of 5.5% for late payment?

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 Current Increased Balance (Example 1)

Closer L
o ok

Solution:
CIB = PD (1 + I/P%)
Current Increased Balance = ₱6,500 (1 + 0.055)
Current Increased Balance = ₱6,500 (1.055)
Current Increased Balance = ₱6,857.5
With a 5.5% penalty rate for late payment, the current
increased balance will become ₱6,857.50.
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 Current Increased Balance (Example 1)

Closer L
o ok

2. What is the current increased balance of a monthly

amortization amounting to ₱22,400, if a 10% penalty
rate is included?

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 Current Increased Balance (Example 1)

Closer L
o ok

Solution:
CIB = PD (1 + I/P%)
Current Increased Balance = ₱22,400 (1 + 0.10)
Current Increased Balance = ₱22,400 (1.10)
Current Increased Balance = ₱24,640
The current increased balance is equal to ₱24,640, if a
10% penalty rate is included.

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 Problems Involving Down payment, Gross Balance, and Current Increased
Balance

You can use our knowledge about down payment, gross

balance, and current increased balance to solve some
problems in buying and selling. Examine how the following
business problems were resolved.

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 Problems Involving Down payment, Gross Balance, and Current Increased
Balance
Closer L
o ok

1. Rodriguez's family would like to buy their first family

car. How much will the gross balance be, if they are
required to pay a down payment of 15% for a car
amounting to ₱2,680,000?

The gross balance is ₱2,278,000 after a

15% down payment is paid.

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 Problems Involving Down payment, Gross Balance, and Current Increased
Balance
Closer L
o ok

2. Tyron pays a monthly amortization of ₱25,500 for his

pick-up truck. For this month, he failed to pay due to
financial problems. How much will the current
increased balance be if a 10% penalty is imposed due
to non-payment on the due date? (Suppose it is not
carried over to the next month’s payment)

The current increased balance is

₱28,050, if a 10% penalty is imposed.
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 Check Your Progress
John plans on acquiring a 2-bedroom condo unit worth
4 ₱4,000,000. How much will he need if it requires a 20%
down payment?

Answer area

₱800,000
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Keep in Mind

● Payments, balances, and penalties play an important role in buying

and selling transactions.
● Down payment is the initial payment made when purchasing
something costly like a house or a car. It represents a portion of the
total price. The seller determines the down payment policy.

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Keep in Mind

● Gross balance is the amount left after the down payment was
deducted from the price of product or service.
● The remaining balance after a down payment is paid, which includes
the interests, fees, or penalties incurred due to non-payment or late
payment is called current increased balance.

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Keep in Mind

Concept Formula

Down payment DP = P x DP%

Gross balance GB = P – DP

Current increased
CIB = PD (1 + I/P%)
balance

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