11

General
Mathematics
Quarter 2 – Module 1:
Simple and Compound Interests
General Mathematics– Grade 11
Alternative Delivery Mode
Quarter 2 – Module 1: Simple and Compound Interests
First Edition, 2020

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 11

General
Mathematics
Quarter 2 – Module 1:
Simple and Compound Interests
Introductory Message

For the facilitator:

Welcome to the General Mathematics 11Alternative Delivery Mode (ADM)

Module on Simple and Compound Interests!

This module was collaboratively designed, developed, and reviewed by

educators both from public and private institutions to assist you, the teacher
or facilitator in helping the learners meet the standards set by the K to 12
Curriculum while overcoming their personal, social, and economic
constraints in schooling.

This learning resource hopes to engage the learners into guided and
independent learning activities at their own pace and time. Furthermore, this
also aims to help learners acquire the needed 21st century skills while taking
into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing
them to manage their own learning. Furthermore, you are expected to
encourage and assist the learners as they do the tasks included in the module.

2
For the learner:

Welcome to the General Mathematics 11 Alternative Delivery Mode (ADM)

Module on Simple and Compound Interests!

The hand is one of the most symbolized parts of the human body. It is often
used to depict skill, action, and purpose. Through our hands we may learn,
create and accomplish. Hence, the hand in this learning resource signifies
that you as a learner is capable and empowered to successfully achieve the
relevant competencies and skills at your own pace and time. Your academic
success lies in your own hands!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time.
You will be enabled to process the contents of the learning resource while
being an active learner.

This module has the following parts and corresponding icons:

What I Need to This will give you an idea of the skills or

Know competencies you are expected to learn in
the module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip
this module.

What’s In This is a brief drill or review to help you

link the current lesson with the previous
one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such
as a story, a song, a poem, a problem
opener, an activity or a situation.

What is It This section provides a brief discussion of

the lesson. This aims to help you discover
and understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding
and skills of the topic. You may check the
answers to the exercises using the
Answer Key at the end of the module.

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 What I Have This includes questions or blank
Learned sentence/paragraph to be filled into
process what you learned from the
lesson.

What I Can Do This section provides an activity which

will help you transfer your new
knowledge or skill into real life situations
or concerns.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.
Additional In this portion, another activity will be
Activities given to you to enrich your knowledge or
skill of the lesson learned. This also tends
retention of learned concepts.

Answer Key This contains answers to all activities in

the module.

At the end of this module, you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part
of the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other
activities included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through
with it.

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 If you encounter any difficulty in answering the tasks in this module, do
not hesitate to consult your teacher or facilitator. Always bear in mind that
you are not alone.

We hope that through this material, you will experience meaningful

learning and gain deep understanding of the relevant competencies. You
can do it!

What I Need to Know

This module was designed and written with you in mind. It is here to
help you master the concept of Simple and Compound Interests. The scope of
this module permits it to be used in many different learning situations. The
language used recognizes the diverse vocabulary level of students. The lessons
are arranged to follow the standard sequence of the course. But the order in
which you read them can be changed to correspond with the textbook you are
now using.

The module is divided into two lessons, namely:

• Lesson 1 – Illustrating Simple and Compound Interests
• Lesson 2 – Simple Interest

After going through this module, you are expected to:

• illustrate simple and compound interests M11GM-IIa-1; and
• distinguish between simple and compound interests
M11GM-IIa-2

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 What I Know

Directions: Read each statement carefully. Choose the letter of the correct
answer and write it on a 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
A. 𝐼𝑠 = 𝑃𝑟𝑡 C. 𝐼𝑠 =
𝑟𝑡
𝑟
B. 𝐼𝑠 = 𝑃𝑟 2 𝑡 D. 𝐼𝑠 =
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 C. Principal
B. Interest D. Rate

6.) 30 months is equivalent to

A. 2.5 years C. 3 years
B. 2.75 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 C. ₱1,200.00
B. ₱600.00 D. ₱6,000.00

6
8.) What is the total number of conversion periods when a certain amount
is borrowed at 10% compounded monthly for 5 years?
A. 12 C. 24
B. 50 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 C. ₱11,500.00
B. ₱45,000.00 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 C. 0.140
B. 0.350 D. 0.460

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 From the previous lesson, the fundamental ideas on functions were
presented. Functions were utilized as mathematical models. These are
conceptual models that use mathematical language to depict connections.
With the thought of mathematical modeling, mathematics is concerned not
just with the proportions of the actual world however it has additionally
extended its relevance to sciences, both social and natural, business, and
money. So, with this, exercises identifying with business and account will at
that point be presented explicitly on interest.

