GENERAL MATHEMATICS

MODULE 2:
BUSINESS MATHEMATICS

Money! Money! Money! We need money

to buy food and other essentials, pay for bills
and debts, invest for future use, and others.
Having enough knowledge in handling
your hard-earned money will bring you to
financial freedom. This will help you achieve
more financially in the future.

In this module, you will learn how

invested or how borrowed money earn interest
over time. Knowing these, you will be able to
decide which kind of interest work for you in
investing or borrowing money.

Most Essential Learning Competencies:

At the end of this module, you are expected to:
• Solves problems involving simple and compound interest.
• Calculates the fair market of a cash flow stream that includes an annuity.
• Calculates the present value and period of deferral of a deferred annuity.
• Solves problems involving business and consumer loans (amortization,
mortgage).
• Analyzes the different market indices for stocks and bonds.
 GENERAL MATHEMATICS

UNIT 1:
SIMPLE INTEREST AND COMPOUND INTEREST
In this unit, you will encounter terms related to investment like, simple interest, compound
interest, interest rate, maturity value, principal, and the like. As we proceed with our discussion, you
will learn how to solve problems related to these terms.
Learning Objectives: At the end of this unit, you are able to:
● illustrate and distinguish between simple and compound interest;
● compute interest, maturity value, future value, principal, and present value in simple and
compound interest environment;
● solve problems involving simple and compound interests.

We need to work with money every day. Simple arithmetic is

necessary to compute and allocate enough for our expenditures. But
when we talk about business, like borrowing and lending money, we
need a higher form of mathematics.

Interest (I) is the amount you pay for borrowing someone’s money or
the amount you earn for lending or investing your own money.
Here are some common terms we need to define before we proceed
with our discussion.

Principal or present value (P) is the amount that is loaned or invested.

Rate (r) is the percentage of the principal paid for the use of money or earned in the investment.

Term or time (t) is the length of time in years the principal is borrowed or invested.

Maturity value or future value (F) is the amount paid by the borrower or the sum of an investment
after t years. This is the sum of the principal and interest.

Interest depends on the principal, rate, and time. To determine the interest incurred or
interest earned, we use the formula
𝑰 = 𝑷𝒓𝒕.

Example 1. During your graduation from Junior High, your relatives gave you money as a gift. You
earned a total of ₱10,500 and decided to place this in an account in preparation for your college
tuition fee. You deposited the money in a rural bank which offers 0.5%. How much interest will you
earn after you graduate from Senior High School? How much is the total amount you can withdraw
then?

Solution: P = ₱10,500
r = 0.5% = 0.005
t = 2 years (total number of years in the Senior High)
 GENERAL MATHEMATICS

Applying the formula, 𝐼 = 𝑃𝑟𝑡, we have

𝐼 = 𝑃𝑟𝑡 = (10,500)(0.005)(2) = ₱105

By definition, the total amount you can withdraw after you graduate from Senior High School is
𝐹 = 𝑃 + 𝐼 = ₱10,500 + ₱105 = ₱10,605.

If the interest is computed entirely as a percentage of the

principal per year, the interest due after some time is called simple
interest. But if the interest is computed on the principal and on the
accumulated past interest, it is called compound interest.

Using the formula, 𝑰 = 𝑷𝒓𝒕 , let us now see the difference in the
computation of simple interest and compound interest using this
example.

Example 2. You received ₱10,000 cash as a price in winning a raffle

draw, and you plan to invest it
for 5 years. Bank A offers a 1% simple interest rate per year, while Bank B offers a
1% compounded annually. Which bank will you invest your money in?

Bank A: Simple Interest

Simple Interest Amount after t years
Principal Interest
Year Solution (Future Value F)
(P) Rate (r) Answer
I=Prt F = Pprevious year + I
1 10,000 1% (10,000) (0.01) (1) 100 10,000 + 100 = 10,100.00
2 10,000 1% (10,000) (0.01) (1) 100 10,100 + 100 = 10,200.00
3 10,000 1% (10,000) (0.01) (1) 100 ______________________________
4 10,000 1% ______________________ _____ ______________________________
5 10,000 1% ______________________ _____ ______________________________

Fill up the table by solving up to the fifth year. Did you get ₱10,500? Now let’s check bank B.
Bank B: Compound Interest
Compound Interest Amount after t years
Principal Interest
Year Solution (Future Value F)
(P) Rate (r) Answer
I=Prt F = Pprevious year + I
1 10,000.00 1% (10,000.00) (0.01) (1) 100.00 10,000.00 + 100.00 = 10,100.00
2 10,100.00 1% (10,100.00) (0.01) (1) 101.00 _____________________________________
3 10,201.00 1% (10,201.00) (0.01) (1) ________ _____________________________________
4 10,303.01 1% __________________________ ________ _____________________________________
5 10,406.13 1% __________________________ ________ _____________________________________

Again, continue solving up to the fifth year, and you should get ₱10,510.19.
 GENERAL MATHEMATICS

In simple interest, the interest remains the same throughout

the term. In compound interest, the interest from the previous year
also earns interest. Thus, the interest increases every period. A more
detailed explanation of the difference between simple and compound
interest follows.

Simple Interest
As defined, simple interest is the interest computed entirely on the principal. This is
given by the formula 𝐼 = 𝑃𝑟𝑡. From here, we can also solve the principal, interest rate, and time by
deriving the formula of each.

𝐼 = 𝑃𝑟𝑡 where: I is the interest

𝐼
P is the principal or present value
𝑃 = 𝑟𝑡 or 𝑃 = 𝐹 − 𝐼
r is the rate
𝐼
𝑡 = 𝑃𝑟 t is the time (in year)
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠
𝐼 if the time is given in months, then 𝑡 =
𝑟 = 𝑃𝑡 12
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠
if the time is given in days, then 𝑡 =
360 𝑜𝑟 365 𝑜𝑟 366

Most Philippine banks use the 360-day year period or ordinary interest, while others use
the 365-day or 365-day period or exact interest depending on whether it is a leap year or not.
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. That is,

𝐹 =𝑃+𝐼 or 𝐹 = 𝑃 + 𝑃𝑟𝑡 or 𝐹 = 𝑃 (1 + 𝑟𝑡)

And from these formulas, we can derive the formulas for the principal or present value
which are
𝐹
𝑃 = 𝐹−𝐼 or 𝑃 = (1+𝑟𝑡)

Here are some examples of how to use the formulas enumerated above. Fill in the blanks as
we go through the solutions.

