11

General Mathematics
Second Quarter
Module 2b: Compound Interest
 Republic of the Philippines
Department of Education
REGION VII-CENTRAL VISAYAS
SCHOOLS DIVISION OF SIQUIJOR

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Published by the Department of Education

OIC-Schools Division Superintendent: Dr. Neri C. Ojastro
Assistant Schools Division Superintendent: Dr. Edmark Ian L. Cabio

Development Team of Learning Module

Writer: Georgie D. Antiquina

Evaluators: Marilou C. Gulahab Mera M. Tuangco
Alma B. Panzo Alberta S. Bato

Management Team: D Dr. Marlou S. Maglinao o

CID - Chief

___________Neddy G. Arong g
Education Program Supervisor (MATHEMATICS)

E Edesa T. Calvadores s
Education Program Supervisor (LRMDS)

Printed in the Philippines

Department of Education – Region VII, Central Visayas, Division of Siquijor
Office Address: Larena, Siquijor
Telephone No.: (035) 377-2034-2038
E-mail Address: deped.siquijor@deped.gov.ph

2
 11
General Mathematics
Second Quarter
Module 2b: Compound Interest

3
 INTRODUCTION

This module is written in support of the k to 12 Basic Education

Program to ensure attainment of standards expected of you as a learner.
This aims to equip you with essential knowledge on how to compute
interest, maturity value, future value, and present value and solving
problems in compound interest.

This includes the following activities/tasks:

 Expected Learning Outcome – This lays out the learning outcome
that you are expected to have accomplished at the end of the
module.
 Pre-Test – This determines your prior learning on the particular
lesson you are about to take.
 Discussion of the Lesson – This provides you with the important
knowledge, principles and attitude that will help you meet the
expected learning outcome.
 Learning Activities – These provide you with the application of the
knowledge and principles you have gained from the lesson and
enable you to further enhance your skills as you carry out
prescribed tasks.
 Post-test – This evaluates your overall understanding about the
module.

With the different activities provided in this module, may you find this
material engaging and challenging as it develops your critical thinking skills.

4
 What I Need To Know

At the end of the lesson, the learner is able to

 computes interest, maturity value, future value, and present
value in compound interest environment(M11GM-IIa-b1)
 solve problems involving compound interest (M11GM-IIb-2)

What I Know

To find out first what you already know about the content of this
module, take the Pre-test. Write your answer in your assessment notebook.

Directions: Read and understand each statement carefully. Choose the

letter of the correct answer and write it on your activity
notebook.

1. Find the compound interest if ₱ 10,000 is compounded annually at an

interest rate of 2% in 5 years.
A. ₱ 1,040.81 C. ₱ 1,250.81
B. ₱ 10250.81 D. ₱ 1,350.81

2. Find the maturity value if ₱ 10,000 is compounded annually at an

interest rate of 2% in 5 years.
A. 11,080.81 C. 11,180.81
B. 11,040.81 D. 11,015.81

3. Find the maturity value if P 50,000 is invested at 5% compounded

annually for 8 years.
A. 73,972.78 C. 73,872.77
B. 73,875.77 D. 73,772.77

4. Suppose your father deposited in your bank account P 10,000 at an

annual interest rate of 0.5% compounded yearly when you graduate
from kindergarten and did not get the amount until you finish Grade
12. How much will you have in your bank account after 12 years?
A. ₱ 11,765.86 C. ₱ 10,773.85
B. ₱ 11,673.84 D. ₱ 10,616.77

5
5. What is the present value of ₱ 50,000 due in 7 years if money is worth
10% compounded annually?
A. ₱ 25,657.91 C. ₱ 25,313.91
B. ₱ 25,625.91 D. ₱ 25,510.91

6. How much money should a student place in a time deposit in a bank

that pays 1.1% compounded annually so that he will have ₱ 200,000
after 6 years?
A. ₱ 1 80,0900.65 C. ₱ 187,2 45.65
B. ₱ 187,293.65 D. ₱ 187,283.65

