INVEMATH-Module 1

FIRST Semester 2021-2022

 CONSUMER MATH- Simple Interest!
• SILEMP TERESTNI
• ETIM:
• LPPRICIAN MOUNTA
• icountDS
• LulF ountAM
 CONSUMER MATH
•
FORMULA
•
EXAMPLE 1.

• Given: P = ₱ 20 000
• r = 4% = 0.04
• t = 2 years
•
EXAMPLE 1.
•
Example 4
• Find the interest earned if ₱ 5 000 is invested at 13% simple interest
for 90 days.
• Given: P = ₱ 5 000
• r = 13 % = 0.13
• t = 90 days
 Example 3
•
Example 3
• Find the ordinary and exact interest on ₱ 15 000 at 4% simple interest
for 45 days.
• Given: P = ₱ 15 000
• r = 4 % = 0.04
• t = 45 days
• Solution:
Example 2
•
Example 2
•
Example 3
•
Example 4
•
At the end of the term of a loan transaction, the borrower pays back the
principal amount together with the interest. This amount is called final
amount or maturity value ( F ).

•
 Example:
• Find the interest and maturity value if ₱ 20 000 is borrowed at 12 ½%
simple interest for 4 years.
• Given: P = ₱ 20 000
• r = 12 ½ % = 0.125
• t = 4 years
•
 Example:
•
Example 2
•
Example 2
•
 Example 3
•
Example 4:
•
Example 4:
•
 Example
•
 SIMPLE DISCOUNT
•
Example 5
• The proceeds of a 2 year loan is ₱120 000. If the discount rate is 12%,
how much is the maturity value?
• Given: P = ₱ 120 000
• d = 12% = 0.12
• t=2
•
Example 2
•
Example 2
•
 Example
•
 Continuation….another method
•
Example 3
•
Example 3
•
Example 3
•
Example 4
•
Example 4
•
Example 5
•
Activity
1.Find the interest if P3000 is invested at 5 % for two
years ?
2.At 5% simple discount , determine the present value
of P30000 which is due at the end of 120 days. a),What
is the discount on P30,000. b.) What is the discounted
amount ?
Quiz solution:
1.Find the interest if P3000 is invested at 5 % for two years ?
Solution:
use I=Prt
I= P3000 x .05 x 2 years
I= P300.

2.At 5% simple discount , determine the present value of

P30000nwhich is due at the end of 120 days. a),What is the discount on
P30,000. b.) What is the discounted amount ?
Quiz solution:
2. At 5% simple discount , determine the present value of
P30000nwhich is due at the end of 120 days. a),What is the discount on
P30,000. b.) What is the discounted amount ?
Solution:
Data ; F= P30,000 b. Discounted Amount
t = 120 days P= F-I
r= 5% =.05 P = 30,000-500 = P 29,500
a. Discount: I=Fdt
b. I= 30,000 x.05 x (120/360) days = P500
Example 5
•
Quiz # 3
• 1. Using Interest rates between two dates. Determine the number of
days for APPROXIMATE AND EXACT DAYS AND THE four types of
simple interest, find the interest on ₱ 35, 000 at 6% from September
8, 2012 to January 28, 2013.
•
• Afour types of simple interest, find the interest on ₱ 35000 at 6% from September 8,
2012 to January 28, 2013.
•
• Solution:
• Approximate time Exact time
• September 22 22
• October 30 31
• November 30 30
• December 30 31
• January 28 _ 28 _
• 140 days 142 days
 a. Ordinary interest for approximate time (Ioa)
𝐴𝑝𝑝𝑟𝑜𝑥𝑖𝑚𝑎𝑡𝑒 𝑡𝑖𝑚𝑒
𝐼𝑜𝑎 = 𝑃𝑟 ( 360 ) 𝐼𝑜𝑎 = (₱ 107
500) (0.08) ( )

𝑰𝒐𝒂 = ₱ 𝟑 𝟑𝟒𝟒. 𝟒𝟒

b. Ordinary interest for exact time (I oe)

