Lesson

Simple Interest
1

What I Know (Pretest)

Directions: Read each statement carefully. Choose the letter of the correct answer and write it
on a 1 whole sheet of paper.
1.) This refers to the accumulated amount obtained by adding the principal and the compound interest.
A. Compound amount C. Present value
B. Compound interest D. Simple interest
2.) Date on which the money borrowed or loaned is to be completely repaid.
A. Conversion period C. Maturity date
B. Loan date D. Origin date
3.) What is the formula in computing the simple interest on a given financial transaction?
P r
A. 𝑰𝒔 = 𝑷𝒓𝒕 B. 𝑰𝒔 = 𝑷𝒓𝟐𝒕 C. 𝑰𝒔 = D. 𝑰𝒔 =
rt Pt
4.) This refers to the interest rate per conversion period.
A. Compound interest C. Rate of interest
B. Periodic rate D. Simple interest
5.) This refers to the amount paid or earned for the use of money.
A. Conversion period B. Interest C. Principal D. Rate
6.) 30 months is equivalent to
A. 2.5 years B. 2.75 years C. 3 years D. 3.25 years
7.) How much is the simple interest on this financial transaction, P = ₱5,000.00, r = 6%, and t = 2
years?
A. ₱120.00 B. ₱600.00 C. ₱1,200.00 D. ₱6,000.00
8.) What is the total number of conversion periods when a certain amount is borrowed at 10%
compounded monthly for 5 years?
A. 12 B. 50 C. 24 D. 60
9.) How much was the interest if Sophia borrowed ₱45,000.00 and paid a total of ₱55,500.00 at the end
of the term?
A. ₱10,500.00 B. ₱45,000.00 C. ₱11,500.00 D. ₱100,500.00
10.) What is the interest rate per conversion period if ₱25,900.00 was invested at 3.5% compounded
annually for 4 years and 6 months?
A. 0.035 B. 0.350 C. 0.140 D. 0.460
11.) John borrowed ₱45,400.00 at 10% simple interest rate. How much should he repay after 3 years?
A. ₱13,620.00 B. ₱46,762.00 C. ₱59,020.00 D. ₱104,420.00
12.) An interest of ₱760.00 was earned on an investment for 9 months at 3% interest rate.
How much was invested?
A. ₱2,052.00 B. ₱2,814.81 C. ₱20,520.00 D. ₱33,777.78
13.) At what simple interest rate was ₱18,350.00 invested if it earned ₱1,025.00 interest for 1.5 years?
A. 0.0372% B. 0.1193% C. 3.72% D. 11.93%
14.) How much will be the compound interest if ₱30,220.00 is invested at 7% compounded quarterly for
2 years and 9 months?
A. ₱4,499.21 B. ₱6,354.05 C. ₱36,574.05 D. ₱147,899.31
 3
15.) When is ₱78,800.00 due if its present value of ₱61,500.00 is invested at 𝟏𝟎 % compounded
4
monthly?
A. 2. 32 years B. 6.95 years C. 10.75 years D. 27.79 years

What’s New

“When you saved money in the bank, you will gain an interest paid by the bank. On the other hand,
when you borrow money, you are charged an interest on the amount you borrowed.
How does gained and charged interests computed?”

A debtor pays the bank an amount which is more than the amount they borrowed. An investor may
withdraw from the bank more than the amount deposited. This additional sum is called INTEREST.

Definition of terms:

Lender or creditor – person (or institution) who invests the money or makes the funds available.
Borrower or debtor – person (or institution) who owes the money or avails of the funds from the lender.
Origin or loan date – date on which money is received by the borrower.
Repayment date or maturity date – date on which the money borrowed or loaned is to be completely
repaid.
Time or term (t) – amount of time in years the money is borrowed or invested; length of time between the
origin and maturity dates.
Principal or present value (P) – amount of money borrowed or invested on the origin date.
Rate of interest or simply rate (r) – annual rate, usually in percent, charged by the lender, or rate of increase
of the investment.
Interest (I) – amount paid or earned for the use of money.
Maturity Value or Future Value (F) – amount after t years that the lender receives from the borrower on
the maturity date; equal to the sum of principal and the interest earned.

