Module - 2

Republic of the Philippines
City of Olongapo
GORDON COLLEGE
COLLEGE OF EDUCATION, ARTS AND SCIENCES
Olongapo City Sports Complex, Donor St., East Tapinac, Olongapo City 2200
Telefax No.: (047) 602-7175 loc 322
www.gordoncollege.edu.ph
Mathematics Of Investment
Module 2
INTEREST
Prepared By :
Rebecca S. Fredeluces
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
Program: BSED major in Mathematics

Course Code: Math Edu 07
Course Title: INVESTMENT OF MATHEMATICS
Course Description:
This will cover the basics of a course in mathematics of investment. It will lead the way as tool in
solving principal, rate, time and interest. Mathematics of Investment has been established so that
different topics such as annuities, perpetuities, amortization, sinking funds, bonds, stocks, credit card,
and depreciation are covered.
A combination of traditional materials in mathematics of investments and new ideas that are
adapted to our changing economic needs and economic pressure. Topics progress beginning with
simple interest and simple discount, and leading through the topics on compound interest, annuities,
amortization, and sinking funds, and bond and bond valuation, depreciation, and stocks.
Course Learning Outcomes:
At the end of the course, the students are expected to:

• Illustrate and solve problems involving simple and compound interest, and varying interest
• Determine the classifications of annuities.
• Solve problems involving annuities.
• Prepare loan amortization and sinking schedule
• Discuss the concept and different types of depreciation as well as creating depreciation schedule
• Differentiate stocks from bonds
• Learn how to solve problems involving bonds
MODULE 2: INTEREST
I. Introduction:
They say that Money is not free to borrow. Individuals can always find a use for money, so it costs to
borrow money. The interest paid for the use of money is called simple interest. This lesson explains the
concept of Simple Interest and Compound Interest. We will develop a basic understanding of these two
different types of interests, their uses and properties.
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
TOPICS AND KEY CONCEPTS
2.1 Simple Interest

• Interest
• The concept of money and time
• Manipulating the simple interest formula
• Compute interest using the four methods
2.2 Compound Interest

• Compound interest
• Present Value and compound discount
• Finding the rate and time
• Nominal and effective rates
II. Learning Objectives

At the end of module 2, the students are expected to:
• Lead to appreciation towards simple interest.

• Gain knowledge in calculating simple interest
• Solve problems involving simple interest and compound interest.
• Articulate the value of mathematics in one’s life.
• Be able to compare and contrast exact and ordinary interest.
• Have connected simple interest to business issues confronting the country.
“A bank is a place that will lend you money if you can prove that you don’t need it.”
- Bob Hope
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
DISCUSSION
2.1 SIMPLE INTEREST
If interest is calculated on the original principal during the whole period of the loan or investment, the
amount due at the end of the time is called simple interest.
Kinds of Simple Interest

There are two kinds of simple interest: Ordinary and Exact. These two terms use the same formula for
solving the simple interest, but they differ on the number of days used in the formula.
Ordinary simple interest is a simple interest that uses 360 days as the equivalent number of days in a
year.
Exact simple interest is a simple interest that uses exact number of days in a year which is 365 (or 366
for leap year) days.
These two kinds of simple interest only apply if the unit of time used is in days.
Two kinds of time are used which are Exact Time and Approximate Time.
Exact Time uses the exact number of days for time of the loan or investment.
Approximate Time assumes that each year has 360 days and each month has 30 days.
SUMMARY:
• Exact Interest - refers to computing interest at time taken as 365 days
• Ordinary Interest - refers to computing interest at time taken as 360 days
• Exact Time - refers to the actual number of days between two given dates
• Approximate Time - considers each month as having 30 days
What is Banker’s rule?