𝐸𝑥𝑎𝑐𝑡 𝑡𝑖𝑚𝑒
𝐼𝑜𝑒 = 𝑃𝑟 ( 360 ) 𝐼𝑜𝑒 = (₱ 107 500)
(0.08) ( )

𝑰𝒐𝒆 = ₱ 𝟑 𝟑𝟗𝟐. 𝟐𝟐

c. Exact interest for approximate time (I ea)

𝐴𝑝𝑝𝑟𝑜𝑥𝑖𝑚𝑎𝑡𝑒 𝑡𝑖𝑚𝑒
𝐼𝑒𝑎 = 𝑃𝑟 ( 365 ) 𝐼𝑒𝑎 = (₱ 107
500) (0.08) ( )

𝑰𝒆𝒂 = ₱ 𝟑 𝟐𝟗𝟖. 𝟔𝟑

d. Exact interest for exact time (I ee)

𝐸𝑥𝑎𝑐𝑡 𝑡𝑖𝑚𝑒
𝐼𝑒𝑒 = 𝑃𝑟 ( 365 ) 𝐼𝑒𝑒 = (₱ 107 500)
(0.08) ( )

𝑰𝒆𝒆 = ₱ 𝟑 𝟑𝟒𝟓. 𝟕𝟓
Hello good afternoon…
Welcome to our SYNCHRONOUS ONLINE CLASS!!!!!
Relationship Between Interest Rate and
Discount Rate
•
Relationship Between Interest Rate and
Discount Rate
•
Activity 2 September 21, 2023
• Problem 1: What is the discount of ₱ 17 ,000 for 8 months at
• a. ) 5.5% discount rate
• b. ) 5.5% interest rate
Example 1.
• Example 1: What is the discount of ₱ 20 000 for 9 months at
• a. 3% discount rate
• b. 3% interest rate
Continuation,,,,,
• 2.What simple interest rate is equivalent to 8% discount rate in 5
years?
Continuation,,,,,
• 2.What simple interest rate is equivalent to 8% discount rate in 5
years?
Continuation,,,,,
• 2.What simple interest rate is equivalent to 8% discount rate in 5
years?
Continuation:
• 3.What discount rate, one can avail for a loan with 8% simple interest
rate for 5 years?
Continuation:
• 3.What discount rate, one can avail for a loan with 8% simple interest
rate for 5 years?
Promissory Note

• A promissory note is a written promise signed by the person or

borrower to pay a certain amount of money at a specified future date,
either to the bearer or to the order of a designated person.
• There are two types of promissory notes: interest bearing
(simple interest note) and noninterest bearing. In simple interest
note, the principal, the term and the interest rate are specified. The
face value plus the interest is the maturity value. In non-interest
bearing note, the face value is the same as the maturity value.
Parts of a Promissory Note
Date of Note

• January 15, 2001 Date of Notice

Term of Note

Sixty days after the date stated, I promise to pay to the order of Carmen Lender
Lopez, the amount of Fifty thousand pesos with 6% interest per annum.
Face Value

Interest Rate

Sgd) Menchie Matias

Md = Maturity Date Dn = FV Date

= Face Value
of the Note tn = Term of the

MV or F = Maturity Value td = Term of the discount

Notation:
• Dn = Date of the Note tn = Term of the Note
• Md = Maturity Date FV = Face Value
• MV or F = Maturity Value td = Term of the discount
Rules in determining the Maturity Date of a
Note

