ARELLANO UNIVERSITY

Juan Sumulong Campus

2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-

Dynamic Learning Program

(General Mathematics)

1|SHS MATHEMATICS DEPARTMENT

 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-
NAME: _____________________________ DATE:________________________
GRADE & SECTION:___________________ TEACHER:_____________________

CONCEPT NOTES 4
I. TOPIC: BASIC BUSINESS MATHEMATICS: Compounding More than Once a Year.

II. LEARNING GOAL: The students should be able to:

a. compute maturity value, interest, and present value; and
b. solve problems involving compound interest when compound interest is computed
more than one a year.

III. CONCEPTS

 Conversion/ Interest Period – time between successive conversions of interest.

 Frequency of conversion (m) – number of conversion periods in one year.
 Nominal rate (i¿¿ m)¿ – annual rate of interest.
 Rate( j ) of interest for each conversion period –
j m annual rate of interest
j= =
m frequency of conversion
 Total number of conversion period n=mt

 Maturity Value, Compounding m times a year

F=P ¿
 Present value P at Compound Interest
F
P=
¿¿

Where:
F = Maturity (Future) Value
P = Principal
i m=¿ Nominal rate of interest or annual rate
m=¿Frequency of conversion
t=¿Term/time in years

Examples:
1. Find the maturity value and interest if 10,000 is deposited in a bank at 2 %
compounded monthly for 5 years?
Given:
P=10,000
i 12=0.02

2|SHS MATHEMATICS DEPARTMENT

 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-
t=5 years
m=12
Solutions:
i 12 0.02
j= =
m 12
n=12 ( 5 )=60

F=P ¿
F=11,050.79
I c =1,050.79

2. Find the present value of 50,000 due in 4 years if money is invested at 12 %

compounded semi-annually.
Given
F=50,000
j=0.06
n=8

Solutions:
F
P=
¿¿

50,000
P= ¿
1+0.06 ¿8
P=31,370.62

IV. EXERCISES
A. Directions: Complete the table by computing the interest rate per period and total
number of conversion period.

Nomina Interest Frequency of Interest rate per

l Rate Compounded Conversion conversion period
12 % Semi annually (1) (2)
16 % Quarterly (3) (4)
9% Monthly (5) (6)
(7). Daily (8) 0.003 %

B. Directions: Complete the table by computing the compound amounts, compound

interests and present values.

Nominal Interest Frequency Interest Time in Total Compound Compound

3|SHS MATHEMATICS DEPARTMENT

 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020 -2021
-
Principal Com- of rate per Years number of Interest Amount
Rate
pounded Conversion period conversions
10,000 Semi 15 (3) (4) (5)
8% (1) (2)
annually
3,000 6 yrs & 3 (8) (9) (10)
5% Quarterly (6) (7)
months
(11) 12 % Monthly (12) (13) 10 (14) (15) 50,000

4|SHS MATHEMATICS DEPARTMENT