What is It

Simple Interest (Is)

For every financial transaction, whether you borrowed or invested a certain amount P, a
corresponding percentage of the principal called interest is being paid. Simple Interest (Is) is the interest
charged on the principal alone for the entire duration or period t of the loan or investment, at a particular rate
r. After the term of the loan or investment, the maturity value or future value F is computed by getting the
sum of the principal and the interest due.

Formulas:
• 𝑰𝒔 = 𝑷𝒓𝒕
• 𝑭 = 𝑷 + 𝑰𝒔 or 𝑭 = 𝑷 + 𝑷𝒓𝒕 or 𝑭 = 𝑷(𝟏 + 𝒓𝒕)
Is
• 𝑷= or 𝑷 = 𝑭 − 𝑰𝒔
rt
Is
• 𝒕=
Pr
 Is
• 𝒓= x 100
Pt

***where 𝐼𝑠 − simple interest

𝑃 − principal
𝑟 − rate of interest or simply rate
𝑡 − time (in year)
𝐹 − future value (or maturity value)

Note: If the given time is in months, it can be converted to year(s) by using the formula
number of months
𝑡=
12
Example.
Directions: Complete the table below by solving the unknown quantities in each row.
Principal (P) Rate Time Simple Interest Future Value (F)
(r) (t) (Is)
1.) ₱500,000.00 12.5% 10 years
2.) 2.5% 4 years ₱1,500.00
3.) ₱36,000.00 1 year and ₱4,860.00
6 months
4.) ₱250,000.00 0.5% ₱1,400.00
5.) ₱10,000.00 4% 5 months

Solution:
1.) Given: P = ₱500,000.00 ; r = 12.5% or 0.125 ; t = 10 years

𝐼𝑠 = 𝑃𝑟𝑡 𝐹 = 𝑃 + 𝐼𝑠
𝐼𝑠 = ₱500,000.00(0.125)(10) 𝐹 = ₱500,000.00 + ₱625,000.00
𝑰𝒔 = ₱𝟔𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎 𝑭 = ₱𝟏, 𝟏𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎

2.) Given: r = 2.5% or 0.025 ; t = 4 years ; 𝑰𝒔 = ₱1,500.00

Is
𝑃= 𝐹 = 𝑃 + 𝐼𝑠
rt
₱ 1 ,500.00 𝐹 = ₱15,000.00 + ₱1,500.00
𝑃=
0.025(4)
𝑷 = ₱𝟏𝟓, 𝟎𝟎𝟎. 𝟎𝟎 𝑭 = ₱𝟏𝟔, 𝟓𝟎𝟎. 𝟎𝟎

3.) Given: P = ₱36,000.00 ; 6

t=1 years or 1.5 years ; 𝑰𝒔 = ₱4,860.00
12
Is
𝑟= x 100 𝐹 = 𝑃 + 𝐼𝑠
Pt
₱ 4,860.00 𝐹 = ₱36,000.00 + ₱4,860.00
𝑟=
₱ 36,000.00(1.5)
𝒓 = 𝟎. 𝟎𝟗 or 9% 𝑭 = ₱𝟒𝟎, 𝟖𝟔𝟎. 𝟎𝟎
 4.) Given: P = ₱250,000.00 ; r = 0.5% or 0.005 ; 𝑰𝒔 = ₱1,400.00
Is
𝑡= 𝐹 = 𝑃 + 𝐼𝑠
Pr
₱ 1,400.00 𝐹 = ₱250,000.00 + ₱1,400.00
𝑡=
₱ 250,000.00( 0.005)
𝒕 = 𝟏. 𝟏𝟐 years 𝑭 = ₱𝟐𝟓𝟏, 𝟒𝟎𝟎. 𝟎𝟎