7. Mr.Ocampo invested ₱ 150,000 at 10% compounded annually. He plans

to get this amount after 6 years for his son’s college education. How
much will he get?
A. ₱ 265,734.25 C. ₱ 265,734.15
B. ₱ 266,412.25 D. ₱ 265,112.15

8. What is the interest of ₱25,000 if invested at 4.5% compounded

annually in 3 years and 2 months?
A. ₱ 3,839.22 C. ₱ 3,769.22
B. ₱ 3,869.22 D. ₱ 3,739.22

9. Christian deposited ₱ 5,000 in a bank that pays 2% compounded

annually. He made a withdrawal of ₱ 2,000 after 2 years. If no further
withdrawal is made, how much will be in his account after another 3
years?
A. ₱ 3,397.99 C. ₱ 3,397.99
B. ₱ 3,497.99 D. ₱ 3,297.99

10. How much money must be invested to obtain an amount of ₱ 30,000

in 4 years if money earns 8% compounded annually?
A. ₱ 22,060.90 C. ₱ 22,150.90
B. ₱ 22,050.90 D. ₱ 22,040.90

11. A businessman invested ₱ 100,000 in a fund that pays 10.5%

compounded annually for 5 years. How much was in the fund at the
end of the term?
A. ₱ 164,844.68 C. ₱ 164,744.68
B. ₱ 164,644.68 D. ₱ 164,844.68

12. What amount must be deposited by a 15-year old student in a bank

that pays 1% compounded annually so that after 10 years he will have
₱20,000?
A. ₱ 18,205.74 C. ₱ 18,116.74
B. ₱ 18,115.74 D. ₱ 18,105.74

13. On the 7th birthday of her daughter, Shirlee deposited an amount in a

bank peso bond fund that pays 1.0% interest compounded annually.

6
 How much should she deposit if she wants to have ₱100,000 on her
daughter’s 18th birthday?
A. ₱ 89,632.37 C. ₱ 89,632.38
B. ₱ 89,633.37 D. ₱ 89,642.37

14. In a certain bank, Angel invested ₱ 88,000 in a time deposit that pays
0.5% compound interest in a year. How much will be her money after
6 years?
A. ₱ 90,573.22 C. ₱ 90,677.22
B. ₱ 90,673.22 D.₱ 90,674.22

15. A savings account in a bank yields 0.25% compound interest

annually. Accumulate (find the future value of) ₱ 25,000 for 4 years in
this savings account.
A. ₱ 26,250.94 C. ₱ 25,250.94
B. ₱ 25,350.94 D. ₱ 25,255.94

16. In order to have ₱50,000 in 5 years, how much should you invest if
the compound interest is 5%?
A. ₱ 39,186.33 C. ₱ 39,276.33
B. ₱ 39,177.33 D.₱ 39,176.33

What’s in?

Let Us Have A Review

Study the data on the table below. In the previous lesson we have
discussed on how to compute for simple interest annually and the maturity
(future) value by using the formula I s=Prt and F=P(1+rt ).

Maturity
Principal (P) Rate (r) Time (t) Interest (I)
Value (F)
60,000 45% 15 36,000 96,000
25,000 12% 5 15,000 40,000
50,000 9.5% 2 9,500 50,500
30,000 10.5% 5 157,500 457,500
1,000,000 0.25% 6.5 16,250 1,016,250

If the principal is ₱60,000 multiplied by 45% and the time is 15 years,

the interest is ₱36,000 and when the interest is added to the principal the
future value after 15 years is ₱96,000.

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 What’s New?

Ella and Thelma each invest ₱10,000 for two years, but under
different schemes. Ella earns 2% of ₱10,000 the first year, which is ₱200,
then another ₱200 the second year. Thelma earns 2% of ₱10,000 the first
year, which is ₱200, same as Ella. But during the second year, she earns 2%
of the ₱10,000 and 2% of the ₱200 also.

a. What is the amount in Ella’s and Thelma’ respective accounts after

two years?
b. Why there is a difference Ella’s and Thelma’s earnings since both of
them receives 2% of their accounts?

