Lesson Exemplar in English for Academics and Professional Purposes (EAPP) Using the IDEA

Instructional Process
Modular Distance Learning
(Learners-Led Modality)

This lesson exemplar is anchored to the learner’s module.

This sample is part of Enclosure 7 of RM No. 296, s. 2020.

School Tanauan School of Grade Level Grade 12

Fisheries – Senior High
School
Teacher DIVINA GRACE M. Learning Area Business
LESSON RODRIGUEZ Finance
EXEMPLAR
Teaching Quarter First
Date Quarter
Teaching No. of Days 12
Time

I. Objectives  At the end of the lesson, the learners are expected to:
a. Differentiate simple and compound interest;
b. Solve exercises and problems related to time value of money; and
c. Describe the risk-return trade-off.
A. Content The learners demonstrate an understanding of basic concepts of risk and
Standards return, and the time value of money.
B. Performance The learners are able to:
Standards 1. Distinguish simple and compound interest;
2. Solve exercises and problems in computing for time value of money
with the aid of present and future value tables;
3. Prepare loan amortization tables
4. Compute for the net present value of a project with a conventional
cash-flow pattern; and
5. Describe the risk-return trade-off.
C. Most Essential The learner…
Learning 1. calculate future value and present value of money (ABM_BF12-IIIg-h-
Competencies 18);
2. compute loan amortization using mathematical concepts and the
present value tables (ABM_BF12-IIIg-h-20);
3. apply mathematical concepts and tools in computing for finance and
investment problems (ABM_BF12-IIIg-h-21); and
4. explain the risk-return trade-off (ABM_BF12-IIIg-h-22).

D. Enabling N/A
Competencies
II. CONTENT Basic Long-Term Financial Concepts
III. LEARNING
RESOURCES
A. References
Teacher’s Guide N/A
pages
Learner’s Material N/A
Pages
Textbook pages N/A
Additional Material Canayan, Arthur S. and Daniel Vincent H. Borja. 2017. Business Finance,
from Learning First Edition. Manila: Rex Book Store
Resources
Florenz C. Tugas, Florenz C. et al.. Business Finance. Araneta Avenue,
Quezon City: Vibal Group Inc.
 Oronce, Orlando A. 2016. General Mathematics, First Edition. Manila: Rex
Book Store

List of Learning https://www.cnbc.com/id/26335784

Resources for
Development and
Engagement
Activities
IV. PROCEDURES
A. Introduction What I need to know?
At the end of this lesson, you are expected to:
1. distinguish simple and compound interest;
2. solve exercises and problems in computing for time value of money
with the aid of present and future value tables;
3. prepare loan amortization tables;
4. compute for the net present value of a project with a conventional
cash- flow pattern;
5. describe the risk-return trade-off.
What’s New?
ACTIVITY 4.1 Simple and Compound Interest
A. Fill in the blanks of the table involving a simple interest.

Principal Rate Time Interest

P 8 000 1)____________ 7 months P 210
P 15 000 4.8% 2)_____________ P 300
3)____________ 4.5% 4 months P 500
P 1 000 4)_____________ 1 yr & 3 P 70
months
P 4 500 0.25% 5 and a half 5)_____________
years

B. Complete the table for a compound interest involving P 40 000 loaned for a period
of 5 years with 6% interest compounded annually.

Principal Interest Amount (at the

at the end of the year)
start of the
year
1st year P 40 000 40 000 x 0.06 x 1 = P 2 P 40 000 +P 2 400
400.00 =
P 42 400.00
2nd year
3rd year
4th year
5th year

B. Development What I Know?

A. TRUE OR FALSE. On the space provided, write TRUE if the idea being
expressed is correct and FALSE if otherwise.
__________1. Interest represents the time value of money.
__________2. Compound interest is the product of the principal amount
multiplied by the period’s interest rate.
__________3. Simple interest is the interest paid on both the principal and
the amount of interest accumulated in prior periods.
__________4. Present value is the current value of a future amount of money,
or series of payments, evaluated at an appropriate discount rate.
__________5. The gradual extinction of a loan over a period of time by means
of a sequence of regular payments as to principal and interest due at the
end of equal intervals of time is known as amortization.
B. SOLVE. Write your solution and explanation.
Your father told you that he will entrust you with the funds for your college
education. He gave you two options: a) receive the money now in the amount
of P 200 000 or b) receive P 500 000 ten years from now. The
investment opportunity will provide you a 10% rate of return. Which option
would you prefer?