Example 3. Annie borrowed a sum of ₱20,000 from a credit cooperative to be returned after 6 months
at 6% interest rate. How much interest is charged?

6
Solution: I = Prt=(20000)(0.06)( 12 ) = ₱600

The total interest is ₱𝟔𝟎𝟎.

 GENERAL MATHEMATICS

Example 4. How much should Joe invest today in order to pay an account worth ₱52,500 at the end
of one year and three months if the bank gives 5% simple interest?
F 52500
Solution: P= 1+rt
= 1+(0.05)(1) = ₱49,411.76

Joe should invest ₱49,411.76 to pay an account of 𝑃52,500 at the end of 1 year and 3 months.

Example 5. How long will it take ₱10,000 to double itself if it is invested at 2.5% simple interest?
I 10000
Solution: t= Pr
= (10000)(0.025) =40 years

➢ Remember, you need ₱10,000 interest to double your principal of ₱10,000.

It will take 40 years for ₱10,000 to become ₱20,000 in an investment which gives 2.5% simple
interest.

Example 6. Joanne borrowed ₱20,000 from a Coop Bank and paid ₱20,700 to settle her obligation
after 6 months. What was the rate of interest?
I 𝐹−𝑃
Solution: r= Pt
=
𝑃𝑡
= = 𝟎. 𝟎𝟕 = 𝟕%

The Coop Bank offers 7% interest rate.

Example 7. Crislyn loaned from a lending company the sum of ₱50,000 and promised to pay the sum
plus interest at the end of 9 months. If money is worth 10.5%, how much will Crislyn pay the
lending company at the end of the term?
Solution A: Solve for I, then solve for F.

𝐼 = 𝑃𝑟𝑡 𝐹 =𝑃+𝐼
= =

𝐼 = ₱𝟑, 𝟗𝟑𝟕. 𝟓𝟎 𝐹 = ₱𝟓𝟑, 𝟗𝟑𝟕. 𝟓𝟎

Solution B: Using the formula 𝐹 = 𝑃 (1 + 𝑟𝑡)

𝐹 = 𝑃 (1 + 𝑟𝑡)
9
= 50000 [1 + (0.105) (12)]

𝐹 = ₱𝟓𝟑, 𝟗𝟑𝟕. 𝟓𝟎

Crislyn will pay a total of ₱53,937.50 at the end of the term.

Example 8. You want to buy a bicycle worth ₱25,000. How much should you invest today if the bike
shop accepts a 25% down payment and the remaining balance is to be paid after two years?
Assume that money is worth 10%.
 GENERAL MATHEMATICS

Solution: 𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 (𝐷𝑃) = 25% 𝑜𝑓 ₱25,000 = 0.25(25,000) = ₱𝟔, 𝟐𝟓𝟎. 𝟎𝟎

𝐹 = 25,000 − 6,250 = ₱𝟏𝟖, 𝟕𝟓𝟎

𝐹
𝑃 = (1+𝑟𝑡) = = ₱𝟏𝟓, 𝟔𝟐𝟓. 𝟎𝟎

You should invest or deposit ₱15,625 in an investment offering a 10% interest rate for you to
pay the remaining balance after 2 years.

Compound Interest
Compound interest is a repeated simple interest.
That is the addition of the interest to the principal at a
regular interval, and the sum becomes the new principal in
the next interval.

The following terms are commonly used in the

discussion of compound interest.

Principal (P) is the amount loaned or invested.

Term (t) is the length of time that money is loaned or
invested.

Frequency of conversion (m) is the number of times the interest is added to the principal in a year;
it is also called the conversion period/ compounding period.

annually : every year : 𝑚=1

semi-annually : every six months : 𝑚=2

quarterly : every three months : 𝑚=4

monthly : every month ; 𝑚 = 12

Number of conversion periods (n) is the total number of times interest is calculated for the whole
term. That is 𝒏 = 𝒎𝒕.
Nominal rate (j) is the annual interest rate.
𝒋
Periodic rate (i) is the interest rate per conversion. That is 𝒊 = .
𝒎

Compound amount (F) is the accumulated amount at the end of the term; it is also called the maturity
value. That is

𝑗 𝑚𝑡
𝐹 = 𝑃 (1 + 𝑖 )𝑛 or 𝐹 = 𝑃 (1 + 𝑚)

Example 9. Your parents invested ₱100,000 in an account for your educational plan. How much
will be in the investment after 15 years if money is worth 5% compounded monthly? How
much interest is earned?
 GENERAL MATHEMATICS

(12)(15)
𝑗 𝑚𝑡 0.05
Solution: 𝐹 = 𝑃(1 + 𝑖 )𝑛 = 𝑃 (1 + 𝑚) = 100000 (1 + )
12

= ₱𝟐𝟏𝟏, 𝟑𝟕𝟎. 𝟑𝟗
𝐼 = 𝐹 − 𝑃 = 211,370.39 − 100,000 = ₱𝟏𝟏𝟏, 𝟑𝟕𝟎. 𝟑𝟗
After 15 years, there will be ₱211,370.39 in the account. The interest earned is ₱111,370.39.

Example 10. Annie will discharge a ₱70,000 loan from Joe on August 11, 2022. If Annie paid the loan
on August 11, 2018 at 6% compounded annually, how much must have she paid?
F F 70000
Solution: P= ( 1 + i) n
= j mt
= 0.06 (1)(4)
=₱55,446.56
(1 + ) (1+ )
m 1

Annie must have paid ₱55,446.56.

Example 11. Find the nominal rate if interest is compounded semiannually and if the principal of
₱3,000 grows to ₱4,100 by the end of 4 years.

mt F
Solution: r = m ( √P -1) =_____________________________ = 0.0796 or 7.96%

The nominal rate is 7.98%.