5
5.) Given: P = ₱10,000.00 ; r = 4% or 0.04 ; t= 𝐲𝐞𝐚𝐫
12
𝐼𝑠 = 𝑃𝑟𝑡 𝐹 = 𝑃 + 𝐼𝑠
5
𝐼𝑠 = ₱10,000.00 (0.04) ( ) 𝐹 = ₱10,000.00 + ₱166.67
12
𝑰𝒔 = ₱𝟏𝟔𝟔. 𝟔𝟕 𝑭 = ₱𝟏𝟎, 𝟏𝟔𝟔. 𝟔𝟕

What’s More

I. Complete the table below by solving the unknown quantities in each row. Write your complete
solutions and answers on a 1 whole sheet of paper.
Principal Rate Time Simple Interest Future Value (F)
(P) (r) (t) (Is)
1.) ₱40,000.00 2% 3 years
2.) 10% 5 years ₱2,500.00
3.) ₱100,000.00 1.5 years ₱3,600.00
4.) ₱250,000.00 4.5% ₱15,400.00
5.) ₱12,345.00 8.25% 9 months

II. Solve the future value (refer on test I) using the alternative formulas:
𝑭 = 𝑷 + 𝑷𝒓𝒕 or 𝑭 = 𝑷(𝟏 + 𝒓𝒕)
What I Have Learned

Problems Involving Simple Interest

1. A bank offers 1.5% annual simple interest rate for a particular deposit. How much interest will be
earned if 1 million pesos is deposited in this savings account for 1 year?
Solution:
Given: r = 1.5% or 0.015 ; P = ₱1,000,000.00 ; t = 1 year
𝐼𝑠 = 𝑃𝑟𝑡
𝐼𝑠 = ₱1,000,000.00 (0.015)(1)
𝑰𝒔 = ₱𝟏𝟓, 𝟎𝟎𝟎.00
Therefore, an interest amounting to ₱𝟏𝟓, 𝟎𝟎𝟎.00 will be earned if 1 million pesos is deposited in a
savings account for 1 year with 1.5% annual simple interest rate.

2. When invested at an annual interest rate of 7%, the amount earned ₱11,200.00 of simple interest in
2.5 years. How much money was originally invested?
Solution:
 Given: r = 7% or 0.07 ; 𝑰𝒔 = ₱11,200.00 ; t = 2.5 years
Is
𝑃=
rt
₱ 11,200.00
𝑃=
0.07 (2.5)
𝑷 = ₱64,000.00
Therefore, the amount of money originally invested was ₱64,000.00.

3. Ricky borrowed ₱25,000.00 and paid ₱1,250.00 interest for 6 months. What was the rate of interest?
Solution:
Given: P = ₱25,000.00 ; 𝑰𝒔 = ₱1,250.00 ; t = 𝟏𝟐 𝟔 year or 0.5 year
Is
𝑟= x 100
Pt
₱ 1,250.00
𝑟=
₱ 25,000.00(0.5)
𝒓 = 𝟎. 1 or 10%
Therefore, the rate of interest was 0.1 or 10%.

4. How long in years will it take for ₱17,300.00 to amount to ₱20,000.00 at 𝟏𝟏. 𝟐𝟓% simple interest?
Solution:
Given: P = ₱17,300.00 ; F = ₱20,000.00 ; r = 11.25% or 0.1125
𝐼𝑠 = 𝐹 − 𝑃
𝐼𝑠 = ₱20,000.00 − ₱17,300.00
𝐼𝑠 = ₱2,700

Is
𝑡=
Pr
₱ 2,700.00
𝑡=
₱ 17,300.00(0.1125)
𝒕 = 𝟏. 39 years
Therefore, it will take 1.39 years for ₱17,300.00 to amount to ₱20,000.00.

What I Can Do

Answer the following problems involving simple interest. Write your complete solutions and answers on a 1
whole sheet of paper.

