General Mathematics Reviewer 1st Semester 2nd Half Example #1: An amount of 150,000 php is invested for 9

months at 4%. Calculate the amount of simple interest with

Business Mathematics respect to the given time.
𝑰 = 𝑷𝒓𝒕
Definition of Terms 𝑰 = (𝟏𝟓𝟎, 𝟎𝟎𝟎)(𝟎. 𝟎𝟒)(𝟎. 𝟕𝟓)
1. Lender or Creditor 𝑰 = 𝟒, 𝟓𝟎𝟎 𝒑𝒉𝒑
➢ Person or institutions who invests the
money or makes the funds available. Example #2: Ronald invested 1,000,000 php using an
2. Borrower or Debtor investment instrument that promises to pay a simple interest
➢ Person or institutions who owes the rate of 1.75% per annum. If Ronald withdraws the money
money or avails of the funds from the after 1 year, how much will he earn by then? Maturity or
lender. Future Value
3. Origin or Loan Date 𝑭 = 𝑷 + 𝑷𝒓𝒕 𝒐𝒓 𝑭 = 𝑷(𝟏 + 𝒓𝒕)
➢ Date on which money is received by the 𝑭 = 𝟏, 𝟎𝟎𝟎, 𝟎𝟎𝟎(𝟏 + (𝟎. 𝟎𝟏𝟕𝟓)(𝟏))
borrower. 𝑭 = 𝟏, 𝟎𝟏𝟕, 𝟓𝟎𝟎 𝒑𝒉𝒑
4. Repayment Date or Maturity Date
➢ Date on which the money borrowed or
loan is to be completely repaid. Example #3: An amount of 1,000,000 php is invested at a
5. Time or Term financial institution. How long will it take for the amount to
➢ Amount of time in years the money is reach 1, 001,000 php at 2 % simple interest? Time
borrowed or invested; length of time 𝑰 = 𝑷𝒓𝒕
between the origin and maturity dates. 𝑰
6. Principal or Present Value 𝒕=
𝑷𝒓
➢ Amount of money borrowed or invested (𝟏, 𝟎𝟎𝟏, 𝟎𝟎𝟎 − 𝟏, 𝟎𝟎𝟎, 𝟎𝟎𝟎)
𝒕=
on the origin date. (𝟏, 𝟎𝟎𝟎, 𝟎𝟎𝟎)(𝟎. 𝟎𝟐)
7. Rate 𝒕 = 𝟎. 𝟎𝟓 𝒚𝒆𝒂𝒓𝒔
➢ Annual rate, usually in percent, charged
by the lender, or rate of increase of the Example #4: If an entrepreneur applies for a loan
investment. amounting to P500, 000 from a bank, the simple interest of
8. Maturity Value or Future Value which is P157,500 for 3 years, what interest rate is being
➢ Amount after t years that the lender charged? Interest Rate
receives from the borrower on the 𝑰 = 𝑷𝒓𝒕
maturity date. 𝑰
9. Interest 𝒓=
𝑷𝒕
➢ Amount paid or earned for the use of 𝟏𝟓𝟕, 𝟓𝟎𝟎
𝒓=
money. (𝟓𝟎𝟎, 𝟎𝟎𝟎)(𝟑)
𝒓 = 𝟎. 𝟏𝟎𝟓 𝒐𝒓 𝟏𝟎. 𝟓%
Simple Interest
✓ Refers to the amount earned for one year calculated Example #5: When invested at an annual interest rate of
by multiplying the principal by the interest rate. 7%, an amount earned P11,200 of simple interest in two
✓ For every financial transaction, whether you years. How much money was originally invested? Principal
borrowed or invested a certain amount, a 𝑰 = 𝑷𝒓𝒕
corresponding percentage of the principal is being 𝑰
paid. 𝑷=
𝒓𝒕
✓ Simple Interest (Is) is charged only on the amount 𝟏𝟏, 𝟐𝟎𝟎
𝑷=
invested or borrowed called the principal (𝟎. 𝟎𝟕)(𝟐)
✓ 𝑰 = 𝑷𝒓𝒕 𝑷 = 𝟖𝟎, 𝟎𝟎𝟎 𝒑𝒉𝒑