Banker’s Rule uses the precise number of days for time of the loan or investment. It assumes that each
year has 360 days.
The Banker’s rule is widely and commonly used by banks and uses the combination of Ordinary
Interest and Exact Time.
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
Four Methods in Computing Interest
• Exact Time, Ordinary Interest (Banker’s Rule)

𝒅
I = 𝑷𝒓 , where d is the actual number of days between two dates
𝟑𝟔𝟎
• Exact Time, Exact Interest
𝒅
I = 𝑷𝒓 , where d is the actual number of days between two dates
𝟑𝟔𝟓
• Approximate Time, Ordinary Interest
𝒅
I = 𝑷𝒓 , where d is the number of days between two dates, assuming each month has 30 days
𝟑𝟔𝟎
• Approximate Time, Exact Interest
𝒅
I = 𝑷𝒓 𝟑𝟔𝟓 , where d is the number of days between two dates, assuming each month has 30 days
Note: If it is not defined on what method to calculate for the interest, Banker’s Rule applies.
FORMULA:
• I = Prt
𝑰
• P =
𝒓𝒕
𝑰
• r =
𝑷𝒕
𝑰
• t = 𝑷𝒓 , T (in years)
𝑰
• t =
𝑷𝒓
𝒙 𝟏𝟐 , T (in months)
𝑰
• t =
𝑷𝒓
𝒙 𝟑𝟔𝟎 or 365 or 366, T (in days)
Where
I is the interest
P is the principal
r is the annual interest rate (expressed as a decimal)
t is the time
Future or Maturity Value for Simple Interest

• F = P(1 + rt)
where
F is the Maturity Value
P is the Principal
r is the Rate
t is the time
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
EXAMPLES:
1. Find the interest on 9,000 loaned at 11% per annum for 2 years
Given:
P = 9,000 r = 11% = .11 t = 2 yrs.
Solution:
I = 9,000 x .11 x 2 yrs
I = 1,980
2. Find the maturity value of 15,000 at 7 % for 5 years.

Given:
P = 15,000 r = 7% = .07 t = 5 yrs.
Solution:
F = P (1+ rt)
F = 15,000 (1+.07x5)
F = 20,250
3. Find time if ordinary simple interest of 6,000 at 10% is 200.

Given:
I = 200 r = 10% = .1 P = 6,000
Solution:
𝐼
t=
𝑃𝑟
200
t=
6,000 (0.1)
𝟏
t = 𝟑 yr or 120 days
4. Find R if P = 25,000 t = 5 yrs I = 6,000

Given:
P = 25,000 t = 5 yrs I = 6,000
Solution:
𝐼
r = 𝑃𝑡
6000
r=
25,000 (5)
r = 0.048
r = 4.8%
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
5. Find the interest on 10,500 investment at 1.5% from March 25,2020 to June 25, 2020 using the
four methods.
Exact Time Approximate Time
Date No. of Days Date No. of Days
March 25-31 6 March 25-30 5
April 30 April 30
May 31 May 30
June 25 June 25
Total 92 Total 90
Given:
P = 10,500 r = 1.5% or 0.015 t = 92 days Exact Time
90 days Approximate Time
𝒅
I = 𝑷𝒓 𝟑𝟔𝟎 , where d is the actual number of days between two dates
92
I = 10,500 x 0.015 x 360
I = 40.25

𝒅
I = 𝑷𝒓 𝟑𝟔𝟓 , where d is the actual number of days between two dates
92
I = 10,500 x 0.015 x 365
I = 39.70

𝒅
I = 𝑷𝒓 , where d is the number of days between two dates, assuming each month has 30 days
𝟑𝟔𝟎
90
I = 10,500 x 0.015 x
360
I = 39.38

𝒅
I = 𝑷𝒓 𝟑𝟔𝟓 , where d is the number of days between two dates, assuming each month has 30 days
90
I = 10,500 x 0.015 x 365
I = 38.84
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
LEARNING TASKS:
Seat work:
A. Finding the Interest:
Principal (P) Interest Rate (r) Time (t) Interest (I)

1 50,000 7% 5 years __________
2 2,000,000 7.5% 18 months __________
3 64,000 5½% 7 months __________
4 50,000 3¼% 3 ½ years __________
B. Finding the Maturity Value
Principal (P) Interest Rate (r) Time (t) Interest (I) Maturity Value
1 5,400,000 10.6% 2 years __________ __________
2 337,500 8.3% 10 months __________ __________
3 1,250,000 11 ½ % 5 months __________ __________
4 910,000 5¼ 1 ½ years __________ __________
QUIZ
Solve the following:
1. Find the exact simple interest on a 90-day loan of 10,000 at 5 ¼%.