Example 12. Tony took a loan from a bank at the rate of 10% compounded quarterly. After 30 months,
the lender will have ₱104960. How much did Tony borrow?
𝐹
Solution: 𝑃 = 𝑟 𝑚𝑡
= ________________________ = ₱𝟖𝟏𝟗𝟗𝟒. 𝟓𝟖
(1+ )
𝑚

Tony borrowed ₱81994.58

Example 13. Mr. Santos owes me ₱20,000 due now. He offers to pay the principal plus accumulated
simple interest at the rate of 5% at the end of 3 years. I insist on charging 5% compounded
semi-annually. How much more do I receive at the end of 3 years as compared to his offer?

Solution:
Simple interest

𝐹 = 𝑃 + 𝐼 = 𝑃 (1 + 𝑟𝑡) = 20000[1 + (0.05)(3)] = ₱𝟐𝟑𝟎𝟎𝟎 Mr. Santos’ offer

Compound interest

𝑟 𝑚𝑡 0.05 2𝑥3
𝐹 = 𝑃 (1 + 𝑚) = 20000 (1 + ) = ₱𝟐𝟑𝟏𝟗𝟑. 𝟖𝟕 My offer
2

₱𝟐𝟑𝟏𝟗𝟑. 𝟖𝟕 − ₱𝟐𝟑𝟎𝟎𝟎 = ₱𝟏𝟗𝟑. 𝟖𝟕. The difference between Mr. Santos’ offer and
my offer. Therefore, I will receive ₱193.87 more than his offer.
 GENERAL MATHEMATICS

Two rates are equivalent if they produce an equal amount of interest on the same principal in the
same period of time. This is where effective rate is used. Effective rate (w) is the annual interest
when the conversion period is one year. Thus, if j is the nominal rate compounded m in a year and
w is the effective rate, then we can derive the formula for w and j by using
𝑗 𝑚 𝑗 𝑚
(1 + ) = (1 + )
𝑚 𝑚

𝑗 𝑚
1 + 𝑤 = (1 + )
𝑚
𝑗 𝑚
for w, 𝑤 = (1 + ) − 1
𝑚

1
for j, 𝑗 = 𝑚 [(1 + 𝑤)𝑚 − 1].

Example 14. What is the effective rate equivalent of 5% compounded quarterly?

𝑗 𝑚 0.05 4
Solution: 𝑤 = (1 + 𝑚) − 1 = (1 + ) − 1 = 0.0509 = 𝟓. 𝟎𝟗%
4

5.09% effective is equivalent to 5% compounded quarterly.

Example 15. What rate, compounded semi-annually, is equivalent to 3.5% effective?
1 1
Solution: 𝑗 = 𝑚 [(1 + 𝑤)𝑚 − 1] = 2 [(1 + 0.035)2 − 1] = 0.0347 = 𝟑. 𝟒𝟕%

3.47% compounded semi-annually is equivalent to 3.5% effective.

Example 16. Rey invested a certain amount in a bank which offers 6.6% compounded quarterly for
9 months. What rate compounded monthly will give Rey the same final amount at the same
time?

Solution A:
Step 1: Find the equivalent effective rate of 6.6% compounded quarterly.
𝑗 𝑚
𝑤 = (1 + 𝑚) − 1 = _____________________________ = 0.0677 = 𝟔. 𝟕𝟕%

Step 2: Using the equivalent rate, 𝑤 = 6.77%, of 6.6% compounded quarterly, solve for the
nominal rate, j, compounded monthly.
1
𝑗 = 𝑚 [(1 + 𝑤)𝑚 − 1] = _____________________________ = 0.0657 = 𝟔. 𝟓𝟔%

Therefore, 6.56% compounded monthly will give the same final amount as 6.6%
compounded quarterly.
Solution B: We can substitute directly to the formula
 GENERAL MATHEMATICS

𝑗 𝑚 𝑗 𝑚
(1 + ) = (1 + )
𝑚 𝑚

where the left side would be for the monthly conversion while the right will be the quarterly
conversion. Make sure to label your notations properly.

𝑗1 𝑚1 𝑗2 𝑚2
(1 + ) = (1 + )
𝑚1 𝑚2

𝑗1 12 0.066 4
(1 + ) = (1 + )
12 4
𝑗1 = 0.0656 = 𝟔. 𝟓𝟔%

Therefore, 6.56% compounded monthly will give the same final amount as 6.6%
compounded quarterly.
Now, it is your turn to do some exercises. Answer the
following problems and check your answer at the end of the module.

1. Grace borrowed ₱10,000 from a bank that charges 7%

compounded quarterly on October 1, 2020. She promised to pay the
loan after six months. However, she was unable to pay on time.
When she settled the loan on June 1, 2021, she was required to pay
9% simple interest on the unpaid amount for the time after the due
date. How much did she pay?

2. How long will it take ₱5,000 to earn ₱350 if money is invested at 6% simple interest?

3. Joshua invested ₱20,000 at 10.5% simple interest for one year and three months. What sum
invested for the same length of time at 10.5% compounded quarterly will produce the same future
value?

4. Which is better, to invest in a coop bank offering 5.5% effective or in a commercial bank offering
5% compounded monthly?

Answer the following questions.

1. As a student, where can you observe the use of simple and
compound interests?

2. Why are simple and compound interest important?

 GENERAL MATHEMATICS

UNIT 2:
ANNUITIES
Annuities are an extension
of simple and compound interests.
Here, you will learn how a series of
equal payments or deposits affect
the interest earned in any
borrowed money or investments.
Furthermore, we will explore its
application in life insurance,
pension plans, and others.

Learning Objectives: At the end of this unit, you are able to:

● illustrate and distinguish between simple and general annuities;

● find the future value and present value of both simple annuities and
general annuities;
● calculate the present value and period of deferral of a deferred
annuity;
● calculate the fair market value of a cash flow stream that includes an annuity;
● illustrate and distinguish between business and consumer loans; and
● solve problems involving business and consumer loans.
GENERAL MATHEMATICS

Examine these three samples of an annuity. Observe the

payments or installments or deposits in each table then write your
observation after the third table.