What’s In?
“A peso today is worth more than a peso tomorrow”. The time value of
money would tell us that a peso today is not equal to a peso in the future.
The most basic finance-related formula is the computation of interest.
It is computed as follows:

(Equation 4.1)

where:
I = interest
P = Principal
R = Interest rate
T = Time period
As a review, try this exercise by identifying the a) principal, b) interest
rate, and time period in the examples below.
1. Your mother invested P 18 000 in government securities that
yields 6% annually for two years.
2. Your father obtained a car loan for P 800 000 with an annual rate
of 15% for 5 years.
3. Your sister placed her graduation gifts amounting to P 25 000 in a
special savings account that provides an interest of 2% for 8
months.
4. Your brother borrowed from your neighbor P 7 000 to buy a new
mobile phone. The neighbor charged 11% for the borrowed
amount payable after three years.
You deposited P 5 000 from the savings of your daily allowance in a time
deposit account with your savings bank at a rate of 15% per annum. This
will mature in 6 months.
What is it?
In general business terms, interest is defined as the cost of using
money over time. This definition is in close agreement with the definition
used by economists, who prefer to say that interest represents the time
value of money.

Interest is the excess of resources (usually cash) received or paid over

the amount of resources loaned or borrowed which is called the principal.

If you decided to invest your money in a bank, you will ask the
banker how much interest you will get. The banker will explain that there
are two types of interest that would be used to determine the amount of
interest that you are going to receive. Remember that interest is beneficial
for you when you are receiving it but not when you are paying it. So, it is
important to know which type of interest when deciding where to put your
money and where to get the money.

SIMPLE INTEREST
Simple interest is the product of the principal amount multiplied by
the period’s interest rate (a one-year rate in standard).

Example 1: You invested P 10 000 for 3 years at 9% and the proceeds from the
investment will be collected at the end of 3 years. Using a simple interest assumption, the
calculation will be as follows:

Year Principal Interest Cumulative Total

Interest

1 P 10 000 10 000 x 0.09 = P 900 P 900 P 10 900

2 P 10 000 10 000 x 0.09 = P 900 P 1 800 P 11 800

3 P 10 000 10 000 x 0.09 = P 900 P 2 700 P 12 700

Using the formula in Equation 4.1, simple interest can be computed.

COMPOUND INTEREST
Compound interest is the interest paid on both the principal and the
amount of interest accumulated in prior periods.

Example 2: Using example 1 where you invested P 10 000 for 3 years at 9%

and the proceeds from the investment will be collected at the end of 3 years,
compound interest will be computed as follows:

Year Principal Interest Cumulative Total

Interest

1 P 10 000 10 000 x 0.09 = P 900 P 900 P 10 900

2 P 10 900 10 900 x 0.09 = P 981 P 1 881 P 11 881

3 P 11 881 11 881 x 0.09 P 2 950.29 P 12 950.29

= P 1 069.29

For compound interest, use the formula

FV = (Equation 4.2)

where:

FV = Future Value

P = Principal

i = Interest rate per compound interest period or periodic rate

n = Time period or number of compound interest periods

Subtract the principal from the future value to get the compound
interest. Hence, Ic= FV – P.

FUTURE VALUE OF MONEY

To account for time value for single lump-sum payment, we use the
same formula provided for under compound interest rates as shown on
Equation 4.2.

FV = (Equation 4.3)

where, PV = Present Value

= Future value interest factor (FVIF)*

The future value is the value of the present value after n time periods.