2. Find exact time from Feb. 3 to April 21 of the same leap year.
3. What principal will yield 450 interest in 3 years at 15%?
4. An interest was of 915 was earned in 9 months on an investment at 12%. How much was
invested?
5. Find the ordinary and exact simple interest if 7,500 is borrowed at 24% for 120 days.
6. On what date will 8,000 earn 180 interest when invested on April 25, 2018 at 9% simple
interest? Use ordinary interest and actual time.
7. What is the simple interest rate using exact time if 6,000 grew to 6,168 from Feb. 2015 to June 8,
2015.
8. Kim Soo has received a 1,500,000 loan from his aunt in order to finance his 4-year college
course. He will repay his aunt in full amount at the end of 10 years with simple interest of 2%
per year. How much should he pay his aunt after 10 years?
9. Joanne makes an investment by lending 25,000 to Jonathan for 2 years at 11% per annum. What
is the maturity value of the investment?
10. What is the present value 5,200 due in six months if 11% is paid?
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
11. Given:
P=16,500 r = 12% t = from Jan. 9, 2018 to June 24 of the same year.
Find interest using the following:

a. Exact Time, Ordinary Interest (Banker’s Rule)
b. Exact Time, Exact Interest
c. Approximate Time, Ordinary Interest
d. Approximate Time, Exact Interest
SUMMARY OF FORMULAE
𝑑
I = 𝑃𝑟 , where d is the actual number of days between two dates
360
𝑑
I = 𝑃𝑟 , where d is the actual number of days between two dates
365
𝑑
I = 𝑃𝑟 360 , where d is the number of days between two dates, assuming each month has 30 days
𝑑
I = 𝑃𝑟 , where d is the number of days between two dates, assuming each month has 30 days
365
• Interest
I = Prt
• Principal
𝐼
P = 𝑟𝑡
• Rate of Interest
𝑰
R = 𝑷𝒕
• Time
𝐼
t= , T (in years)
𝑃𝑟
𝐼
t= 𝑥 12 , T (in months)
𝑃𝑟
𝐼
t== 𝑥 360 or 365 or 366, T (in days)
𝑃𝑟
• Future or Maturity Value for Simple Interest
F = P(1 + rt)
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
TEACHING AND LEARNING MATERIALS/ RESOURCES

Learning Modules
PowerPoint
Video Clips
REFERENCES
IPracticeMath.com. (n.d.). Simple Interest Example. Retrieved August 2, 2020, from

https://www.ipracticemath.com/learn/consumermath/simple-interest-example
Laylo, V. T. (n.d.). BUSMATH (SIMPLE INTEREST) - Interest Simple Interest Exact and Ordinary
Interest Actual and Approximate Time Maturity Date Contents Simple Interest: Course Hero.
Retrieved August 02, 2020, from https://www.coursehero.com/file/22054447/-BUSMATH-
SIMPLE-INTEREST/
Paguio, D. P., Gadia, E. D., Soriano, D. D., Taganap, E. C., & Aniciete, E. B. (2014). Simple Interest. In
E. D. Ibañez (Ed.), Mathematics of Investment (pp. 1-31). Malabon City, NCR: Jimczyville
Publications.
Pierce, Rod. (15 Apr 2018). "Introduction to Interest". Math Is Fun. Retrieved August 2, 2020 from
http://www.mathsisfun.com/money/interest.
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
2.2 COMPOUND INTEREST
What Is Compound Interest?

Compound interest (or compounding interest) is interest that is calculated by including all of the
accumulated interest from previous periods on a investment or loan.
Albert Einstein allegedly described compound interest as “the most powerful force in the universe”
and “the greatest invention in human history.” Focusing on the strength of compound interest is a very
important part of any profit strategy.
The following variables will be used to compute compound interest:
F = Maturity Value of the loan or investment

P = Principal Amount of the loan or investment
I = Amount of interest paid or received
J = Nominal rate
m = Number of conversion period
t = Time period (term) of the loan or investment
i = Periodic interest rate
n = Number of conversions
The formula for the Maturity Value of the Compound Interest is:
𝑗
F = (1 + 𝑖)𝑛 or F = 𝑃(1 + 𝑚)𝑚𝑡
I=F-P
Interest Compounded Compounding Made Compounding Period Per Year