In solving problems involving simple interest, the following More on Simple Interest
formulas will be used for a particular given and required
information: 1. At what rate did Simon invest his money amounting to
Php 175,000 if he received Php 2,874.75 worth of
interest after 6 months
𝑰 = 𝑷𝒓𝒕
𝑰
𝒓=
𝑷𝒕
𝟐, 𝟖𝟕𝟒. 𝟕𝟓
𝒓=
𝟔
(𝟏𝟕𝟓, 𝟎𝟎𝟎) ( )
𝟏𝟐
𝒓 = 𝟎. 𝟎𝟑𝟐𝟗 = 𝟑. 𝟐𝟗%
2. How much was invested by Jam if he earned an interest Compound Interest
of 5,250 php after investing his money at the rate of
2.05 % per annum simple interest for 8 months? Compound Interest
𝑰 = 𝑷𝒓𝒕 • The interest due at the end of a certain period is
𝑰 added to the principal and that sum earns interest
𝑷=
𝒓𝒕 for the next period, the interest paid is called
𝟓, 𝟐𝟓𝟎 compound interest.
𝑷=
𝟖 • 𝑭 = 𝑷(𝟏 + 𝒓)𝒕
(𝟎. 𝟎𝟐𝟎𝟓)( )
𝟏𝟐
• In a standard bank account, any interest we earn is
𝑷 = 𝟑𝟖𝟒, 𝟏𝟒𝟔. 𝟑𝟒
automatically added to our balance, and we earn
interest on that interest in future years.
Ordinary Interest or Banker’s Interest
• This reinvestment of interest is called
• Interest – based on a 360 – day year
compounding.
Exact Interest
Example: Find the compound amount on deposit at the end
• Interest – based on a 365 – day year
of 5 years if Php 10 000 is deposited at 4% compounded
• Default
annually.
𝑭 = 𝑷(𝟏 + 𝒓)𝒕
Example #1: Find the exact and the ordinary interest given
𝑭 = 𝟏𝟎, 𝟎𝟎𝟎(𝟏 + 𝟎. 𝟎𝟒)𝟓
the following values: 5000 php for 120 days at 5 %.
𝑭 = 𝟏𝟐, 𝟏𝟔𝟔. 𝟓𝟑 𝒑𝒉𝒑
a. Ordinary:
𝑰 = 𝑷𝒓𝒕
𝟏𝟐𝟎 Term k