Example 3: Using the formula, find the future values of P 1 000

compounded at a 10% annual interest at the end of one year, two years and
five years.

Solution: PV = P 1 000 and i = 0.10

Year 1 FV = P 1 000 (1 + 0.10)1 = P 1 100*

Year 2 FV = P 1 000 (1 + 0.10)2 = P 1 210*

Year 5 FV = P 1 000 (1 + 0.10)5 = P 1 610.50*

Example 4: Determine the compound amount on an investment at the end

of 2 years if P 20 000 is deposited at 4% compounded a) semi-annually and
b) quarterly.

Solution: a) Given: PV = P 20 000, i = 0.04/2, n = 2 x 2 = 4

FV = 20 000 = P 21 648*

b) Given: PV = P 20 000, i = 0.04/4, n = 4 x 2 = 8

FV = 20 000 = P 21 658*

PRESENT VALUE OF MONEY

To get the present value of a lump-sum amount, we rearrange
Equation 4.2:

PV = (Equation 4.4)

where, = Present value interest factor (PVIF)* or discount

factor

Example 5: Jack would like to buy a car two years from now using the
proceeds of a 20% investment that is compounded semi-annually. If the
projected price of the car is P 1 400 000, how much money must be invested
today to earn the price of the car?

Solution:

Given: FV = P 1 400 000, i = 0.20/2, n = 2 x 2 years = 4

PV = = P 956 200*

* Refer to the tables at the end of this module for FVIF and PVIF. Simply find the
intersection of the relevant time in the rows and the interest rate in the columns of
the table.

ACTIVITY 4.2 Future Value and Present Value

A. DIRECTION: Complete the table to find the compound amount of P 50 000.00
invested at 10% interest. Show your solutions.

In 1 year In 5 years In 10 years

1. Compounded annually
2. Compounded semi-
annually
3. Compounded quarterly
4. Compounded monthly
5. compounded daily

B. DIRECTION: Solve each problem.

1. Lisa receives an amount of P 20 000 deposited in her account on
her 18th birthday. If the bank pays 6% interest monthly and no
withdrawals are made, how much should be credited in her
account on his 21st birthday?
2. James borrows P 5 000 with interest at 15% quarterly. How much
should he pay at the end of 2 years and 6 months to settle her
debt?
3. Mr. Santos invested P 15 000 in an account for each of his
children. The accounts paid 8% compounded semi-annually.
Determine the balance of each account for the following:
a. The youngest child withdrew the balance after 5 years for
college
b. The second child withdrew the balance after 8 years to buy a
car
c. The third child withdrew the balance after 10 years to travel
4. A man wishes to accumulate P 10 000 in 2 years, how much
should he invest now at 15% compounded semi-annually?
5. What is the present worth of P 5 000 for 2 years at 12%
compounded quarterly?
6. How much should be deposited now at 10% compounded monthly
to have P 10 000 in 4 year?
7. Mr. Malakas deposited P 5 000 on the day his son was born. If the
money is worth 12% compounded quarterly, how much money will
his son have on his 21st birthday?
8. Your father entrusts you with the funds for your college education.
He gave you two options: a) receive the money now in the amount
of P 200 000 or b) receive P 500 000 ten years from now. An
available investment opportunity to you provides a 10% return.
Which option would you prefer? Show your calculations and
explanation.

Five years ago, Joe invested P 35 000 compounded semi-annually at

8%. How much is his money now?

ANNUITIES
An installment that requires a buyer to pay equal payments at a
certain period illustrates an annuity – a series of equal cash flow – payments
in this case for a specific number of periods.