• If the term is given in days, the maturity date is determined by adding

the term to the date of the note.
• Example: Date of note: January 15, 2013 Term of
note: 60 days
• Using table 1: January → 15
• 15 + 60 = 75
• Maturity date: March 16, 2013
Continuation:
• If the term is expressed in months, the maturity date is the date of
the note plus the term (in months). The maturity date will fall on the
same date as the date of the note.
•
• Example: Date of note: January 15, 2013 Term of
note: 8 months
• January(1st month) → 1 + 8 months
• = 9 → 9th month is September
• Maturity date: September 15, 2013
Continuation:::
• 3. In cases where in the maturity date will fall on a day that is not
within the month, the maturity date is the last day of the month.
• Example: Date of note: August 31, 2012 Term of
note: 6 months
• August (8th month) → 8 + 6 =14
• 14 – 12 (month/year) = 2→ 2nd
month is February
• Maturity date: February 28, 2013
Promissory notes can either be interest-
bearing or non-interest bearing
Example Non-interest bearing note
1: A ₱ 5 000 non-interest bearing note dated October
15, 2013 is due after six months. When is the
maturity date?
Given: Dn = October 15, 2013 ; tn = 6 months

Solution: Md = October 15 + 6 months = April 15, 2014

Promissory notes can either be interest-
bearing or non-interest bearing
Example Non-interest bearing note
1: A ₱ 5 000 non-interest bearing note dated October
15, 2013 is due after six months. When is the
maturity date?
Given: Dn = October 15, 2013 ; tn = 6 months

Solution: Md = October 15 + 6 months = April 15, 2014

Interest-bearing note
2.A ₱ 50 000 note dated January 5, 2012 is due after 120 days with 6% simple interest per annum. Find the maturity date
and maturity value.

• Dn = January 5, 2012 ; tn = 120 days ; FV = ₱ 50 000

• Md = 5 + 120 days = 125 days, May 4, 2012 (Subtract 1 day for
February 29, because 2012 is a leap year)
• F=(1+rt)
• F=P50,000( 1+ 0.06x(120/360))
• F= P51,000

•
Discounting Promissory Notes

• Business firms or individuals accept promissory note as payment for

certain goods supplied or services rendered to an individual or
institution.
• The amount stated on the note can only be claim on the maturity
date. However if the need for cash arise before the maturity date, the
holder of the note can sell the note to other person or to a bank. This
process is called discounting or selling of promissory note.
Continuation:
• Formula
Formula: 𝐹 = 𝑃(1 + 𝑟𝑡) Notation : Dd = Discounting date
𝑀𝑑 = 𝐷𝑛 + 𝑡𝑛 t = term of discount
𝑡 = 𝑀𝑑 − 𝐷𝑑
𝑃 = 𝐹(1 − 𝑑𝑡)

Example 1: Anna Vitug issued a ₱ 65 000 bank discount note due on September 12, 2013 to
Gina Intes. On May 18, 2013, Gina Intes needed cash, so she sells the
note to a bank which discounts it at 12%. Solve for the proceeds
• Example 1: Anna Vitug issued a ₱ 65 000 bank discount note due on September 12, 2013 to
• Gina Intes. On May 18, 2013, Gina Intes needed cash, so she sells the
• note to a bank which discounts it at 12%. Solve for the proceeds
• that Gina will receive.
•
• Given:
• 12% = 0.12 FV = ₱ 65 000 ; Md = Sept. 12, 2013 ; Dd = May 18, 2013 ; d =
• Solution:
• September 12, 2013 = 255 t = 255 – 138 = 117 days May 18, 2013 = 138
•
• P = F (1 – dt) P = ₱ 65 000 [1 − (0.12) ( 117/360)]
• P = ₱ 62 465
•
COMPOUND INTEREST
• Compound interest is the interest obtained from the periodic addition of
simple interest to the principal amount. When interest is periodically added to
the principal amount, this new sum becomes the new principal amount for a
specified number of periods. The result of this periodic addition is called the
compound amount (F).
• The number of times that the interest is computed in a year is called the
frequency of conversion (m). Interest may be compounded:
• annually m=1
• semi-annually m=2
• quarterly m=4
• monthly m = 12
Continuation….
•
Example1.
1.If ₱ 20 000 is invested in a bank that pays 4 % compounded
annually, how much is in the account at the end of 3 years?
Year Principal Interest Final Amount

0 ₱ 20 000 0 ₱ 20 000

1 ₱ 20 000 ₱ 800 ₱ 20 800

2 ₱ 20 800 ₱ 832 ₱ 21 632

3 ₱ 21 632 ₱ 865.28 ₱ 22 497.28

Continuation
•
Example
Example:

• 1.P20000, compounded quarterly , for 3 years with interest rate of

12%.
Example 2.
Find the compound amount and interest if ₱ 40 000 is invested for 4
years at 10% compounded semi-annually? Quarterly , every 2 months
Example 2.
Find the compound amount and interest if ₱ 40 000 is invested for 4
years at 10% compounded semi-annually? Quarterly , every 2 months
Example 2.
Find the compound amount and interest if ₱ 40 000 is invested for 4
years at 10% compounded semi-annually? Quarterly , every 2 months
SW #
Find the compound amount if ₱ 100 000 is invested for 5 years at 25%
compounded :
1. monthly
2. semi- annually
3.Quarterly
4.bi-monthly
5.every 4 months
SW #
Find the compound amount if ₱ 100 000 is invested for 5 years at 25%
compounded :
1. monthly
2. semi- annually
3.Quarterly
4.bi-monthly
5. every 4 months
SW #
Find the compound amount if ₱ 100 000 is invested for 5 years at 25%
compounded :
1. monthly
2. semi- annually
3.Quarterly
4.bi-monthly
5.Every 4 months
SW #
Find the compound amount if ₱ 100 000 is invested for 5 years at 25%
compounded :
1. monthly
2. semi- annually
3.Quarterly
4.bi-monthly
5.Every 4 months
•
•
Example
Example 2:
•
CREDIT CARDS
•
Continuation..
•
Example:
1. Rose had an unpaid credit bill of ₱ 4 000 with a due date of June 1. She made a purchase of ₱
2 000 on June 10 and ₱ 1 100 purchase on June 20. A payment of ₱ 3 000 was made on June 17.
The next billing date is July 1. The interest on the average daily balance is 3.5% per month. Find the
finance charge and the current balance of the bill.

• Solution:

• To determine the finance charge:

• a. Prepare a table showing the unpaid balance for each purchase, the number of days the balance
is owed and the daily balance (unpaid balance times the number of days
 Date Payments/ Unpaid Number Daily
Purchase Balance of Days Balance
June 1 ₱ 4 000 9 ₱36 000
(June 1-
Solution: June 9)

June 10 ₱ 2 000 6 000 7 42 000

(June 10-
June 16)
1. Rose had an unpaid credit
bill of ₱ 4 000 with a due June 17 - 3 000 3 000 3 9 000
date of June 1. She made a (June 17-
purchase of ₱ 2 000 on June 19)
June 10 and ₱ 1 100
purchase on June 20. A
payment of ₱ 3 000 was June 20 1 100 4 100 11 45 100
made on June 17. The next (June 20-
billing date is July 1. The June 30)
interest on the average
daily balance is 3.5% per
month. Find the finance
charge and the current
balance of the bill.
Table
Date Payment Unpaid Number of Days Daily
s/ Balance Balance
Purchase

June 1 ₱ 4 000 9 (June 1- June 9) ₱ 36 000

June ₱ 2 000 6 000 7 (June 10- June 42 000

10 16)
June - 3 000 3 000 3 (June 17- June 9 000
17 19)
June 1 100 4 100 11 (June 20- June 45 100
20 30)
Total ₱ 132 100
•
•
1. Find the present value of ₱ 300 000 due at the end of 5 years if it is invested at 5% compounded:

a. annually

b. semi-annually

c. quarterly

d. monthly
2. What sum is needed to accumulate to ₱ 50 000 in 3 years and 5 months if the interest rate is 7% compounded
monthly?

3. Christine made the following transactions: purchase of ₱ 5 520 on July 5 ;

• purchase of ₱ 12 080 on July 12; payment of ₱ 5 000 on July 17 using her credit card which had an unpaid
bill of ₱ 7 200 on July 2 . The interest on the average daily balance is 2.5% per month. The next billing date
is August 2. Find the average daily balance, finance charge and current balance.