Annually Every Year 1
Semi-annually Every 6 months 2
Quarterly Every 3 months 4
Monthly Every month 12
Examples
1. Find the maturity value of a note at the end of 5 years if the principal P of present value is 1,000
and interest rate is 4% compounded semi-annually.
Given:
P = 1,000 j = 4% t = 5 years m=2
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
Solution:
𝒋
F = 𝑷(𝟏 + 𝒎)𝒎𝒕
.04 2𝑥5
F = 1,000(1 + )
2
F = 1,218.99
2. Accumulate 65,500 for 3.5 years at 6% converted monthly.

3. Accumulate 85,600 for 4 years and 6 months at 4 ½ % converted semi-annually. Find F and I.
4. What sum of money will be required to discharge a loan of 85,000 on March 1, 2020 if the loan
is made December 1, 1998.
Present Value is described as the principal which, if invested for the given time at a given interest, will
arrive at a certain amount on the date that amount is due.
P - principal invested
t - given time
r - given rate
F - amount on due date
Compound Discount (D) is the difference between the final amount F and the present value P. It is
calculated using the following formula:
𝑗
P = F(1 + 𝑖)−𝑛 or P = F(1 + )−𝑚𝑡
𝑚
D= F–P
where
F = Amount expected at a given year
P = Present Value
i = periodic rate (i = j/m )
n = total no. of conversion periods for the whole term
D = compound discount
Examples
1. Ms. A invested in a time deposit 3.5% converted quarterly, find the present value of 52000 due at
the end of 3 years and 6 months.
Given:
6
F = 52,000 j = 3.5% or 0.035 m=4 t = 3 12 or 3.5 years
Solution:
𝑗
P = F(1 + 𝑚)−𝑚𝑡
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
0.035 −4𝑋3.5
P = 52,000(1 + )
4
P = 46,029.22
2. Discount 80,000 due at the end of 25 years and 3 months at 2% compounded semi-annually.
3. Find the present value of 95,000 at 5% if converted:

a. Converted annually for 33 years
b. Converted for 18 years and 9 months
SUMMARY OF FORMULAE
• Maturity Value of the Compound Interest

𝑗
F = (1 + 𝑖)𝑛 or F = 𝑃(1 + )𝑚𝑡
𝑚
I=F-P
• Present Value
𝑗
P = F(1 + 𝑖)−𝑛 or P = F(1 + 𝑚)−𝑚𝑡
• Compound Discount
D=F–P
REFERENCES
Ballada, W., & Ballada, S. (2009). Investment Mathematics Made Easy (3rd ed.). Win Ballada and
Susan Ballada.
Kirchberger, W. J. (2020, June 24). Compound Interest. Retrieved August 02, 2020, from
https://sigmainvestments.com/compound-interest/
Paguio, D. P., Gadia, E. D., Soriano, D. D., Taganap, E. C., & Aniciete, E. B. (2014). Compound
Interest. In E. D. Ibañez (Ed.), Mathematics of Investment (pp. 33-60). Malabon City, NCR:
Jimczyville Publications.
Sirug, W. S. (2018). Mathematics in the Modern World. Manila City, NCR: Mindshapers Co., Inc.
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
2.3 FINDING TIME AND RATE
In order for an amount invested at an interest rate to reach a certain amount, it will take time. The
formula for that time is:
𝑛
𝒕=
𝑚
However, to find n when the interest rate is compounded, we use the logarithmic method that is
computed using the following formula:
𝐹
log (𝑃 )
𝒏=
log(1 + 𝑖)
Kinds of Rates
There are three kinds of rates when dealing with compound interest.
• Periodic rate (i) – A rate that can be charged on a loan, or realized on an investment over a
specific period of time.
• Nominal rate (j) – Used if the conversion period is not identical to the basic time unit which is
normally a year.
• Effective rate (e) – The return on an investment when the effects of compounding over time are
taken into account.
Note: Assume that the given rate is nominal if it is not specified.
We can compute these interests using the following formulae:
𝑛 𝐹 𝑚𝑡 𝐹 𝑟
𝒊= √ −1 𝑜𝑟 𝒊= √ −1 𝑜𝑟 𝒊=
𝑃 𝑃 𝑚
1
𝒋 = (𝑖)(𝑚) 𝑜𝑟 𝒋 = 𝑚 [(1 + 𝑒)𝑚 − 1]
𝑗 𝑚
𝒆 = [(1 + ) − 1]
𝑚
where
City of Olongapo
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F= compound amount
P= principal amount
t = time
i = periodic rate
r = interest rate
j = nominal rate
e = effective rate
m = conversion period
Examples
1. Given an interest rate of 3% quarterly, how much time is needed for 50,000 to reach 60,000?
Given:
j = 0.03 m=4 P = 50,000 F = 60,000
Solution:
First, let us determine n using the logarithmic method.
𝐹 60,000 60,000
log ( ) log ( ) log ( )
𝑃 50,000 50,000
𝒏= = 𝑗 = 0.03 = 24.4005881586
log(1+𝑖) log(1+ ) log(1+ )
𝑚 4
Next, we compute for time t
𝑛 24.4005881586
𝒕=𝑚 = 4
= 6.10014 years or 6 years and 1 month
2. In 6.10014 years or 6 years and 1 month, 50,000 accumulated to 60,000 with a rate that is
compounded quarterly. Find the rate.
Given:
t = 6.10014 years m = 4 P = 50,000 F = 60,000
Solution:
𝑚𝑡 𝐹 (4)(6.10014) 60,000
𝒊= √𝑃 − 1 = √50,000 − 1 = .0075
𝒋 = (𝑖)(𝑚) = (.0075)4 = 0.03 or 3%
3. Find the effective rate if the nominal rate is 4% compounded quarterly.