If payment is made and interest is computed at the end of each

payment interval, then it is called ordinary annuity. To get the present value
interest factor for an ordinary annuity (FVIFA) use the formula below:

PV = R (Equation 4.5)

Where,
R = regular payment
To get the future value of an ordinary annuity, use this formula:

FV = R (Equation 4.6)

Example 6: What lump sum would have to be invested at 6% compounded

annually to provide an ordinary annuity of P 10 000 per year for 4
years?
Solution: Given: R = P 10 000, i = 0.06/1, n = 1 x 4 = 4

PV = 10 000 = P 34 651*

Take note that 3.4651(rounded) is the present value factor of ordinary

annuity for 4 years at 6% according to the present value factor table (see
table 3).
If the cash flow happens at the beginning of each period, then it is
called a annuity due. The formulas to use are shown below:

PV = R(1+ i)[ ] (Equation 4.7)

FV = R(1+ i)[ ] (Equation 4.8)

Example 7: If a supplier would allow you to pay P 50 000 annually at 10%

for 3 years with the first payment due immediately, how much would
be the present value and the future value?
Solution: Given: R = P 50 000, i = 0.10/1 , n = 1 x 3 = 3

PV = 50 000(1 +0.10)[ ] = P 136 775*

Take note that 2.7355 is the present value of an annuity due for 3
years at 10% according to the present value factor table (see table 5).

FV = 50 000(1+ 0.10)[ ]= P 182 050*

Take note that 3.6410 is the future value of an annuity due for 3
years at 10% according to the future value factor table (see table 6).
If the cash flow stream lasts forever or is indefinite, then it is called a
perpetuity. The formula for present value of a perpetuity is simply

PV = (Equation 4.9)

LOAN AMORTIZATION
 Most housing and car loans are amortizing loans that require the
borrower to pay that equal amount either annually, semi-annually,
quarterly, or monthly.

* Refer to the tables at the end of this module for FVIF and PVIF of ordinary annuity and
annuity due.

Let us look at an example of a corporate loan to illustrate how a loan

amortization table is prepared. For some corporate long-term loans,
principal payment is fixed, and the interest expense is adjusted based on the
declining principal balance.

Example 8: On July 1, 2015, DD Company borrowed P 3 million from ASC

Bank at the rate of 10% a year. The loan is paid at the rate of P 500
000 every December 31 and June 30 until the full amount is paid.
Below is an amortization table for the loan.

Amortization Table for P 3-million Loan

Date Payments Interest Principal Principal

Payment Balance

3 000 000

Dec. 31, 2015 650 000 150 000 500 000 2 500 000

June 30, 2016 625 000 125 000 500 000 2 000 000

Dec. 31, 2016 600 000 100 000 500 000 1 500 000

June 30, 2017 575 000 75 000 500 000 1 000 000

Dec. 31, 2017 550 000 50 000 500 000 500 000

June 30, 2018 525 000 25 000 500 000 -

To compute for the interest expense from June 30 to December 31,

2015:

Interest = 3 000 000 x 10% x (6 /12)

= 150 000

To compute for the equal regular payment, use the formula in

Equation 4.5, that is

R= or R= (Equation 4.10)

Example 9: You borrowed P 50 000 from a bank to buy a mobile phone.

Assuming you need to repay the loan by equal payments at the end of
every 6 months for 3 years at 10% interest compounded semi-
annually. What is your periodic payment?

Solution: Given: PV = P 50 000, i = 0.10/2, n = 2 x 3 = 6

R= = P 9 850.86

* Refer to the table at the end of this module for PVIF of ordinary annuity.
 ACTIVITY 4.4 LOAN AMORTIZATION
Using the problem in example 9, construct an amortization
schedule by filling up the table below. Show your solutions for
column B by using the formula: I = Prt.

Period Periodic Interest at Amount repaid Outstanding

Payment at 10% due at to the Principal at
the end of the end of Principal at the end of
every 6 every 6 the end of every 6
months months every 6 months
months
A B D
C

0 P 50 000.00

Total

C. Engagement What’s More?

NET PRESENT VALUE METHOD
One useful application of the time value of money is using the Net
Present Value Method to determine whether a project should be accepted or
rejected by a company. The basic decision rule is to accept the project if the
net present value is positive and reject if it is negative. The basic formula is:

NPV = PV of Inflows – PV of Outflows

or

NPV = PV of Future Cash Flows – Initial Investment (Equation

4.11)

Example 10: A company wants to purchase an equipment that will cost P

100 000 and estimated to be used for 5 years. Operating cash
inflows from the use of equipment would be P 50 000 while annual
operating cash outflows (due to repairs and maintenance) are
estimated at P 10 000. Compute for the NPV.