What’s In

Listed below are the skills and competencies you should possess before
proceeding to the next lesson. Read the statements and evaluate yourself
about your level of understanding by answering YES if you agree and NO if
otherwise.

Statement YES NO
1.I can solve problems involving logarithmic functions
2. I can determine logarithmic functions.

● If your response to all the statement is yes, at that point you are sure
to continue to the following exercise.

● If your response no to any of the statements there is a need for you

to have a quick review.

Review the examples below and reflect if you are confident enough to
proceed. Since the concept of the next lesson still have an equation and
solving problems.

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Example 1: The number of ants in a nest doubles every month. If there are
now 600 ants, about how long it takes for their number to grow to 9600?

Given: P= 600 r=100% A= 9,600

Solution:

A= P (1 + 𝑟)𝑡
9,600=600(1 + 1)𝑡
9,600 600 (2)𝑡
=
600 600
16=2 𝑡

.24 =2𝑡
4= t

Therefore, it will take 4 months for 600 ants to grow to 9,600.00.

Example 2: Using the formula A= P(1 + 𝑟)𝑛 Where A is the future value of the
investment, P is the principal, r is the fixed annual interest rate, and n is the
number of years, how many years will it take an investment to double if the
interest rate per annum is 2.5%.

Solution:

Doubling the principal P, we get A=2P, r=2.5% =0.25,

A= P(1 + 𝑟)𝑛
2P=P(1 + 0.025)𝑛
2= (1.025)𝑛
Log2=log(1.025)𝑛
Log2= nlog (1.025)
𝑙𝑜𝑔2
N= ≈ 28.07 𝑦𝑒𝑎𝑟𝑠
𝑙𝑜𝑔1.025

It will take 28 years for investment to double.

9
 What’s New

Consider the figure below.

https://www.raisin.co.uk/banking/compound-interest/

Figure 1
As the illustration shows we can figure out how simple and compound
interests work.
Example:
Let us say you deposited ₱10,000.00 and saved it in the bank for 10
years and had an interest rate of 10%. If you gained 10% simple interest
every year, you would end the 10 years with a total interest income of
₱10,000.00 (I = ₱10,000.00 x 0.10 x 10).
However, if the interest were compounded, the interest income in each
year would be higher than the previous year. And at the end of 10 years,
you would have earned ₱15,937.42 in interest.

10
 What is It

Definition of terms:

Lender or creditor – is a person or institution to whom money is owed.

Borrower or debtor – is an individual or entity that owes money to a creditor.

Origin or loan date –means the date of the Loan Agreement as set forth.

Repayment date or maturity date – refers to the date on which a borrower's

final loan payment is due.

Time or term (t) – is a period of duration, time the money is borrowed or

invested.

Principal or present value (P) – quantity of money acquired or invested on

the starting date of investment.

Rate of interest or simply rate (r) – is the amount a lender charges for the
use of money usually in percent.

Interest (I) – the financial charge for the benefit of acquiring cash, normally
conveyed as a yearly rate.

Maturity Value or Future Value (F) – sum of amount after t years that the
investor collects from the debtor on the maturity date.

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Illustration of Simple and Compound Interests

Example: Assume you won ₱10,000.00 and you intend to invest it for 5 years.
A financial institution offers 2% basic financing cost every year. A bank offers
2% compounded yearly. Which will you pick and why?"

Solutions:

Investment 1: Simple Interest

Time Principal Int. Simple Interest Amount after t years
(t) (P) rate (r) (Maturity value)
Solution Answer
1 ₱10,000.00 2% (₱10,000.00)(0.02)(1) ₱200.00 ₱10,000.00+₱200.00
=₱10,200.00
2 ₱10,000.00 2% (₱10,000.00)(0.02)(2) ₱400.00 ₱10,000.00+₱400.00
=₱10,400.00
3 ₱10,000.00 2% (₱10,000.00)(0.02)(3) ₱600.00 ₱10,000.00+₱600.00
=₱10,600.00
4 ₱10,000.00 2% (₱10,000.00)(0.02)(4) ₱800.00 ₱10,000.00+₱800.00
=₱10,800.00
5 ₱10,000.00 2% (₱10,000.00)(0.02)(5) ₱1,000.00 ₱10,000.00+₱1,000.00
=₱11,000.00