Although the amounts may be quite close, take note that the situation
only includes two years, with only a 2% interest rate. Our next lesson will
formalize the concepts in the given situation.

What Is It

In this module, we are going to discuss on how to compute interest,

maturity value, future value, and present value and solving problems in
compound interest.

“Many bank savings accounts pay compound interest. In this case,

the interest is added to the account at regular intervals, and the sum
becomes the new basis for computing interest. Thus, the interest earned at
a certain time interval is automatically reinvested to yield more interest.

The following table shows the amount at the end of each year if
principal P is invested at an annual interest rate r compounded annually.
Computations for the particular example P= ₱ 100,000 and r =5 % are also
included.

Principal = P Principal = ₱100,000

Year Interest rate = r, Int. rate = 5%, compounded
(t) compounded annually annually
Amount at the end of the year Amount at the end of the year

8
 1 P x(1+ r)=P (1+ r ) 100,000 x 1.05 = 105,000
2 P(1+r )x (1+r )=P(1+ r)² 105,000x1.05 = 110,250
3 P(1+r )² x(1+ r)=P (1+ r)³ 110,250x1.05 = 121,550.63
4 P(1+r )x (1+r )=P(1+ r)² 121,550.63x1.05 = 127,628.16

Observe that the amount at the end of each year is just the amount
from the previous year multiplied by (1+r ). in other words, 1+r is multiplied
each time the year ends. This results in the following formula for the
amount after t years, given an annual interest rate of r.

Maturity Future Value and compound Interest

F=P(1+r )t

where:

P = principal or present value

F = maturity (future) value at the end of the term

r = interest rate
t = term/time in years

The compound interest is given by

I c =F−P
Example 1: Find the maturity value and the compound interest if ₱10,000
is compounded annually at an interest rate of 2% in 5 years.

Given: P= ₱ 10,000I = 2% = 0.02 t = 5 year

Find: (a) maturity value F
(b) compound interest Ic
Solution:
(a) F=P ¿
F=(10,000) ¿
F=11,040.081

(b) I c= F – P
I c= 11,040.81 – 10,000
I c= 1,040.81

Answer: The future value F is ₱11,040.81 and the compound interest

earned is ₱ 1,040.81 .

Example 2: Find the maturity value and interest if ₱50,000 is invested at

5% compounded annually for 8 years.

9
 Given: P=50,000 r = 5% = 0.05 t=8 years

Find: Maturity value F

(a) Compound interest I c

Solution:
(a) F=P ¿
F=(50,000) ¿
F=73,872.77

(b) I c= F – P
I c= 73,872.77 – 50,000
I c= 23,872.77

Answer: The maturity value F is ₱ =73,872.77 and the compound

interest is ₱ 23,872.77.

Example 3: Suppose your father deposited in your bank account P 10,000 at

an annual interest rate of 0.5% compounded yearly when you
graduate from kindergarten and did not get the amount until
you finish Grade 12. How much will you have in your bank
account after 12 years?

Given: P= ₱ 10,000 r = 0.5% = 0.005 t=12 years

Find: F
Solution: the future value F is calculated by
F=P ¿
F=(10,000) ¿
F=10,616.78

Answer: The amount will become ₱ 10,616.77 after 12 years.

Present Value P at Compound Interest

The present value or principal of the maturity value F due in t years
any rate r can be obtained from the maturity value formula F=P ¿.
Solving for the present value P,
P¿
P¿¿

F or equivalently, P=F ¿
P=
¿¿

Present Value P at Compound Interest

F
P=
¿¿

where:

P = principal or present value

F = maturity (future) value at the end of the term 10
r = interest rate
t = term/time in years
Example 4: What is the present value of ₱ 50,000 due in 7 years if money is
worth 10% compounded annually?

Given: F=50,000 r = 10% = 0.10 t=7 years

Find: Amount invested or principal P

Solution:
The present value P can be obtained by
F
P=
¿¿
50,000
P=
¿¿
P=25,657.91

Answer: The present value is₱ 25,657.91.