Given:
j = 0.04 m=4
Solution:
𝑗 0.04 4
𝒆 = [(1 + 𝑚)𝑚 − 1] = [(1 + ) − 1] = 0.0406 or 4.06%
4
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
2.4 EQUIVALENT RATES
Sometimes, different rates can still have the same interests considering that they are applied to the same
principal and period of time as well. The following formulae are used to compute for these:
Compound Interest Rate equivalent to Compound Interest Rate
𝑚
𝑔 𝑚𝑒
𝒆𝒒 = 𝑚𝑒 [(1 + ) − 1]
𝑚
where
eq = unknown rate
me = conversion period of the missing rate
g = given interest rate
m = conversion period of given rate
Simple Interest Rate equivalent to Compound Interest Rate
|(1 + 𝑖)𝑛 − 1|
𝒓=
𝑡
where
r = unknown rate
𝑗
i = periodic rate (𝑚)
t = term / time of investment
n = total number of conversion periods (𝑚𝑡)
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
SUMMARY OF FORMULAE
• Maturity Value of the Compound Interest

𝑗
F = (1 + 𝑖)𝑛 or F = 𝑃(1 + )𝑚𝑡
𝑚
I=F-P
• Present Value
𝑗
P = F(1 + 𝑖)−𝑛 or P = F(1 + )−𝑚𝑡
𝑚
• Compound Discount
D=F–P
• Time
𝑛
𝒕=
𝑚
• Logarithmic Method
𝐹
log (𝑃 )
𝒏=
log(1 + 𝑖)
• Periodic Rate
𝑛 𝐹 𝑚𝑡𝐹 𝑟
𝒊 = √ −1 𝑜𝑟 𝒊= √ −1 𝑜𝑟 𝒊=
𝑃 𝑃 𝑚
• Nominal Rate
1
𝒋 = (𝑖)(𝑚) 𝑜𝑟 𝒋 = 𝑚 [(1 + 𝑒)𝑚 − 1]
• Effective Rate
𝑗
𝒆 = [(1 + )𝑚 − 1]
𝑚
• Compound Interest Rate equivalent to Compound Interest Rate
𝑚
𝑔 𝑚𝑒
𝒆𝒒 = 𝑚𝑒 [(1 + ) − 1]
𝑚
• Simple Interest Rate equivalent to Compound Interest Rate
|(1 + 𝑖)𝑛 − 1|
𝒓=
𝑡
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
Exercises :
Finding Time and Rate :
1. Find Time :
P F j m t
a. 82000 105000 5% 12 --------------------------------
Solution:
b. 55700 102000 4.5% 4 --------------------------------