Solution:

PV of Future Cash Flows = 40 000 = P 40 000 x

3.7908

PV of Future Cash Flows = P 151 632

NPV = PV of Future Cash Flows – Initial Investment

= 151 632 – 100 000

 = P 51 632

Since the NPV is positive, this means that the benefit to be derived
from the project is higher than the cost which would mean to accept the
investment.

ACTIVITY 4.5 ARE YOU A RISK TAKER?

Do you have what it takes to make it? Let’s find out:
Write down the letter of the answer you select on a piece of paper for scoring!
Compare your score with your classmates.
1. You are driving to meet some friends. You’re running late. The traffic
light ahead turns yellow. You:
a. Always stop at yellow no matter what.
b. Break and stop at the light. You’re late anyway, right?
c. You beat the light.
2. Your friend gives you a tip. She heard this stock is going to go
through the roof in the next week. You:
a. Hear this stuff all the time, know it’s not true and ignore her.
b. Nod, squint your eyes, log into E*Trade and invest a few.
c. Take all that money you had for a rainy day and invest.
3. You are a really cool partygoer. Your bf/gf is with you. You see this
seriously cute hottie across the room. You:
a. Look at your boy/girl, order yourself another drink and continue on
with your conversation.
b. Envision a plan where if the stars aligned and you were both at the
bar at the same time you would definitely have something to talk
about. [+2]
c. Immediately excuse yourself and head across the room.
4. You’re with a friend in a carnival. You walk into this interesting tent.
In the center is a cobra in a cage. People are queued up to pay a
hundred for a chance to grab the five-hundred bill on top of the
snake's cage. You:
a. Leave.
b. Stick around to see the free show.
c. Exclaim, “Heck, I’ve got a hundred!” And get in line.
5. You’re sitting next to this old man on a jeepney. It’s obvious he
hasn’t showered and smelling alcohol while he naps through the trip.
When he wakes up he starts talking to you, explaining how he can
help your business. You:
a. Thank him politely and inside your head you can’t wait to get off.
b. Give him your business card and ask for his, knowing full well this
guy is full of crap.
c. You try to find a polite way to tell him his body odor offends.
6. It’s the dreaded annual company Christmas party. The CEO is a little
enebriated and asks if anyone else would like to get up to attest to
the company’s good fortune. You:
a. Put your head down in shame.
b. Chuckle with most of the crowd.
c. Realize this is your time to shine and head up to the front.
7. You’ve spent time researching the perfect part of town to buy a
property. You think you have all your bases covered, but investing in
this property will definitely put you and your family out there. You:
a. Decide it’s better to wait until you have more of a cushion.
b. Buy the property and hope for the best.
c. Are so convinced the deal is so good, you buy two. The other with
money from a 2nd mortgage on your home.
8. Today is your birthday and you are on a trip with friends to
celebrate. Everyone has been drinking and the gang decides it’s the
perfect time to rent gears from the resort and go bungee jumping.
You:
a. Tell your friends you’ll greet them when they get back.
b. Go ask around for a car to hire and recommendations on the best
places to drink in town.
c. You are the first one tethered to the cord.
Scoring:
For every answer A, award yourself 1 point
For every answer B, award yourself 2 points
For every answer C, award yourself 3 points
So, what kind of risk taker are you? Well, if you scored from
8 – 10 Death warmed over. Check your pulse. Are you even alive? What are
you doing with your life?
11 – 13 Nervous Nelly. Come on, it’s time for you step it up. You want to be
more adventurous. Try a little harder.
14 – 16 Risk Master General. Nice. You know how to balance risk with
reward. This is exactly where you want to be. You know how to have a good
time and you will be very successful.
17 – 19 You’re the Pusher. You like to push the envelope. That’s great! Just
be careful. Scale it back from time to time. Risk is not its own reward.
20+ You have serious issues and you should seek professional help. If you
haven’t crashed and burned yet, you will soon.
Questions:
1. Which category did you belong?
2. Do you think it reflects your personality? Why?
3. Are your choices the same as your classmates?
4. Which category did most belong?