Example 5: How much money should a student place in a time deposit in a

bank that pays 1.1% compounded annually so that he will have
₱ 200,000 after 6 years?

Given: F=200,000 r = 1.1% = 0.011 t=¿ 6 years

Find: P
Solution: The present value P can be obtained by
F
P=
¿¿
200,000
P=
¿¿
P=187,293.65

Answer: The present value is ₱ 187,293.65

What’s More?

Directions: Find the unknown principal P, rate r, time t, and compound

interest Ic by completing the table. Copy the table in your
notebook.
Principal (P) Rate (r) Time (t) Compound Maturity

11
 Interest (Ic) Value (F)
6,000 8% 12 years (1) (2)
12,000 5.5% 6 years and (3) (4)
9 months
60,000 9.75% 10 months (5) (6)
(7) 1% 6 years (8) 25,000
(9) 7.5% 4 years and (10) 400,000
6 months

1. A savings account in a bank yields 0.25% compound interest

annually. Accumulate (find the future value of) ₱ 25,000 in 4 years in
this savings account. How much interest will be gained?

2. On the 7th birthday of her daughter, Shirlee deposited an amount in a

bank peso bond fund that pays 1.0% interest compounded annually.
How much should she deposit if she wants to have ₱100,000 on her
daughter’s 18th birthday?

What I Have Learned

I Learned that:

 to find the Maturity( Future) Value and Compound Interest F=P(1+r )t

where:
P = principal or present value
F = maturity (future) value at the end of the term
r = interest rate
t = term/time in years
The compound interest is given by I c =F – P
I learned also that:

 to find the Present Value P at Compound Interest

F
P=
¿¿

What I Can Do

Directions: Complete the table by finding the unknown.

Principal (P) Rate (r) Time (t) Compound Maturity

12
 Interest (Ic) Value (F)
10,000 8% 15 (1) (2)
3,000 5% 6 (3) (4)
50,000 10.5 10 (5) (6)
(7) 2% (5) (8) 50,000
(9) 9.5% 2.5 (10) 100,000

1. A businessman invested ₱100,000 in a fund that pays 10.5%

compounded annually for 5 years. How much was in the fund at the
end of the term?

2. What amount must be deposited by a 15-year old student in a bank

that pays 1% compounded annually so that after 10 years he will
have ₱20,000?

Assessment
Directions: Read and understand each statement carefully. Choose the
letter of the correct answer and write it on your activity
notebook.

1. What is the present value of ₱ 50,000 due in 7 years if money is worth

10% compounded annually?
A. ₱ 25,657.91 C. ₱ 25,313.91
B. ₱ 25,625.91 D. ₱ 25,510.91

2. How much money should a student place in a time deposit in a bank

that pays 1.1% compounded annually so that he will have ₱ 200,000
after 6 years?
A. ₱ 1 80,090.65 C. ₱ 187,2 45.65
B. ₱ 187,293.65 D. ₱ 187,283.65

3. Mr.Ocampo invested ₱ 150,000 at 10% compounded annually. He plans

to get this amount after 6 years for his son’s college education. How
much will he get?
A. ₱ 265,734.25 C. ₱ 265,734.15
B. ₱ 266,412.25 D. ₱ 265,112.15

4. What is the interest of P25,000 if invested at 4.5% compounded

annually in 3 years and 2 months?
A. ₱ 3,839.22 C. ₱ 3,769.22
B. ₱ 3,869.22 D. ₱ 3,739.22

13
5. Find the compound interest if ₱ 10,000 is c0mpounded annually at an
interest rate of 2% in 5 years.
A. ₱ 1,040.81 C. ₱ 1,250.81
B. ₱ 10250.81 D. ₱ 1,350.81

6. Find the maturity value if ₱ 10,000 is c0mpounded annually at an

interest rate of 2% in 5 years.
A. 11,080.81 C. 11,180.81
B. 11,040.81 D. 11,015.81