1. Find the simple interest on a loan of ₱65,000.00 if the loan is given at a rate of 2% and is due in 5
years and 3 months?

2. How much money will you have after 4 years if you deposited ₱10,000.00 in a bank that pays 6%
simple interest?
Answer Key
 What’s More
What I Know (Pretest)
I.
1. A
Lesson 1. Is = ₱2,400.00 F = ₱42,400.00
2. C
3. A
Compound Interest
2. P = ₱5,000.00 F = ₱7,500.00

4. B
1 3. r = 0.024 or 2.4% F = ₱103,600.00
4. t = 1.37 years F = ₱265,400.00
5. B
5. Is = ₱763.85 F = ₱13,108.85
6. A
II.
7. B
*The same answers on test I (values of F).
8. D
9. A What I Can Do
10. A 1. Is = ₱6,825.00
11. C 2. F = ₱12,400.00
12. D
13. C
14. B
15. A

What’s In
Problems involving simple interest were discussed on the previous lesson. Simple interest is the interest
charged on the principal alone for the entire length of the loan or investment. Several formulas were
introduced to solve problems involving simple interest. The second type of interest that will be discussed on
this lesson is the compound interest. For many long-term financial transactions, compound interest is used
instead of simple interest.

What’s New
“Suppose you won ₱10,000.00 and you plan to invest if for 5 years. A cooperative group offers 2%
simple interest rate per year. A bank offers 2% compounded annually. Which will you choose and why?”

Definition of terms:

Compound amount (F) – also called maturity value, it is an accumulated amount obtained by adding the
principal and the compound interest.
Conversion period (m) – the number of times in a year the interest will be compounded.
The following are the common conversion periods in a year:
annually : m =8
semi-annually : m =8
quarterly : m = 4
monthly : m =9
Number of conversion periods (n) – the total number of times interest is calculated for the entire term of
the investment or loan.
Annual interest rate or nominal rate (r) – the stated rate of interest per year.
Periodic rate (i) – the interest rate per conversion period.
Present value of F (P) – this is the principal P, that will accumulate to F if there is an interest at periodic
rate i for n conversion periods.

What is It

Compound Interest (Ic)

Compound interest (Ic) is usually used by banks in calculating interest for long-term investments
and loans such as savings account and time deposits. In this type of interest, the interest due at stipulated
interval is added to the principal and earns interest thereafter. It implies that the principal increases over a
period of time, resulting to an increase in interest earned at every compounding period. Thus, compound
interest is an interest resulting from the periodic addition of simple interest to the principal amount or simply
the difference between the compound amount and the original principal.
The problem below is an example of compound interest.
Example:
₱50,000.00 was loaned for a period of 3 years with 5% interest compounded annually. What amount
of money will be needed to repay the loan?
Principal at
Amount at the end of the
the start of Interest
year
the year
₱50,000 + ₱2,500 =
First Year ₱50,000.00 ₱50,000 × 0.05 × 1 = ₱2,500.00
₱52,500.00
₱52,500 + ₱2,625 =
Second Year ₱52,500.00 ₱52,500 × 0.05 × 1 = ₱2,625.00
₱55,125.00
₱55,125 + ₱2,756.25 =
Third Year ₱55,125.00 ₱55,125 × 0.05 × 1 = ₱2,756.25
₱57,881.25

The required answer to the problem is ₱57,881.25.

As shown in the table, the amount at the end of the year is equal to the sum of the principal and the
interest for that year.
Thus,

Amount for First Year : A = ₱50,000 + (₱50,000 × 0.05)

= ₱50,000 (1 + 0.05)

Amount for Second Year: A = ₱50,000 (1 + 0.05) + (₱50,000 (1 + 0.05)(0.05))

= ₱50,000 (1 + 0.05) (1 + 0.05)
= ₱50,000 ( 1 + 0.05)2

Amount for Third Year: A = ₱50,000 (1 + 0.05)2 + (₱50,000 ( 1 + 0.05)2(0.05))

= ₱50,000 (1 + 0.05)2 (1 + 0.05)
= ₱50,000 (1 + 0.05)3

Generally, when interest is compounded annually for n years, the amount A = P( 1 + i) n.