RISK-RETURN TRADE-OFF
In finance, we assume that individuals are risk averse but have
different levels of risk aversion. Risk aversion means that individuals
maximize returns for a given level of risk or minimize risk if the returns are
the same. Risk-averse individuals would require a higher return if the risk
level increases.
In general, the riskier the investment, the higher the potential return
should be, indicating a direct relationship between risk and potential return.
As a business owner you should know to balance the risk and the potential
return of your investments.
Risk is defined here as the uncertainty of returns. One way to reduce
risk to an acceptable level is through diversification wherein you invest in
different types of investments with different risks and returns. This is an
 application of the saying: “ Don’t put all your eggs in one basket.”

What I Can Do?

ACTIVITY 4.6 BUSINESS APPLICATIONS

Solve and show your solution and explanations in a separate paper.
CM Company borrowed P 2 000 000 from a bank on June 30, 2015.
The loan has an annual interest rate of 10% and the principal is payable at
the end of every quarter amounting to P 25 000. The first quarterly payment
will be on September 30, 2015. Prepare an amortization schedule for 2015
until the loan is fully paid on June 30, 2017. How much interest expense is
incurred in 2015 and 2016 with respect to this loan?
What Other Activities Can I Engage In?

Solve and show your solution and explanations in a separate paper.

A firm is evaluating two projects. The firm’s cost of capital
(appropriate discount rate) has been determined to be 9%, and the projects
have the following initial investments and cash flows:

Project Q Project Y
Initial Investment: P 50 000 P 48 000
Cash Flows: 1 P 20 000 P 30 000
2 25 000 35 000
3 15 000 40 000
4 20 000 10 000
Which project should the company pursue? Why?

D. Assimilation What I Have Learned?

ACTIVITY 4.6 DISCUSSION QUESTIONS
Answer as briefly as you can.
1. Differentiate simple interest from compound interest.
2. Explain the concept of time value of money.
3. Differentiate between present value and future value.
4. What is the difference between an ordinary annuity and annuity
due?
5. What does an amortization table show?
6. Explain the purpose of the net present value.
7. Explain the concept of risk-return trade-off.

What I Can do?

A. DIRECTION: Fill the blanks with the correct answer. Write all your
answers in a separate answer sheet.
1. ________is the excess of resources (usually cash) received or paid over
the amount of resources loaned or borrowed.
2. ________ is the interest paid on both the principal and the amount of
interest accumulated in prior periods.
3. Future value interest factor (FVIF) is represented by the formula
____________.
4. An installment that requires a buyer to pay equal payments at a
 certain period is called ___________.
5. __________means that individuals maximize returns for a given level of
risk or minimize risk if the returns are the same.
6. The basic decision rule is to accept the project if the net present value
is _________.
7. If the cash flow stream lasts forever or is indefinite, then it is called
___________.
8. If payment is made and interest is computed at the end of each
payment interval, then it is called _____________.
9. One way to reduce risk to an acceptable level is through ___________
wherein you invest in different types of investments with different
risks and returns.
10. If the cash flow happens at the beginning of each period, then it is
called ___________.
B. Multiple Choice
1. In a loan amortization schedule, interest payments for each period
would most probably
a. Increase overtime c. Remain the same
b. Decrease overtime d. There are no interest payments in the
schedule.
2. The formula (1 + i)n is also called
a. present value factor for lump-sum payment
b. future value factor for lump-sum payment
c. present value factor for ordinary annuity
d. future value factor for ordinary annuity