Table 1. SSS Loan Transaction

 GENERAL MATHEMATICS

Table 2. Modified Pag-IBIG 2 Savings Program

Table 3. Smart and Sun 6-Month Installment Payment Program

What is/are common and differences among them? Write your observation/s below.
 GENERAL MATHEMATICS

Annuity
An annuity is a series of equal payments or deposits made at
regular intervals of time. Some examples are insurance premiums,
pensions, anything bought on installment, and others. There are
two types of an annuity, the simple annuity and the general
annuity. Below is comparison between the two.

ANNUITY

SIMPLE Annuity GENERAL Annuity

Payment period Payment period

IS THE SAME WITH DIFFERS FROM
compounding period compounding period

Example: Example:
Annual payments AND interest Annual payments BUT interest is
are compounded annually. compounded quarterly.

Here are other terms we will be using in our discussion.

Payment interval or period is the length of time between two successive payments.
Term (t) is the time between the first payment interval and the last payment interval.
Periodic payment (R) is the size of each payment.
Future value (F) is sum of all the periodic payments and the compound interest accumulated in
each payment from the time they are made up to the end of the term.
Present value (P) is the sum of all the periodic payments and the compound interest discounted in
each payment from the time it should be made back to the beginning of the term.
 GENERAL MATHEMATICS

Future Value and Present Value of Simple and

General Annuity
The computation for the future value and the present value
of simple and general annuities are the same. The only difference is
that for general annuity, you need to solve the equivalent rate of
the given interest rate using the formula we have discussed in
compound interest. Let us derive the formulas of the future and present
values using this example.

Example 1. You want to buy a new cellphone after a year. You made quarterly deposits of P1,000
each in a fund that offers 12% compounded every three months. How much is available
after a year for you to buy a new cellphone?
F

0 1 2 3 4
1,000 1,000 1,000 1,000 0.12 0
= 1,000(1 + )
4
0.12 1
= 1,000(1 + )
4
0.12 2
= 1,000(1 + )
4
0.12 3
= 1,000(1 + )
4
𝐹 = 1,000 + 1,030 + 1,060.90 + 1,092.73 = ₱𝟒, 𝟏𝟖𝟑. 𝟔𝟑.
To shorten the solution in finding the future value of an annuity, we can use the formula
(1 + 𝑖)𝑛 − 1
𝐹 = 𝑅[ ]
𝑖

which is derived from the formula of the future value of compound interest. Applying now the
formula in our example, we have

𝑗 𝑚𝑡 0.12 4(1)
(1 + 𝑖)𝑛 − 1 (1 + ) − 1 (1 + ) −1
𝐹 = 𝑅[ ] = 𝑅[ 𝑚 ] = 1,000 [ 4 ] = ₱𝟒, 𝟏𝟖𝟑. 𝟔𝟑.
𝑖 𝑗 0.12
𝑚 4
 GENERAL MATHEMATICS

Example 2. You bought a new cellphone and agreed to pay P1,000 at the end of every three months
for one year. How much is the cash price of the cellphone if money is worth 12%
compounded quarterly?
P

0 1 2 3 4

1,000 1,000 1,000 1,000 1,000

= 1
0.12
(1 + )
4
1,000
=
0.12 2
(1 + )
4
1,000
=
0.12 3
(1 + )
4
1,000
=
0.12 4
(1 + )
4

𝑃 = 970.87 + 942.60 + 915.14 + 888.49 = ₱𝟑, 𝟕𝟏𝟕. 𝟏𝟎.

Again, we can shorten our solution in finding the present value of an annuity by this formula
1 − (1 + 𝑖)−𝑛
𝑃 = 𝑅[ ]
𝑖

which we can derive from the formula of the present value of compound interest. Applying it in our
example, we have
𝑗 −𝑚𝑡 0.12 −4(1)
1−(1+𝑖)−𝑛 1−(1+𝑚) 1−(1+ 4
)
𝑃 = 𝑅[ ] = 𝑅[ 𝑗 ] = 1,000 [ 0.12 ] = ₱𝟑, 𝟕𝟏𝟕. 𝟏𝟎.
𝑖
𝑚 4

Example 3. Jimmy pays ₱200,000 cash and agreed to pay ₱20,000 a month for 5 years to purchase a
car. If money is worth 2.25% compounded monthly, what is the cash price of the car?
Solution: Compute the present value of the annuity

1 − (1 + 𝑖)−𝑛
𝑃 = 𝑅[ ] = ______________________ = ____________________ = ₱𝟏, 𝟏𝟐𝟔, 𝟗𝟐𝟖. 𝟎𝟕
𝑖

Compute for the cash price of the car.

𝐶𝑎𝑠ℎ 𝑃𝑟𝑖𝑐𝑒 = 𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 + 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑎𝑛𝑛𝑢𝑖𝑡𝑦

𝐶𝑎𝑠ℎ 𝑃𝑟𝑖𝑐𝑒 = ₱200,000 + ₱1,126,928.07 = ₱𝟏, 𝟑𝟐𝟔, 𝟗𝟐𝟖. 𝟎𝟕.
The cash price of the car is ₱1,326,928.07.
 GENERAL MATHEMATICS

Example 4. Summer’s Construction wants to create a P1,650,000 fund that will be used to replace
deteriorating machineries. If money is worth 7.5% compounded semi-annually. What equal
deposits must be made at the end of every six months in 10 years to establish the fund?

Solution: Derive the formula of R using the formula of the future value of an annuity
(1 + 𝑖 )𝑛 − 1
𝐹 = 𝑅[ ]
𝑖
𝑗 0.075
𝐹𝑖 𝐹 (𝑚) 1,650,000 ( 2 )
𝑅= = = = ₱𝟓𝟔, 𝟖𝟔𝟐. 𝟒𝟔
(1 + 𝑖 )𝑛 − 1 𝑗 𝑚𝑡 0.075 2(10)
(1 + 𝑚 ) − 1 (1 +
2 ) −1

Summer’s Construction will have to deposit P56 862.46 semi-annually to establish the fund.