 Computation of the compound amount by the method shown above is tedious and time consuming. The
formulas below will greatly ease computations.

Formulas:

***where
𝐼𝑐 − compound interest
𝑃 − present value of F
𝑟 − annual interest rate
𝑡 − time (per year)
𝐹 − compound amount or maturity value
𝑚 − conversion period
annually : m=1
semi-annually : m=2
quarterly : m=4
monthly : m = 12
𝑛 − total number of conversion periods (𝑛 =
𝑚𝑡)
r
𝑖 − periodic rate (𝑖 = )
m
Examples:
1.) Find the compound amount and interest earned on ₱15,000.00 for 1 year at
(a) 7% compounded semi-annually and
(b) 7% compounded quarterly.
Solution:
(a) Given: P = ₱15,000.00 t = 1 year
r = 7% or 0.07 m=2
r 0.07 𝒏 = 𝒎𝒕 = 𝟐(𝟏) = 𝟐
𝒊 = m = 2 =0.035

𝐹 = 𝑃(1 + 𝑖)𝑛 𝐼𝑐 = 𝐹 − 𝑃
𝐹 = ₱15,000.00(1 + 0.035 ) 2
𝐼𝑐 = ₱16,068.38 − ₱15,000.00
𝑭 = ₱𝟏𝟔, 𝟎𝟔𝟖. 𝟑𝟖 𝑰𝒄 = ₱𝟏, 𝟎𝟔𝟖. 𝟑𝟖
Therefore, the compound amount and the interest are ₱𝟏𝟔, 𝟎𝟔𝟖. 𝟑𝟖 and ₱𝟏, 𝟎𝟔𝟖. 𝟑𝟖, respectively.

(b) Given: P = ₱15,000.00 t = 1 year

r = 7% or 0.07 m=4
r 0.07
𝒊 = m = 4 =0.0175 𝒏 = 𝒎𝒕 = 𝟒(𝟏) = 𝟒

𝐹 = 𝑃(1 + 𝑖)𝑛 𝐼𝑐 = 𝐹 − 𝑃
𝐹 = ₱15,000.00(1 + 0.0175 )4 𝐼𝑐 = ₱16,077.89 − ₱15,000.00
𝑭 = ₱𝟏𝟔, 𝟎𝟕𝟕. 𝟖𝟗 𝑰𝒄 = ₱𝟏, 𝟎𝟕𝟕. 𝟖𝟗
Therefore, the compound amount and the interest are ₱𝟏𝟔, 𝟎𝟕𝟕. 𝟖𝟗 and ₱𝟏, 𝟎𝟕𝟕. 𝟖𝟗, respectively.

2.) Find the present value of ₱𝟏𝟐, 𝟖𝟓𝟎. 𝟎𝟎 due in 3 years if the interest rate is 6% compounded monthly.
Solution:
(a) Given: F = ₱𝟏𝟐, 𝟖𝟓𝟎. 𝟎𝟎 t = 3 years
r = 6% or 0.06 m = 12
r 0.06 𝒏 = 𝒎𝒕 = 𝟏𝟐(𝟑) = 𝟑𝟔
𝒊= = =0.005
m 12

𝑃 = 𝐹(1 + 𝑖)−𝑛
𝑃 = ₱12,850.00(1 + 0.005)−36
𝑷 = ₱𝟏𝟎, 𝟕𝟑𝟖. 𝟎𝟒
Therefore, the present value is ₱𝟏𝟎, 𝟕𝟑𝟖. 𝟎𝟒.