𝑰 = (𝟓𝟎𝟎𝟎)(𝟎. 𝟎𝟓)( ) Annual 1
𝟑𝟔𝟎
𝑰 = 𝟖𝟑. 𝟑𝟑 Semi-annual 2
Quarterly 4
b. Exact:
Monthly 12
𝑰 = 𝑷𝒓𝒕
Daily 360/365
𝟏𝟐𝟎
𝑰 = (𝟓𝟎𝟎𝟎)(𝟎. 𝟎𝟓)( ) • Note: K represents the number of times per year
𝟑𝟔𝟓
𝑰 = 𝟖𝟐. 𝟏𝟗 that interest is compounded.
𝒓
• 𝑭 = 𝑷(𝟏 + )𝒌𝒕
𝒌
Example #2: Mr. Senirois sued a promissory note on May
08, 2015 to BPI amounting to Php 100,000 with interest at 6 Example: Find the maturity value and the compound
%. The due date is October 08, 2015. Determine the interest of a loan of Php 50,000 at the rate of 2.5 %
maturity value to be paid. compounded monthly for 3 years.
𝑭 = 𝑷 + 𝑷𝒓𝒕 𝒐𝒓 𝑭 = 𝑷(𝟏 + 𝒓𝒕) 𝒓
𝑭 = 𝑷(𝟏 + )𝒌𝒕
𝟏𝟓𝟑 𝒌
𝑭 = 𝟏𝟎𝟎, 𝟎𝟎𝟎(𝟏 + (𝟎. 𝟎𝟔) ( )) 𝟎. 𝟎𝟐𝟓 (𝟏𝟐)(𝟑)
𝟑𝟔𝟓 𝑭 = 𝟓𝟎, 𝟎𝟎𝟎(𝟏 + )
𝑭 = 𝟏𝟎𝟐, 𝟓𝟏𝟓. 𝟎𝟔 𝟏𝟐
𝑭 = 𝟓𝟑, 𝟖𝟗𝟎. 𝟎𝟎
Partial Payments
𝑰= 𝑭−𝑷
• Mr. Peralta borrowed Php 200, 000 from the
Manila Teachers Savings and Loans Association on 𝑰 = 𝟓𝟑, 𝟖𝟗𝟎 − 𝟓𝟎, 𝟎𝟎𝟎
May 1, 2015 with interest at 6%. On June 15, 2015, 𝑰 = 𝟑, 𝟖𝟗𝟎 𝒑𝒉𝒑
he paid 60,000 php. Determine the amount Mr.
Peralta should pay on September 05,2015, the due Example: Rick borrowed money from bank at the rate of
date agreed by both parties. 5.25 % compounded annually. If his loans accumulated to
𝑰 = 𝑷𝒓𝒕 Php 180, 500 after 3.5 years, how much did Rick borrow?
𝟒𝟔 𝑭 𝑭
𝑰𝟏 = (𝟐𝟎𝟎, 𝟎𝟎𝟎)(𝟎. 𝟎𝟔) ( ) 𝑷= 𝒕
𝒐𝒓 𝑷 = 𝒓
𝟑𝟔𝟓 (𝟏 + 𝒓) (𝟏 + )𝒌𝒕
𝒌
• 46 is from May 1 to June 15 𝟏𝟖𝟎, 𝟓𝟎𝟎
𝑰𝟏 = 𝟏, 𝟓𝟏𝟐. 𝟑𝟑 𝑷=
(𝟏 + 𝟎. 𝟎𝟓𝟐𝟓)𝟑.𝟓
So: 𝟔𝟎𝟎𝟎𝟎 − 𝟏, 𝟓𝟏𝟐. 𝟑𝟑 = 𝟓𝟖, 𝟒𝟖𝟕. 𝟔𝟕 𝑷 = 𝟏𝟓𝟎, 𝟗𝟎𝟑. 𝟔𝟖 𝒑𝒉𝒑
𝑵𝑩 = 𝟐𝟎𝟎, 𝟎𝟎𝟎 − 𝟓𝟖, 𝟒𝟖𝟕. 𝟔𝟕
𝑵𝑩 = 𝟏𝟒𝟏, 𝟓𝟏𝟐. 𝟑𝟑