Investment 2: Compound Interest (Annual)

Time Principal Int. Compound Interest Amount after t
(t) (P) rate(r) Solution Answer years (Maturity
value)
1 ₱10,000.00 2% (₱10,000.00)(0.02)(1) ₱200.00 ₱10,000.00+₱200.00
=₱10,200.00
2 ₱10,200.00 2% (₱10,200.00)(0.02)(1) ₱204.00 ₱10,200.00+₱204.00
=₱10,404.00
3 ₱10,404.00 2% (₱10,404.00)(0.02)(1) ₱208.08 ₱10,404.00+₱208.08
=₱10,612.08
4 ₱10,612.08 2% (₱10,612.08)(0.02)(1) ₱212.24 ₱10,612.08+₱212.24
=₱10,824.32
5 ₱10,824.32 2% (₱10,824.32)(0.02)(1) ₱216.49 ₱10,824.32+₱216.49
=₱11,040.81

Simple interest earned only on the original investment or principal. As

the table on Investment 1 shown ₱10,000.00 at 2% simple interest per year,
you will earn 2% of ₱10,000.00 or ₱200.00 interest per year; at the end of five
years, your investment will have grown only to ₱11,000.00, or 10% more than
your initial investment.

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 Whereas, in compound interest as shown in table of Investment 2
earned interest is added to the principal at the end of every period, leading to
a higher interest in the next period. As such, with compound interest,
earnings are reinvested so that interest also earns interest, a process which is
referred to as compounding.

The results of the above computations illustrated how simple and

compound interest works.

Basically, simple interest is a fixed percentage of the principal amount

that was borrowed or lent. Ideally, simple interest remains constant
throughout the investment term. In compound interest, the interest from
previous years also earns interest.

What’s More

Directions: Complete the table below by finding the unknown.

Principal (P) Rate (r) Time (t) Interest

(a) 2.5% 4 ₱1,500.00
₱36,000.00 (b) 1.5 ₱4,860.00
₱250,000.00 0.5% (c) ₱275.00
₱500,000.00 12.5% 10 (d)

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 What I Have Learned

Modified TRUE or FALSE

Directions: Write TRUE if the statement is correct and if it is wrong, underline

the word/s and changed it to make the statement correct.

____ 1. The principal is the quantity of money acquired or invested on the

starting date of investment.

_____2. The creditor is an individual that owes money.

_____3. In the simple interest formula, I=Prt, the I always refers to the rate of
interest charged for the use of money.

______4. In the simple interest formula, I = Prt, the t is always expressed in

years.

______5. Maturity Value is the sum of amount after t years that the investor
collects from the debtor on the maturity date.

What I Can Do

Directions: Illustrate Simple and Compound Interests. Answer as

indicated. Write your answers on a separate sheet of paper.

A. Vince Alden won ₱5,000.00 and plan to invest it for 3 years. ABC
Cooperative offers 5% simple interest rate per year. XYZ bank offers 5%
compounded annually. Which offers did Mr. Vince Alden choose and why?

14
 Assessment

Directions: Read each statement carefully. Choose the letter of the correct
answer and write it on a whole sheet of paper.

1. A person borrows ₱5,000.00 for 2 years at 4% per annum simple

interest. He immediately lends it to another person at 6.25% for 2 years.
Find his gain in the transaction per year.
A. ₱125.00
B. ₱112.50
C. ₱225.00
D. ₱167.50

2. The I in the simple interest formula stands for?

A. Account balance in peso
B. Interest earned in peso.
C. Interest rate in decimal
D. Interest rate in peso

3. The P in the simple interest formula stands for?

A. Principal amount invested.
B. Percentage amount invested.
C. Price of borrowing money
D. Principal amount earned.

4. What is another word for interest rate?

A. Annual Percentage Rate
B. Annual Percentage Yield
C. Annual Percentage Earned
D. Annual Percentage Invested

5. Mr. Ocampo invests ₱3,000.00 for one year at a rate of 6%. How much
interest will he earn at the end of that year?
A. ₱180.00
B. ₱200.00
C. ₱220.00
D. ₱240.00

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6. Mr. Smith invests ₱2,500.00 at a rate of . What will her balance be
at the end of three years?
A. ₱562.00
B. ₱2,687.50
C. ₱3,062.50
D. ₱3,063.00