3.) At what rate of interest compounded semi-annually will ₱𝟏𝟒, 𝟑𝟎𝟎. 𝟎𝟎 accumulate to
₱𝟏𝟕, 𝟎𝟎𝟎. 𝟎𝟎 in 2 years and 6 months?
Solution:
Given: P = ₱𝟏𝟒, 𝟑𝟎𝟎. 𝟎𝟎 m=2
6
F = ₱𝟏𝟕, 𝟎𝟎𝟎. 𝟎𝟎 t=𝟐 years or 2.5 years
12
𝒏 = 𝒎𝒕 = 𝟐(𝟐. 𝟓) = 𝟓

[( ) ]
1
F n
r =m −1
P

[( ) ]
1
₱ 17,000.00 5
r =2 −1
₱ 14,300.00
𝒓 = 𝟎. 𝟎𝟕𝟎𝟒 or 7. 𝟎𝟒%
Therefore, the rate of interest will be 0.0704 or 7.04%.

4.) How many years will it take for ₱𝟏𝟑, 𝟎𝟎𝟎. 𝟎𝟎 to become ₱𝟐𝟎, 𝟎𝟎𝟎. 𝟎𝟎 at 12.5% compounded
annually?
Solution:
Given: P = ₱𝟏𝟑, 𝟎𝟎𝟎. 𝟎𝟎 m=1
F = ₱𝟐𝟎, 𝟎𝟎𝟎. 𝟎𝟎 r = 12.5% or 0.125
r 0.125
𝒊= = =0.125
m 1

t=
log ( FP )
m [ log ⁡(1+i) ]

t=
log (
₱ 20,000.00
₱ 13,000.00 )
1 [ log ⁡(1+ 0.125) ]
𝒕 =3.66 years
Therefore, ₱13,000.00 will become ₱20,000.00 in 3.66 years.

What’s More
 Solve what is asked in each item. Write your complete solutions and answers on a 1 whole sheet of
paper.
1.) Find the final or compound amount of ₱15,900.00 at 5.5% interest compounded annually for 18
months.
2.) Find the interest on ₱25,750.00 for 3 years at 8% compounded quarterly.
3.) Find the present value of ₱150,000.00 at 15% interest compounded monthly for 6 years.
4.) At what rate of interest compounded semi-annually will ₱𝟐𝟏, 𝟓𝟗𝟎. 𝟎𝟎 accumulate to ₱𝟐𝟔, 𝟗𝟎𝟎. 𝟎𝟎
in 2 years?
5.) How long will it take for ₱𝟑, 𝟕𝟎𝟎. 𝟎𝟎 accumulate to ₱𝟔, 𝟗𝟎𝟎. 𝟎𝟎 at 4.5% compounded quarterly?

What I Have Learned

Problems Involving Compound Interest

1. Joseph borrows ₱𝟓𝟎, 𝟎𝟎𝟎.𝟎𝟎 and promise to pay the principal and interest at 12% compounded
monthly. How much must he repay after 6 years?
Solution:
Given: P = ₱50,000.00 m = 12
r = 12% or 0.12 t = 6 years
r 0.12 𝒏 = 𝒎𝒕 = 𝟏𝟐(𝟔) = 𝟕𝟐
𝒊= = =0.01
m 12
𝐹 = 𝑃(1 + 𝑖)𝑛
𝐹 = ₱50,000.00(1 + 0.01 )72
𝑭 = ₱𝟏𝟎𝟐, 𝟑𝟓𝟒. 𝟗𝟕
Therefore, Joseph must repay ₱𝟏𝟎𝟐, 𝟑𝟓𝟒. 𝟗𝟕 after 6 years.
2. A loan ₱𝟏𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎 at 8% compounded quarterly was paid back with an amount of ₱𝟏𝟕𝟔,
𝟎𝟎𝟎. 𝟎𝟎 at the end of the period. For how long was the money borrowed?
Solution:
Given: P = ₱𝟏𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎 r = 8% or 0.08
F = ₱𝟏𝟕𝟔, 𝟎𝟎𝟎. 𝟎𝟎 m=4
r 0.8
𝒊= = =0.02
m 4

t=
log ( FP )
m [ log ⁡(1+i) ]

t=
log(₱ 176,000.00
₱ 125,000.00 )
4 [ log ⁡(1+0.02) ]
𝒕 =4.32 years
Therefore, the money was borrowed for 4.32 years.