Solution :
c. 3600000 4500000 3.25% 2 ----------------------------------
Solution :
2. Annie received a loan of 20500 with and interest of 2.5% compounded quarterly. She promise to
pay her creditor in full amount amounting to 36000 on due date. How long will it take for Annie
to pay her debtor?
Solution:
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3. What is the rate compounded monthly will 16000 accumulate to 23000 in 2 years and 10 months
?
Solution :
4. If interest is compounded Quarterly, find the nominal rate if effective rate is : Commented [R1]:
a. 2 ¾ % b. 5/24% c. 5 ½%
5. Find effective rate 2 .5% compounded :
a. Semi annually b. quarterly d. monthly

City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
REFERENCES
Ballada, W., & Ballada, S. (2009). Investment Mathematics Made Easy (3rd ed.). Win Ballada and
Susan Ballada.
Kirchberger, W. J. (2020, June 24). Compound Interest. Retrieved August 02, 2020, from
https://sigmainvestments.com/compound-interest/
Paguio, D. P., Gadia, E. D., Soriano, D. D., Taganap, E. C., & Aniciete, E. B. (2014). Compound
Interest. In E. D. Ibañez (Ed.), Mathematics of Investment (pp. 33-60). Malabon City, NCR:
Jimczyville Publications.
Sirug, W. S. (2018). Mathematics in the Modern World. Manila City, NCR: Mindshapers Co., Inc.
City of Olongapo
GORDON COLLEGE
Telefax No.: (047) 602-7175 loc 322
SAMPLE RUBRICS
RUBRICS FOR PROBLEM SOLVING IN MATHEMATICS

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Republic of the Philippines

Program: BSED major in Mathematics

Course Learning Outcomes:

At the end of the course, the students are expected to:

TOPICS AND KEY CONCEPTS

2.1 Simple Interest

2.2 Compound Interest

II. Learning Objectives

• Lead to appreciation towards simple interest.

2.1 SIMPLE INTEREST

Kinds of Simple Interest

What is Banker’s rule?

Four Methods in Computing Interest

• Exact Time, Ordinary Interest (Banker’s Rule)

Future or Maturity Value for Simple Interest

2. Find the maturity value of 15,000 at 7 % for 5 years.

3. Find time if ordinary simple interest of 6,000 at 10% is 200.

4. Find R if P = 25,000 t = 5 yrs I = 6,000

• Exact Time, Exact Interest

• Approximate Time, Ordinary Interest

• Approximate Time, Exact Interest

A. Finding the Interest:

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

B. Finding the Maturity Value

Solve the following:

1. Find the exact simple interest on a 90-day loan of 10,000 at 5 ¼%.

Find interest using the following:

TEACHING AND LEARNING MATERIALS/ RESOURCES

IPracticeMath.com. (n.d.). Simple Interest Example. Retrieved August 2, 2020, from

2.2 COMPOUND INTEREST

What Is Compound Interest?

The following variables will be used to compute compound interest:

F = Maturity Value of the loan or investment

Interest Compounded Compounding Made Compounding Period Per Year

2. Accumulate 65,500 for 3.5 years at 6% converted monthly.

3. Find the present value of 95,000 at 5% if converted:

• Maturity Value of the Compound Interest

2.3 FINDING TIME AND RATE

Note: Assume that the given rate is nominal if it is not specified.

We can compute these interests using the following formulae:

3. Find the effective rate if the nominal rate is 4% compounded quarterly.

2.4 EQUIVALENT RATES

Compound Interest Rate equivalent to Compound Interest Rate

Simple Interest Rate equivalent to Compound Interest Rate

• Maturity Value of the Compound Interest

Finding Time and Rate :

a. 82000 105000 5% 12 --------------------------------

b. 55700 102000 4.5% 4 --------------------------------

c. 3600000 4500000 3.25% 2 ----------------------------------

5. Find effective rate 2 .5% compounded :

a. Semi annually b. quarterly d. monthly

RUBRICS FOR PROBLEM SOLVING IN MATHEMATICS

Almost 85-89% of Mostly 75-84% of More than 75% of

the work appears

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