7. Rhea deposited ₱7,500.00 for two years into a money market account.
At the end of two years, she had a total of ₱8,700.00. What rate of
interest did she receive?
A. 7%

B. .
C. 8%
D. 9%

8. A certain amount of money was invested for one year at a rate of .

At the end of that year, it had earned ₱675.00. How much money was
invested?
A. ₱7,000.00
B. ₱8,000.00
C. ₱9,000.00
D. ₱10,000.00

9. Jason borrowed ₱3,200.00 at a rate of simple interest of 8% for 3 years.

What will be the maturity value of Jason’s loan?
A. ₱3,948.00
B. ₱3,958.00
C. ₱3,978.00
D. 3,968.00

10. What amount of interest will be charged on ₱2,500.00 borrowed for

2 years at a simple interest rate of 10%?
A. ₱500.00
B. ₱550.00
C. ₱250.00
D. ₱555.00

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 Additional Activities

Give an example of a real-life situation that involves and illustrates

simple interest. Answer it on a separate sheet of paper.

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 18
Additional Assessment
Activities 1. B
2. B
*Answer may vary. 3. A
4. A
5. A
6. C
7. C
8. C
9. D
10. A
What I can Do
I - Simple Interest
Time Principal Int. Simple Interest Amount after t years
(t) (P) rate (r) Solution Answer (Maturity value)
1 ₱5,000.00 5% (₱5,000.00)(0.05) (1) ₱250.00 ₱5,000.00+₱250.00=₱5,250.00
2 ₱5,000.00 5% (₱5,000.00)(0.05) (2) ₱500.00 ₱5,000.00+₱500.00=₱5,500.00
3 ₱5,000.00 5% (₱5,000.00)(0.05) (3) ₱750.00 ₱5,000.00+₱750.00=₱5,750.00
II - Compound Interest Annual
Time Principal Int. Compound Interest Amount after t years
(t) (P) rate (r) Solution Answer (Maturity value)
1 ₱5,000.00 5% (₱5,000.00)(0.05) (1) ₱250.00 ₱5,000.00+₱250.00=₱5,250.00
2 ₱5,000.00 5% (₱5,250.00)(0.05) (1) ₱262.50 ₱5,250.00+₱262.50=₱5,512.50
3 ₱5,000.00 5% (₱5,512.50)(0.05) (1) ₱275.63 ₱5,512.50+₱275.63=₱5,788.13
*For the question: answer may vary.
What’s In What I Have What’s More What I Know
Learned
1. Logarithmic a. ₱15,000 1. A
Equation 1.True b. 9% 2. C
2. Logarithmic 2. Borrower c. 0.22 years 3. A
Function 3. True d. ₱625,000.00
4. B
3. Logarithmic 4. True
Inequalities 5. B
5. True
4. Logarithmic 6. A
Inequalities 7. B
5. Logarithmic 8. D
Function 9. A
10. A
Answer Key
 What I know

Directions: Read each statement carefully. Choose the letter of the correct
answer and write it on a whole sheet of paper.

1.) What is the formula in computing the simple interest on a given

financial transaction?
𝑃
A. 𝐼𝑠 = 𝑃𝑟𝑡 C. 𝐼𝑠 = 𝑟𝑡
𝑟
𝐵. 𝐼𝑠 = 𝑃𝑟 2 𝑡 D. 𝐼𝑠 =
𝑃𝑡
2.) How much is the simple interest on this financial transaction,
P = ₱10,000.00, r = 7%, and t = 3 years?
A. ₱2,100.00 C. ₱1,200.00
B. ₱700.00 D. ₱2,000.00

3.) Mr. Marvin borrowed ₱8,200.00 at a rate of simple interest of 5% for

3 years. What will be the maturity value of Mr. Marvin’s loan?

A. ₱1,320.00 C. ₱1,230.00
B. ₱1,030.00 D. ₱1,200.00

4.) What amount of interest will be charged on ₱2,000.00 borrowed for

2 years at a simple interest rate of 10%?
A. ₱500.00 C. ₱400.00
B. ₱550.00 D. ₱450.00

5.) Krystal deposited ₱7,500 for two years into a money market account.
At the end of two years, she had a total of ₱8,700. What rate of interest
did she receive?

A. 7% C. 8%

B. . D. 9%

19
 In the previous lesson, there can be a big difference in the amount of
interest payable on a loan if interest is calculated on a compound rather than
a simple basis. The magic of compounding can work for your potential benefit
with regards to your investments and can be an intense factor in wealth
creation. Being the basic financial concepts, it may help you make more
informed decisions when taking out a loan or investing.