3. How much must be invested today in a savings account in order to have ₱𝟓𝟎, 𝟖𝟎𝟎. 𝟎𝟎 in 6 years and
9 months if money earns 5.4% compounded semi-annually?
Solution:
Given: F = ₱𝟓𝟎, 𝟖𝟎𝟎. 𝟎𝟎 9
t=𝟔 years or 6.75 years
12
r = 5.4% or 0.054 m=2
 r 0.8 𝒏 = 𝒎𝒕 = 𝟐(𝟔. 𝟕𝟓) = 𝟏𝟑. 𝟓
𝒊= = =0.02
m 4

𝑃 = 𝐹(1 + 𝑖)−𝑛
𝑃 = ₱50,800.00(1 + 0.027)−13.5
𝑷 = ₱𝟑𝟓, 𝟒𝟓𝟑. 𝟕𝟗
Therefore, an amount of ₱𝟑𝟓, 𝟒𝟓𝟑. 𝟕𝟗 must be invested today.

What I Can Do
Answer the following problems involving compound interest. Write your complete solutions and
answers on a 1 whole sheet of paper.
1. In a certain bank, Justine invested ₱𝟏𝟎𝟎, 𝟎𝟎𝟎. 𝟎𝟎 in a time deposit that pays 0.5% compounded
annually. How much will be his money after 5 years? How much interest will he gain?
2. Recca borrows ₱𝟑𝟓, 𝟒𝟎𝟎. 𝟎𝟎 and agrees to pay ₱𝟒𝟕, 𝟓𝟎𝟎. 𝟎𝟎 after 2 years. At what rate,
compounded monthly, is the interest computed?

Additional Activities
Directions: Answer the following activities and write answers on a 1 whole sheet of paper.
I. Arrange the jumbled letters to form a word/s related to business mathematics.
1.) T M T U R I Y A A E D T
2.) N E E T T R I S E R T A
3.) I I P P C N L R A
4.) O O U D C M N P N U T M A O
5.) I P S E M L T E N T S R E I
6.) E V M N T T N E I S
7.) T E U Y A Q R L R
8.) C M C U E T U L A A
9.) R W O R B O R E
10.) M O C U D O N P T N T R E E S I
II. Suppose you are working in a bank that encourages customers to save money for their future.
Your bank manager requested you to form a team and formulate a slogan to be used for this
savings campaign. Write a short phrase or slogan to persuade people to open a savings account in
the bank where you work.
III. Complete the Simple Interest Vs Compound Interest Comparison Chart below.
Simple Interest Vs Compound Interest
Basis for Comparison Simple Interest Compound Interest