Example 5. Carol wants to buy a new refrigerator worth ₱29,500 cash. If it can be sold at 20%
down payment and 24 equal monthly payments, find the size of the payment if money is
worth 12% compounded semi-annually.

Solution: Since the paying period (monthly) is not the same as the compounding
period (semi-annually), first find the nominal rate compounded monthly equivalent to 12%
compounded semi-annually by using equivalent rate. Hence, this is an example of a general
annuity.
𝑤𝑚𝑜𝑛𝑡ℎ𝑙𝑦 = 𝑤𝑠𝑒𝑚𝑖−𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦

𝑗 𝑚 𝑗 𝑚
(1 + ) − 1 = (1 + ) − 1
𝑚 𝑚

𝑗 12 0.12 2
(1 + ) = (1 + )
12 2
𝒋 = 𝟎. 𝟏𝟏𝟕𝟏
Derive the formula of R using the formula of the present value of an annuity.

1 − (1 + 𝑖 )−𝑛
𝑃 = 𝑅[ ]
𝑖
Before substituting, compute for the new present value by subtracting the down payment.

𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 (𝐷𝑃) = 20% 𝑜𝑓𝑃29,500 = ₱𝟓, 𝟗𝟎𝟎

𝑃 = 29,500 − 5,900 = ₱𝟐𝟑, 𝟔𝟎𝟎
𝑃𝑖
𝑅= = ____________________ = ____________________ = ₱𝟏, 𝟏𝟎𝟕. 𝟕𝟒
1 − (1 + 𝑖)−𝑛
Carol needs to pay ₱1,107.74 every month for 24 months.
 GENERAL MATHEMATICS

Example 6: A laptop was purchased on instalment by your mother. Your mother made a ₱15,000
down payment and made a regular payment of ₱3,000 every end of two months for 2 years.
What is the cash value/ cash price of the laptop if money is worth 5% compounded
bimonthly? What kind of annuity is described in the problem?
𝑟 −𝑚𝑡
1−(1+ )
𝑚
Solution: 𝐶𝑉 = 𝑃 + 𝐷𝑃 = 𝑅 [ 𝑟 ] + 𝐷𝑃 where DP is down payment
𝑚

0.05 −6(2)
1−(1+ )
6
𝐶𝑉 = 3000 [ 0.05 ] + 15000 = ₱49,123.53
6

The cash value/ cash price of the laptop is ₱49,123.53. The problem is an example of a
simple annuity.

Deferred Annuity
Deferred annuity is an annuity whose term does not begin until a specified time. The period
of deferral or deferment period is the time between the present and the start of the payment
period.

The diagrams below show how deferred annuity differs from a simple annuity.

Simple / General Annuity Deferred Annuity

Start of Payout End of Payout Start of Payout End of Payout

R R R R

0 1 2 3 4 5 6
0 1 2 3 4 5 6

Deferred
Period, nd Payment
Period, np
Lump Sum Deposit
Lump Sum Deposit
P
P

Let us say, we have a lump sum amount deposited at the start of the term. The start of
payout for simple annuity is immediate, that is the end of the first period, while the start of payout
for deferred annuity begins after some time, that is the end of the fourth period. The end of payout
for both annuities are at the end of the term, which is the end of the sixth period.

The future value of a deferred annuity is similar to the future value of a simple annuity, only
that the total number of conversion (n) is counted from the beginning of the payment period until
the end of the term (payment period, 𝑛𝑝 ). That is,
 GENERAL MATHEMATICS

(1 + 𝑖)𝑛𝑝 − 1
𝐹 = 𝑅[ ]
𝑖

On the other hand, the present value of a deferred annuity is computed using the formula
1 − (1 + 𝑖)−𝑛𝑝
𝑃 = 𝑅[ ] (1 + 𝑖)−𝑛𝑑
𝑖

Example 7. If money is worth 2.5% compounded monthly, find the present value and the future
value of a sequence of 9 monthly payments of ₱2,300, the first due at the end of 4 months.
Illustration:
Present value Start of payment Future
value

0 1 2 3 4 5 6 7 8 9 10 11 12

deferred periods, nd payment periods, np

Where: 𝑛𝑑 = 𝑚𝑡𝑑 𝑛𝑝 = 𝑚𝑡𝑝

Solution: Present value

9
( )
0.025 −(12) 12 3
−( )(12)
1 − (1 + 𝑖 )−𝑛𝑝 1 − (1 + ) 0.025 12
12
𝑃 = 𝑅[ ] (1 + 𝑖 )−𝑛𝑑 = 2300 (1 + )
𝑖 0.025 12
[ 12 ]
= ₱𝟐𝟎, 𝟑𝟓𝟖. 𝟓𝟏

Future value

(1 + 𝑖 )𝑛𝑝 − 1
𝐹 = 𝑅[ ] = ____________________ = ____________________ = ₱𝟐𝟎, 𝟖𝟕𝟑. 𝟑𝟒
𝑖

Example 8. A car dealer offered a client a car for 54 monthly payments, the first to be made at the
end of 6 months. Find the monthly payment if the cash price of the car is ₱850,000 and
money is worth 5% compounded monthly?

Solution: Derive the formula of the regular payment from the formula in finding the
present value of a deferred annuity.
 GENERAL MATHEMATICS

1 − (1 + 𝑖 )−𝑛𝑝 𝑃𝑖 (1 + 𝑖 )𝑛𝑑
𝑃 = 𝑅[ ] (1 + 𝑖 )−𝑛𝑑 → 𝑅=
𝑖 1 − (1 + 𝑖 )−𝑛𝑝

0.05 0.05 6
𝑃𝑖 (1 + 𝑖 )𝑛𝑑 850,000 ( 12 ) (1 + 12 )
𝑅= = = ₱18,055.43
1 − (1 + 𝑖 )−𝑛𝑝 0.05 −54
1 − (1 + 12 )

Fair Market Value

Sometimes, we encounter different choices in financial decision making. Comparing the fair
market value helps us in selecting the best choice.