7. Find the maturity value if P 50,000 is invested at 5% compounded

annually for 8 years.
A. 73,972.78 C. 73,872.77
B. 73,875.77 D. 73,772.77

8. Suppose your father deposited in your bank account ₱ 10,000 at an

annual interest rate of 0.5% compounded yearly when you graduate
from kindergarten and did not get the amount until you finish Grade
12. How much will you have in your bank account after 12 years?
A. ₱ 11,765.86 C. ₱ 10,773.85
B. ₱ 11,673.84 D. ₱ 10,616.77

9. Christian deposited ₱ 5,000 in a bank that pays 2% compounded

annually. He made a withdrawal of ₱ 2,000 after 2 years. If no further
withdrawal is made, how much will be in his account after another 3
years?
A. ₱ 3,397.99 C. ₱ 3,197.99
B. ₱ 3,497.99 D. ₱ 3,297.99

10. How much money must be invested to obtain an amount of ₱ 30,000

in 4 years if money earns 8% compounded annually?
A. ₱ 22,060.90 C. ₱ 22,150.90
B. ₱ 22,050.90 D. ₱ 22,040.90

11. A businessman invested ₱ 100,000 in a fund that pays 10.5%

compounded annually for 5 years. How much was in the fund at the
end of the term?
A. ₱ 164,844.68 C. ₱ 164,744.68
B. ₱ 164,644.68 D. ₱ 164,844.68

12. What amount must be deposited by a 15-year old student in a bank

that pays 1% compounded annually so that after 10 years he will have
₱20,000?
A. ₱ 18,205.74 C. ₱ 18,116.74
B.₱ 18,115.74 D. ₱ 18,105.74

14
13. On the 7th birthday of her daughter, Shirlee deposited an amount in a
bank peso bond fund that pays 1.0% interest compounded annually.
How much should she deposit if she wants to have ₱100,000 on her
daughter’s 18th birthday?
A. ₱ 89,632.37 C. ₱ 89,633.37
B. ₱ 89,642.37 D. ₱ 89,634.37

14. In a certain bank, Angel invested ₱ 88,000 in a time deposit that pays
0.5% compound interest in a year. How much will be her money after
6 years?
A. ₱ 90,573.22 C. ₱ 90,677.22
B. ₱ 90,673.22 D.₱ 90,674.22

15. A savings account in a bank yields 0.25% compound interest

annually. Accumulate (find the future value of) ₱ 25,000 for 4 years in
this savings account.
A. ₱ 26,250.94 C. ₱ 25,250.94
B. ₱ 25,350.94 D. ₱ 25,255.94

16. In order to have ₱50,000 in 5 years, how much should you invest if
the compound interest is 5%?
A. ₱ 39,186.33 C. ₱ 39,276.33
B. ₱ 39,177.33 D.₱ 39,176.33

Key Answer

15
What I Know What I Can Do
1. A 9. A 1. 21,721.69
2. B 10. B 2. 31,721.69
3. C 11. C
3. 1,020.29
4. D 12. D
4. 4,020.29
5. A 13. A
6. B 14. B 5. 85,704.04
7. C 15. C 6. 135,704.04
8. D 16. D 7. 45,286.54
8. 4,713.46
9. 80,157.91
10. 19,842.09
11. 164,744.68
12. 18,105.74

What’s More Assessment

1. 9,120 9. 289,855
1. A 9. A
2. 15,120 10. 110,145
2. B 10. B
3. 5,280 11. 250.94
3. C 11. C
4. 17,280 12. 89,632.37
5. 4,800 4. D 12. D
6. 64,800 5. A 13. A
7. 23,585 6. B 14. B
8. 1,415
7. C 15. C
8. D 16. D

16
REFERENCES

Verzosa, Debbie Marie B., Infante, Francis Nelson M., Crisologo, Leo Andrei
A., Hao, Lester C., Mindaña, Mary Ann A., Gonzales, Quincy D.
General Mathematics Learner’s Manual. Pasig City, Philippines:
First Edition 2016 Lexicon Press Inc.

https://www.google.com.ph/search?q=illustration+of+simple+interest&source

https://www.google.com.ph/search?q=illustration+of+compound+interest&source

17