What’s In

Before you proceed to the new lesson, let us recall what you have learned from
the previous lesson.

Direction: Differentiate Simple Interest from Compound Interest.

Simple Interest vs Compound Interest

Basis for Comparison Simple Interest Compound Interest

1. Meaning

2. Formula

3. Principal

4. Amount of Interest

20
 What’s New

Understanding simple interest is one of the most important and

fundamental concepts for mastering your finances. It helps you understands
how interest works, an also empowered to make a better financial decision.

Example: Austin has been working at the department store, he has had his
eye on a new bike. He has saved ₱1,000.00, but the bike is being sold for
₱5,000.00. Austin would not mind waiting except for the fact that several of
his friends are going to go on a big bike ride on the weekend and he wants to
go with them. He has decided to ask his brother if he can borrow the money.
The one catch is that he wants to charge his interest. His brother will loan
him the ₱5,000.00, but he wants to charge him 15% interest per month. “I
don’t think that is very fair,” Austin tells him when he presents the deal. “It
isn’t that much more that you have to pay back.” Austin disagrees. How much
is 15% interest on ₱5,000.00?

Solution:

Is = Prt
= ₱15,000(0.15) (1)
Is = ₱750.00

Therefore, ₱750.00 is the 15% of ₱5,000.00. that Austin gives to his

brother.

21
 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=
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

22
Example:

Directions: Complete the table below by solving the unknown quantities in

each row.

Principal Rate Time Simple Future Value

(P) (r) (t) Interest (F)
(Is)
1.) ₱50,000.00 12.5% 10 years (a) (b)
2.) (c) 2.5% 4 years ₱1,500.00 (d)
3.) ₱36,000.00 (e) 1 year ₱4,860.00 (f)
and
6 months
4.) ₱250,000.00 0.5% (g) ₱1,400.00 (h)
5.) ₱10,000.00 4% 5 months (i) (j)

Solution:

1.) Given: P = ₱50,000.00; r = 12.5% or 0.125; t = 10 years

𝐼𝑠 = 𝑃𝑟𝑡 𝐹 = 𝑃 + 𝐼𝑠
𝐼𝑠 = ₱50,000.00(0.125)(10) 𝐹 = ₱50,000.00 + ₱62,500.00
𝑰𝒔 = ₱𝟔𝟐, 𝟓𝟎𝟎. 𝟎𝟎 (a) 𝑭 = ₱𝟏𝟏𝟐, 𝟓𝟎𝟎. 𝟎𝟎 (b)
2.) Given: r = 2.5% or 0.025; t = 4 years; 𝐼𝑠 = ₱1,500.00

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

6
3.) Given: P = ₱36,000.00; t=1 years or 1.5 years; 𝐼𝑠 = ₱4,860.00
12

𝐼
𝑟 = 𝑃𝑡𝑠 𝐹 = 𝑃 + 𝐼𝑠
₱4,860.00
𝑟 = ₱36,000.00(1.5 ) 𝐹 = ₱36,000.00 + ₱4,860.00

𝒓 = 𝟎. 𝟎𝟗 or 9% (e) 𝑭 = ₱𝟒𝟎, 𝟖𝟔𝟎. 𝟎𝟎 (f)

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 4.) Given: P = ₱250,000.00; r = 0.5% or 0.005; 𝐼𝑠 = ₱1,400.00

𝐼
𝑡 = 𝑃𝑟𝑠 𝐹 = 𝑃 + 𝐼𝑠
₱1,400.00
𝑡 = ₱250,000.00(0.005) 𝐹 = ₱250,000.00 + ₱1,400.00

𝒕 = 𝟏. 𝟏𝟐 years (g) 𝑭 = ₱𝟐𝟓𝟏, 𝟒𝟎𝟎. 𝟎𝟎 (h)

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 (i) 𝑭 = ₱𝟏𝟎, 𝟏𝟔𝟔. 𝟔𝟕 (j)

What’s More
Directions: Complete the table below by solving the unknown quantities in
each row. Write your complete solutions and answers on a whole sheet of
paper.