Example 9. Three appliance stores offer installment plans if you buy a TV set from them. Store A
offers a down payment of ₱5,000 with a monthly installment of ₱1,500 at 5% compounded
monthly for one year. Store B offers ₱4,000 quarterly installments at 3.5% compounded
quarterly for one year and six months. And Store C offers a down payment of ₱10,000 with
three semi-annual installments of ₱4,000 at 4% compounded semi-annually, the first due at
the end of one year. Which store has a better plan?

Solution:
In comparing the two options, you may use either the present value or the future value as
your comparison value. In our solution, we will use the present value since there is a down
payment involved.
Store A:
1 − (1 + 𝑖 )−𝑛
𝑃 = 𝑅[ ] = ____________________ = ____________________ = ____________________
𝑖
𝐶𝑎𝑠ℎ 𝑃𝑟𝑖𝑐𝑒 = 𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 + 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑖𝑡𝑦 = ₱𝟐𝟐, 𝟓𝟐𝟏. 𝟖𝟑.
Store B:

1 − (1 + 𝑖 )−𝑛
𝑃 = 𝑅[ ] = ____________________ = ____________________ = ₱𝟐𝟑, 𝟐𝟖𝟏. 𝟖𝟐
𝑖
𝐶𝑎𝑠ℎ 𝑃𝑟𝑖𝑐𝑒 = 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑖𝑡𝑦, since there is no down payment.

Store C
1 − (1 + 𝑖 )−𝑛𝑝
𝑃 = 𝑅[ ] (1 + 𝑖 )−𝑛𝑑 = __________________ = ___________________ = __________
𝑖
𝐶𝑎𝑠ℎ 𝑃𝑟𝑖𝑐𝑒 = 𝐷𝑜𝑤𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 + 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑖𝑡𝑦 = ₱𝟐𝟏, 𝟑𝟎𝟗. 𝟑𝟓.

Therefore, Store C offers the best option since its cash price is lower than Store A and B.
 GENERAL MATHEMATICS

Business and Consumer Loans

Often, borrowing money is essential in putting up a business or just for personal
use. Your knowledge of computing the interest using the simple and compound interest formula
and annuity application is beneficial in such cases. Let us differentiate between business and
consumer loans.

Business Loan – loans availed specifically for Consumer Loan – loans availed for personal
putting up or expanding a business use

Types of Business Loan Types of Consumer Loan

1. Corporate loan 1. Housing or Mortgage loan
2. Commercial loan 2. Auto or Car loan
3. Small and Medium Enterprise loan 3. Salary or Personal loan
4. Credit card

In any kind of loans, you have to appreciate how amortization of loan works. This will help
you understand how loans are discharged. To amortize means to pay a loan (principal and interest)
by series of equal payments. Here, we will be using the annuity formulas.

Example 10. Donna borrowed ₱100,000 from a coop bank to start up her mini-grocery. The loan is
to be discharged by 6 semi-annual payments of ₱18,459.75 at 6% compounded semi-
annually. Complete the table below showing the amortization schedule for the loan.

Interest Principal
Outstanding Balance
Regular Payment Component of Component of
(OB)
Period (R) Payment (IC) Payment (PC)
OBprevious – PCcurrent
OB x i R-I
0 a. ___________

1 18,459.75 3,000.00 15,459.75 84,540.25

2 18,459.75 b. ___________ 15,923.54 68,616.71

3 18,459.75 2,058.50 16,401.25 52,215.46

4 18,459.75 1,566.46 c. ____________ 35,322.17

5 18,459.75 1,059.67 17,400.08 d. ____________

6 18,459.75 537.66 17,922.08 0

Totals e. ___________ f. ____________ g. ____________

 GENERAL MATHEMATICS

a. How much is the loan? _______________________________

b. How much goes to the interest on the 2nd period? __________________________________

c. How much goes to the principal on the 4th period? __________________________________

d. How much is the outstanding balance after the 5th payment? __________________________
e. How much is the total amount of regular payments? (Add the regular payments) __________

f. How much is the total interest paid? ____________________________________

g. How much is the total payments for the principal? _________________________________

h. Verify that the outstanding balance after the 3rd payment is P52,215.46.

Solution: Use the formula of the present value of an annuity

1 − (1 + 𝑖)−𝑛
𝑃 = 𝑅[ ]
𝑖

The formula of the outstanding balance (OB) will be

1 − (1 + 𝑖)−(𝑛−𝑘)
𝑂𝐵 = 𝑅 [ ] where k is the number of paid payments
𝑖

0.06 −(6−3)
1 − (1 + 𝑖)−(𝑛−𝑘) 1 − (1 + )
𝑂𝐵 = 𝑅 [ ] = 18,459.75 [ 2 ] = ____________________
𝑖 0.06
2

Example 11. Ismael borrowed ₱500,000 from a bank offering 5% compounded monthly to finance
his house improvement. He promised to pay the loan monthly for 5 years. If he already paid
36 payments, how much must he pay today to settle his loan?
Solution: Find the monthly amortization of the loan (that is R)

1 − (1 + 𝑖 )−𝑛
𝑃 = 𝑅[ ]
𝑖
0.05
𝑃𝑖 500000 ( )
12
𝑅= = ( )( ) = ______________________
1 − (1 + 𝑖 )−𝑛 0.05 − 12 5
1 − (1 + 12 )

Compute for the outstanding balance after the 36th payment.

( )
0.05 − 60−36
1 − (1 + 𝑖 )−(𝑛−𝑘) 1 − (1 + 12 )
𝑂𝐵 = 𝑅 [ ] = _________ [ ] = ₱𝟐𝟏𝟓, 𝟎𝟕𝟒. 𝟒𝟗
𝑖 0.05
12
GENERAL MATHEMATICS

Let’s have some exercises to deepen your understanding of

annuities and their application to loans.

1. Sally wants to borrow a certain amount from a bank for her to

purchase a car worth ₱1,250,000. She promised to pay a 25% down
payment, and the balance to be paid by semi-annual payments for
five years at 8% compounded semi-annually. What kind of loan did
Sally make?
a. Calculate the balance to be financed by the bank.
b. Calculate the semi-annual payment.
c. Sally failed to make her payments when they were due. What amount should she pay to
the bank at the end of three years to settle her loan?