1. Meaning

2. Formula

3. Principal

4. Amount of Interests
 Assessment (Post-test)
Directions: Read each statement carefully. Choose the letter of the correct answer and write it on a 1 whole
sheet of paper.
1.) Date on which money is received by the borrower.
A. Conversion period B. Loan date C. Maturity date D. Repayment date
1
2.) 𝟑 % is equivalent to
5
A. 0.0032 B. 0.032 C. 0.32 D. 3.2
3.) This refers to the interest charged on the principal alone for the entire duration or period of the loan
or investment.
A. Compound interest C. Interest rate
B. Future value D. Simple interest
4.) This refers to the number of years for which the money is borrowed or invested.
A. Conversion period C. Principal
B. Interest rate D. Time
5.) An interest resulting from the periodic addition of simple interest to the principal amount.
A. Compound amount C. Interest rate
B. Compound interest D. Simple interest
6.) What is the formula in computing the present value of F in a financial transaction involving
compound interest?
A. 𝑷 = 𝑭(𝟏 + 𝒊)−𝒏 C. 𝑷 = 𝑭(𝟏 − 𝒊)−𝒏
B. 𝑷 = 𝑭(𝟏 + 𝒊)𝒏 D. 𝑷 = 𝑭(𝟏 − 𝒊)𝒏
7.) How much was the interest if Althea invested ₱30,400.00 and received a total of ₱40,300.00 at the
end of the term?
A. ₱9,900.00 C. ₱40,300.00
B. ₱30,400.00 D. ₱70,700.00
8.) How much is the future value on this financial transaction, P = ₱10,000.00, r = 5%, and t = 3
years?
A. ₱1,500.00 C. ₱21,500.00
B. ₱11,500.00 D. ₱25,000.00
9.) What is the total number of conversion periods when a certain amount is borrowed at
5.5% compounded quarterly for 4 years?
A. 4 C. 16
B. 12 D. 22
10.) What is the interest rate per conversion period if ₱29,500.00 was invested at 2.5% compounded
semi-annually for 5 years and 4 months?
A. 0.0025 C. 0.025
B. 0.0125 D. 2.5
11.) Edgardo invested ₱15,600.00 at 10.25% interest rate. How long will take for his investment to earn
an interest of ₱5,055.00?
A. 0.32 year C. 6.29 years
B. 3.16 years D. 30.11 years
12.) Find the simple interest on a loan of ₱65,000.00 if the loan is given at a rate of 8% and is due in 6
years and 3 months.
A. ₱3,250.00 C. ₱32,500.00
B. ₱31,200.00 D. ₱46,800.00
13.) Jamaico made a loan of ₱20,450.00 from a bank that charges 3% simple interest. How much must
he pay the bank after 2 years?
A. ₱1,227.00 C. ₱32,720.00
B. ₱21,677.00 D. ₱42,127.00
 14.) At what interest rate compounded semi-annually will ₱𝟏𝟓, 𝟎𝟎𝟎. 𝟎𝟎 accummulate to
₱𝟐𝟓, 𝟎𝟎𝟎. 𝟎𝟎 in 10 years?
A. 2.05% C. 4.05%
B. 2.59% D. 5.17%
15.) ABC University anticipates additional expenses of ₱𝟑𝟔𝟕, 𝟖𝟎𝟎. 𝟎𝟎 for a new equipment needed for
offering a new course 5 years from now. How much should be invested in an account that earns
12% compounded monthly?
A. ₱62,427.83 C. ₱202,455.37
B. ₱165,344.63 D. ₱668,181.05

Answer Key

What’s More
1. F = ₱𝟏𝟕, 𝟐𝟐𝟗. 𝟔𝟐
2. 𝑰𝒄 = ₱𝟔, 𝟗𝟎𝟕. 𝟐𝟑
3. P = ₱𝟔𝟏, 𝟑𝟐𝟔. 𝟔𝟏
4. r = 0.1130 or 11.30%
5. t = 13.93 years

What I Can Do
1. F = ₱𝟏𝟎𝟐, 𝟓𝟐𝟓. 𝟏𝟑 𝑰𝒄 = ₱𝟐, 𝟓𝟐𝟓. 𝟏𝟑
2. r = 0.1479 or 14.79%

Additional Activities
I.
1. MATURITY DATE
2. INTEREST RATE
3. PRINCIPAL
4. COMPOUND AMOUNT
5. SIMPLE INTEREST
6. INVESTMENT
7. QUARTERLY
8. ACCUMULATE
9. BORROWER
10. COMPOUND INTEREST
II.
*Answers may vary
III.
1. Definitions of Simple Interest and Compound Interest
2. Formulas of Simple Interest and Compound Interest
3. Simple Interest – Constant;
Compound Interest – Changing during the entire term of loan or investment
4. Simple Interest – uniform; Compound Interest – Increasing rapidly

Assessment (Post-test)
1. B
2. B
3. D
4. D
5. B
6. A
7. A
8. B
9. C
10. B
11. B
12. C
13. B
14. D
15. C