Principal Rate Time Simple Future Value

Interest
(P) (r) (t) (F)
(Is)
1.) ₱40,000.00 2% 3 years (a) (b)
2.) (c) 10% 5 years ₱2,500.00 (d)
3.) ₱100,000.00 (e) 1.5 years ₱3,600.00 (f)
4.) ₱250,000.00 4.5% (g) ₱15,400.00 (h)
5.) ₱12,345.00 8.25% 9 months (i) (j)

Solve the future value on test I use the alternative formulas:

𝐹 = 𝑃 + 𝑃𝑟𝑡 or 𝐹 = 𝑃(1 + 𝑟𝑡)

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 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 8%, the amount earned

₱11,200.00 of simple interest in 2.5 years. How much money was
originally invested?

Solution:
Given: r = 8% or 0.08; 𝐼𝑠 = ₱11,200.00; t = 2.5 years
𝐼𝑠
𝑃=
𝑟𝑡
₱11,200.00
𝑃=
0.08(2.5)
𝑷 = ₱56,000.00

Therefore, the amount of money originally invested was ₱56,000.00.

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3. Ricky borrowed ₱25,000.00 and paid ₱1,250.00 interest for 6 months.
What was the rate of interest?

Solution:
6
Given: P = ₱25,000.00; 𝐼𝑠 = ₱1,250.00; t= year or 0.5 year
12

𝐼𝑠
𝑟=
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 many 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
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.

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 What I Can Do

Answer the following problems involving simple interest. Write your

complete solutions and answers on a 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?

2. How much money will you have after 4 years if you deposited
₱10,000.00 in a bank that pays 6% simple interest?

Assessment
Directions: Read each statement carefully. Choose the letter of the
correct answer and write it on a 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
C. 𝐼𝑠 = 𝑃𝑟𝑡 C. 𝐼𝑠 = 𝑟𝑡
𝑟
𝐵. 𝐼𝑠 = 𝑃𝑟 2 𝑡 D. 𝐼𝑠 =
𝑃𝑡

27
 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 C. Principal
B. Interest D. Rate

6.) 30 months is equivalent to

A. 2.5 years C. 3 years
B. 2.75 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 C. ₱1,200.00
B. ₱600.00 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 C. 24
B. 50 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 C. ₱11,500.00
B. ₱45,000.00 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 C. 0.140
B. 0.350 D. 0.460

Additional Activities

Formulate one problem that involve simple interest. Write the problem and its
complete solution and answer on a whole sheet of paper.

28
 29
What’s In Additional Assessment
Activities (Post Test)
Simple Interest Compound Interest
*Answers may 1. A
1. Meaning Answer may Answer may vary. 2. C
vary 3. A
2. Formula Is = Prt A = P (1 + r) t 4. B
3. Principal Constant Changing during the 5. B
entire term of loan or 6. A
investment 7. B
4. Interest uniform Increasing rapidly 8. D
9. A
10. A
What I Can What’s More What I Know
Do
1. ₱6,500 I. 1. A
2. ₱12,400 2. A
1. (a)Is = ₱2,400.00 (b)F = ₱42,400.00 3. C
2. (c)P = ₱5,000.00 (d)F = ₱7,500.00 4. C
3. (e) r = 0.024 or 2.4% (f) F = ₱103,600.00 5. B
4. (g) t = 1.37 years (h) F = ₱265,400.00
5. (i) Is = ₱763.85 (j) F = ₱13,108.85
Answer Key
References:

Oronce, Orlando. (2016), General Mathematics pp. 196-199, Rex Bookstore,

Inc., REX Knowledge Center, 109 Sen M Cuenco Sr, Quezon City, 1114
Metro Manila, Ph.

Versoza, Debbie Marie, et al. (2016), General Mathematics pp. 156-185

Lexicon Press, Inc. Ground Floor Bonifacio Building, DepEd Complex
Meralco Avenue, Pasig City, Philippines 1600.

Picardo, Elvis (2019), Learn about simple and compound interest.

https://www.investopedia.com/articles/investing/020614/learn-
simple-and-compound-interest.asp. Retrieved on December 28, 2020.

Young, Robert (2018), How to calculate simple and compound interest.

https://homeguides.sfgate.com/calculate-simple-interest-compound-
interest-2424.html. Retrieved on December 28, 2020.

30
For inquiries or feedback, please write or call:

Department of Education – Region XI Davao City Division

Office Address: DepEd Davao City Division, E. Quirino Ave.,

Davao City, Davao del Sur, Philippines

Telefax: (082) 224 0100

E-mail Address: info@deped-davaocity.ph

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