2. Arlene wants to start a business that requires a capital of ₱400,000. She loaned from a coop
bank that charges 4.5% compounded quarterly. What kind of loan did Arlene make?
a. Find the size of her quarterly payment if the first payment is due at the end of the fifth
period and the last at the end of the 20th period.

b. Compute the outstanding balance just after the 10th payment.

3. To provide for the college education of their child, Mr. and Mrs. Cuevas decided to deposit
₱5,000 a month in an investment that pays 12% compounded annually. How much is in the
fund after 18 years?

Reflect on this!

What connection can you make between amortization and simple or

compound interest?
 GENERAL MATHEMATICS

UNIT 3:
BONDS AND STOCKS
At your age, you may be thinking that it is not time
for you to invest. But, as experts say, investing early and
regularly over time will help you become financially free
in the future.
In this unit, you will learn the two most common
type of investment, stocks and bonds. These two, and other
investments, have different levels of risks and potential
returns. As we discuss, you will learn how you will earn in
each investment.
Additionally, this unit will introduce you to the
basic concepts of loans. Loans, generally address financial
needs of individuals or entrepreneurs. But it is not limited to
just borrowing money. Here, we will discuss the use of credit card and amortization.
Learning Objectives: At the end of this unit, you are able to:
● illustrate and distinguish between stocks and bonds;
● describe the different market indices for stocks and bonds;
● analyze the different market indices for stocks and bonds.

Watch the video entitled Bonds and Stocks to learn the

difference between the two.

Based on the definition discussed in the video, match each

of the following statements, whether it describes a stock or a bond.
Write the letter on the column each statement belongs.
 GENERAL MATHEMATICS

Stocks Basis for Comparison Bonds

Meaning
A. A Debt Instrument with a promise to pay back the principal amount with
interest.
B. An Equity Instrument representing an ownership interest in a corporation.
Issuer
A. Corporates
B. Government Institutions, Financial Institutions, Companies etc.
Status of Holders
A. Shareholders are the owners of the company.
B. Bondholders are the lenders to the company.
Risk Level
A. Relative low risk since bondholders are prioritized for repayment.
B. High risk since it depends on the performance of the issuer.
Form of Return
A. Interest which is a fixed payment.
B. Dividend but not guaranteed.
Additional Benefit
A. Shareholders get the right to vote.
B. Bondholders get the preference in terms of repayment and also on
liquidation.
Market
A. Centralized / Stock Market (i.e. Philippine Stock Exchange through brokers)
B. Over-the-Counter (through Bureau of Treasury or any financial institution)

Stocks
Stocks are certificates of ownership. A person who buys stock
in a company becomes one of the company’s owners. As an owner,
the stockholder is eligible to receive a dividend, a share in the
company’s profit. The amount of this dividend may change from
year to year, depending on the company’s performance.

There are two types of stock: common stock and preferred stock. Owners of
common stock may vote for company directors and attend annual stockholder’s
meetings. At these meetings, they have the chance to review the company’s yearly
performance and its future plans and to present their own ideas. Owners of preferred
stocks do not usually have voting rights or the right to attend stockholders’ meetings. They do,
however, have priority when dividends are paid. The dividends on preferred stocks are paid
according to a set rate, while the dividends on common stocks fluctuate according to the company’s
performance. However, if the company does well, preferred stocks do not usually gain in value as
much as common stocks. If a company goes out of business, preferred stockholders are paid off first.
Here are other definitions related to stocks.

Stock valuation is the process of computing the market value of a company and its stock price.
Market price is the current price of a stock at which it is sold.
 GENERAL MATHEMATICS

Market value is the total value of the shares of stock; it is calculated

Stock market is a place where stocks are bought and sold.

Commission is a payment to a broker based on the value of bought or sold stocks.

Broker is an individual or a firm that acts as an intermediary between buyers and sellers.
Net proceeds are the amount the seller receives after selling a stock.

Example 1. You bought 5000 shares of NOW at ₱2.56 per share. If the broker charges 2% as
commission on the total sales, find the total cost of the stock.

Solution: 𝑻𝒐𝒕𝒂𝒍 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑺𝒕𝒐𝒄𝒌 = 𝑴𝒂𝒓𝒌𝒆𝒕 𝑽𝒂𝒍𝒖𝒆 + 𝑪𝒐𝒎𝒎𝒊𝒔𝒔𝒊𝒐𝒏

= (5,000 x 2.56) + 0.02(5,000 x 2.56)
= ₱13,056.
The total cost of the stock is ₱13,056.

Example 2. You own 10,000 shares of MRC at ₱0.4 per share. The company declares 3.25% dividend
at the end of the year. How much is the total dividend will you receive at the end of the year?

Solution: 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 = 𝒓𝒂𝒕𝒆 𝐱 𝒎𝒂𝒓𝒌𝒆𝒕 𝒑𝒓𝒊𝒄𝒆

= 0.035 x 0.4
= ₱0.014

𝑻𝒐𝒕𝒂𝒍 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 = 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 𝐱 𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒔𝒉𝒂𝒓𝒆𝒔

= 0.014 x 10000
= ₱140
The total dividend is ₱140.

Example 3. Looking at your portfolio, you decided to sell half of your shares of IDC at ₱2.43 per
share. If the broker charges a constant commission of ₱200, how much is the net proceeds if
you own 15,000 shares?

Solution: 𝑵𝒆𝒕 𝒑𝒓𝒐𝒄𝒆𝒆𝒅𝒔 = 𝑴𝒂𝒓𝒌𝒆𝒕 𝑽𝒂𝒍𝒖𝒆 − 𝑪𝒐𝒎𝒎𝒊𝒔𝒔𝒊𝒐𝒏

= (7,500 x 2.43) − 200
= ₱18,025
The net proceeds is ₱18,025.
Bonds
Bonds are certificates that promise to pay a fixed rate of interest. A person who buys a bond
(bondholder) is not buying ownership in a company but is lending the company money. The bond
is the company’s promise to repay that money at the end of a certain time, such as five or ten years.
In return for lending the company money, the bondholder is paid interest at regular intervals. The
interest rate is based on general interest rates in effect at the time the bonds are issued, as well as
on the company’s financial strength. If the company goes bankrupt, bondholders are paid before
both preferred and common stockholders.
 GENERAL MATHEMATICS

Here are other terms related to bonds.