3. An increase in the present value may be caused by

a. increase in the discount rate

b. decrease in the discount rate

c. discount rate does not affect the present value

d. none of the above

4. Interest payments that are based on the original principal and

previous interest recognized is based on

a. present value c. simple interest rate

b. future value d. compound interest rate

5. The time value of money suggest that a peso received today is worth
_______ a peso received in the future.

a. less than c. the same as

b. more than d. none of the above

6. You invest P 5 000 today at an interest rate of 10% for four years,
how much would be the future value of the investment?

a. P 3 415 b. P 7 000 c. P 6 500 d. P 7

320

7. You are an incoming college freshman taking-up a four-year course.

Suppose that you want to purchase a car immediately after
 graduating which will cotst you P 750 000. How much should you
invest at the end of every year in an investment fund that earns 9%
annually to have enough to buy the car upon graduation?

a. P 164 000 b. P 531 300 c. P 607 445 d. P 132

828

8. If you invest a lump-sum amount of P 25 000 at an interest rate of

12%, compounded monthly, how much would be your investment
after 3 years?

a. P 34 000 b. P 35 123 c. P 39 338 d. none of

the above

9. An equipment with a cost of P 100 000 is expected to generate returns

of P 90 000; P 60 000 and P 50 000 for the first, second and
third year, respectively. Using a discount rate of 12%, what is the NPV
of the project?

a. P 60 121 b. P 79 341 c. P 83 431 d. P 63

778

10.What is the present value of a 6% investment that would pay P 30

000 annually perpetually?

a. P 500 000 b. P 450 000 c. P 300 000 d. none of

the above

DIRECTION: Solve the following problems.

1. You will invest P 30 000 into an investment that will earn 10% every
year for 5 years.

a. How much would you receive after 5 years if the 10% is a simple
interest rate?

b. How much would you receive after 5 years if the 10% is a

compound interest rate?

2. ABC Company expects to receive P 1 000 five years from now and
wants to know what this money is worth today. Calculate the value
today of P 1 000 discounted at 10%.

3. Find the amount of P 5 000 ordinary annuity payable quarterly for 3

years. Money is worth 12% converted quarterly.

4. Consider the given annuities:

A: P 1 000 deposited at the beginning of each month for 3 years at

12% compounded semi-annually.

B: P 3 000 deposited at the beginning of each quarter for 3 years at

12% compounded quarterly.

Calculate the amount of each annuity. Compare the two annuities.

5. A mortgage of P 80 000 is to be paid by annual payment over a period

of 10 years. If the interest rate is 15.8% effective.

a) calculate the annual payment;

b) construct an amortization schedule;

c) find the total payment made;

d) find the total interest paid

6. A project requires an initial outlay of P 100 000. The relevant inflows

 associated with the project are P 60 000 in year one and P 50 000 in
years two and three. The appropriate discount rate for this project is
11%. Compute the net present value. Should the company accept the
project?

V. REFLECTION Directions: Using the prompts below, write your personal insights about the
lesson in your notebook or portfolio.

I understand that _________________________________________________________

___________________________________________________________________________
I realized that _____________________________________________________________
___________________________________________________________________________

Prepared by: Checked by:

DIVINA GRACE M. RODRIGUEZ KRISTINE ANN I. CARANDANG

Teacher II Master Teacher II

Noted by:

SHIRLEY C. SIMAN ROWENA C. TERCERO

Vocational School Administrator Public School District Supervisor – West I

Validated by:

RONALDO V. RAMILO
Education Program Supervisor

EDNA U. MENDOZA, Ph. D.

Chief Education Supervisor
Curriculum Implementation Division

Recommending Approval:

RHINA O. ILAGAN, Ed. D

Officer-In-Charge - Assistant Schools Division Superintendent

Approved:

ROGELIO F. OPULENCIA
Officer-In-Charge - Schools Division Superintendent