Coupon is the periodic interest received by the bondholder during the life of the bond.
Coupon rate is the rate used to compute the coupon amount (it is not the rate at which money
grows)
Life of the bond (term) is the time between the purchase date and the maturity date of the bond.

Price of a bond (P) is the price of the bond at purchase time.

Value of a bond is the present value of cash inflows to the bondholder; also called the fair price.
Par value (F) is the amount payable on the maturity date; also called the face value.

If P = F, the bond is said to be purchased at par.

If P < F, the bond is purchased at a discount.

If P > F, the bond is purchased at premium.

Example 4. A ₱100,000 par value bond bearing a coupon rate of 10% will mature in 10 years and will
pay 10 annual coupon payments. What is the value of the bond if money is worth 12% effective?

Solution: Determine the coupon payment.

𝑪𝒐𝒖𝒑𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕 = 𝑷𝒂𝒓 𝒗𝒂𝒍𝒖𝒆 𝐱 𝒄𝒐𝒖𝒑𝒐𝒏 𝒓𝒂𝒕𝒆

= 100,000 x 0.10
= ₱10,000

Compute the value of the bond.

𝑽𝒂𝒍𝒖𝒆 𝒐𝒇 𝒕𝒉𝒆 𝒃𝒐𝒏𝒅 = 𝒑𝒓𝒆𝒔𝒆𝒏𝒕 𝒗𝒂𝒍𝒖𝒆𝒔 𝒐𝒇 𝒄𝒂𝒔𝒉 𝒊𝒏𝒇𝒍𝒐𝒘𝒔

= 𝑷𝒄𝒐𝒖𝒑𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕 + 𝑷𝒑𝒂𝒓 𝒗𝒂𝒍𝒖𝒆

1 − (1 + 𝑖)−𝑛 F
= 𝑅[ ]+
𝑖 (1 + i)n

0.12 −1(10)
1 − (1 + ) 100,000
= 10,000 [ 1 ]+
0.12 0.12 1(10)
1 (1 + )
1
= ₱𝟖𝟖, 𝟔𝟗𝟗. 𝟓𝟓.
The value of the bond is ₱88,699.55.

Example 5. A P500,000 par value bond bearing a coupon rate of 12% will mature in 5 years and will
pay the coupon payment in advance. What is the value of the bond if the bond is bought at
par?
 GENERAL MATHEMATICS

Solution: Determine the coupon payment.

𝐶𝑜𝑢𝑝𝑜𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 = 𝑃𝑎𝑟 𝑣𝑎𝑙𝑢𝑒 x 𝑐𝑜𝑢𝑝𝑜𝑛 𝑟𝑎𝑡𝑒
= 500,000 x 0.12
= P60,000

Compute the value of the bond.

Since the bond is bought at par and the coupon payment is paid in advance,

𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑏𝑜𝑛𝑑 = 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑏𝑜𝑛𝑑 + 𝑐𝑜𝑢𝑝𝑜𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡

= 500,000 + P60,000
= P560,000

Market Indices for Stocks and Bonds

According to forbes.com, a market index tracks the performance of a certain group of
stocks, bonds or other investments. These investments are often grouped around a particular
industry or even the stock market overall. There’s no set size when it comes to market indexes. One
may just have 30 stocks while others may have more than 3000. What’s important is that each
contains a large enough sample size to represent the overall behavior of the economic sliver they
aim to represent. In this unit, we will
only discuss the market indices for
stocks and bonds.

A stock market is a place

where stocks are bought and sold.
The Philippine Stock Exchange (PSE)
governs the local stock market in our
country. The main index for PSE is
the PSEi (Philippine Stock Exchange
Index), which is composed of 30
companies carefully selected to
represent the general movement of
market prices. Within the PSEi,
sector indices represent particular
sectors of the market.

Here is an example of a stock

index table. You can see this in the
business section of newspapers and
other online business sites.

In buying or selling stocks, one may go to the PSE personally, call a registered broker, or log
on to an online trading platform. If you have an account on a trading platform, you may do it on
your own. A portfolio may look like these, where you can buy or sell stocks that you are interested
in.
 GENERAL MATHEMATICS

Note that the broker’s commissions and other charges are already included under the
market value; that is why it differs from the value that we get when we multiply the number of
shares and the market price.

On the other hand, the bond market in the Philippines is not yet as popular as the stock
market. Government bonds are auctioned out to banks and other brokers and dealers every
Monday by the Bureau of Treasury. Depending on their terms, these bonds are also called treasury
bills (t-bills), treasury notes (t-notes), or treasury bonds (t-bonds). The resulting coupon rates and
the total amount sold for these bonds are usually reported by news agencies on the day right after
the auction. Since these bond transactions involve large amounts, these bonds are usually limited to
banks, insurance firms, and other financial institutions. The banks may then resell these bonds to
their clients.
 GENERAL MATHEMATICS

Below is an example of a bond index summary and a public offering for treasury bills and
bonds issued by the Bureau of Treasury.
GENERAL MATHEMATICS

Now, answer the following exercises to apply the concept

learned.

1. IZ Financials declared a ₱10,000,000 total dividend at the end of the fiscal year. If there are
250,250 shares, how much would be the dividend per share? If you own 10% of the shares,
how much do you expect to receive?

2. You bought shares from two holding companies. Company A, with a market price of ₱96,
distributed ₱8.50 per share as a dividend. Company B, with a market price of ₱152, gave a
dividend of ₱13. Which company gave you a higher rate?

3. The net proceeds of selling 8,000 PHA shares is ₱6,099.71. If the market price of the stock is
0.77, how much is the broker’s commission?

In your own understanding define the following terms:

1. Compound Interest -

2. Simple Annuity -

3. General Annuity -

4. Interest rate -
5. Stocks -

6. Bonds -