𝟖𝟏
𝑰𝟐 = (𝟏𝟒𝟏, 𝟓𝟏𝟐. 𝟑𝟑)(𝟎. 𝟎𝟔)( )
𝟑𝟔𝟓
• 81 is from June 15 to September 5
𝑰𝟐 = 𝟏, 𝟖𝟖𝟒. 𝟐𝟓

𝑻𝑷 = 𝟏𝟒𝟏, 𝟓𝟏𝟐. 𝟑𝟑 + 𝟏, 𝟖𝟖𝟒. 𝟐𝟓 = 𝟏𝟒𝟑, 𝟑𝟗𝟔. 𝟓𝟖

Example: What interest rate compounded quarterly will
make Php 1,000,000 accumulate to Php 1,150,000 after 36
months?
𝒕𝒌 𝑭
𝒓 = 𝒌[( √ ) − 𝟏]
𝑷

(𝟒)(𝟑) 𝟏, 𝟏𝟓𝟎, 𝟎𝟎𝟎

𝒓 = 𝟒[( √ ) − 𝟏]
𝟏, 𝟎𝟎𝟎, 𝟎𝟎𝟎
𝒓 = 𝟒. 𝟔𝟗%

Example: How long will it take for Php 250,000 to gain an

interest of Php 10 000 if money is worth 2 % compounded
Annuity Certain
annually?
✓ Payable for a definite duration.
𝑭
𝒍𝒐𝒈(𝟏+ 𝒓 ) ( )
𝑷 ✓ Begins and ends on a definite or fixed date.
𝒌
𝒕=
𝒌
𝟐𝟔𝟎, 𝟎𝟎𝟎 Annuity Uncertain or Contingent Annuity
𝒍𝒐𝒈 𝟎.𝟎𝟐 ( ) ✓ Annuity payable for an indefinite duration;
(𝟏+ ) 𝟐𝟓𝟎, 𝟎𝟎𝟎
𝟏
𝒕= dependent on some certain event.
𝟏
𝒕 = 𝟏. 𝟗𝟖 𝒚𝒆𝒂𝒓𝒔
Under Annuity Certain:
Annuity a. Simple Annuity
• Interest conversion or compounding
Annuity period is equal or the same as the payment
• A fixed sum of money paid to someone at regular interval.
intervals with respect to a fixed compound interest b. General Annuity
rate. • Interest conversion or compounding
period is unequal or not the same as the
Examples: payment interval.
• Health Insurance
• Pension Fund Situation 1: Payments are made at the end of each month
for a loan that charges 1.25% interest compounded monthly.
Definition of Terms: - Simple Annuity
1. Annuities
• A fixed sum of money paid to someone at Situation 2: A deposit of P10,500 was made at the end of
regular intervals with respect to a fixed every two months to an account that earns 5.6% interest
compound interest rate. compounded quarterly.
2. Periodic Payment - General Annuity
• Each payment in every payment interval
in an annuity. Under Simple Annuity:
3. Payment Interval a. Simple Ordinary Annuity
• Time between the successive payments • A simple annuity in which the periodic
dates of an annuity. payment is made at the end of each
4. Term of the Annuity payment interval.
• The interval between the beginning of the b. Simple Annuity Due
first payment period and the of the last • A simple annuity in which the periodic
payment period. payment is made at the beginning of each
payment interval.
Example: If you pay 5000 php at the end of each month for c. Simple Deferred Annuity
40 years on account that pays interest at 10 % compounded • The periodic payment is not made at the
monthly, how much money do you have after 40 years? beginning nor at the end of each payment
a. Periodic Payment – 5000 php interval but some later date.
b. Payment Interval – monthly
c. Term of the Annuity – 40 years Situation #1: Jun’s monthly mortgage payment is P 35,
148.05 at the end of each month.
- Simple Ordinary Annuity
Situation #2: A loan to be paid of 10 semi-annual payments 3. Simple Annuity Due
of 2,000 php each where the first payments is due at the end ➢ A simple annuity in which the periodic
of 3 years and money is worth 8 % compounded semi- payment is made at the beginning of each
annually. payment interval.
- Simple Deferred Annuity
Additional Important Terms
Situation #3: The rent for apartment is P7000.00 due at the 1. Future Value
beginning of each month. ➢ Sum of all payments of the annuity at the
- Simple Annuity Due end of the last interest conversion period.
➢ This value measures how much an
annuitant would have in the future given a
Under General Annuity: specified interest rate.
a. General Ordinary Annuity 2. Present Value
• A general annuity in which the periodic ➢ The principal that must be invested today
payment is made at the end of each to provide the regular payment of an
payment interval. annuity.
b. General Annuity Due 3. Cash Value or Cash Price
• A general annuity in which the periodic ➢ Equal to the down payment (if there is
payment is made at the beginning of each any) plus the present value of the
payment interval. installment payment.
c. Perpetuities
• A series of periodic payments which are to For the Computation of Annuities, the following
run infinitely or forever. notations will be used:
a. R – regular payment
State the Type of Annuity: b. PV – present value of annuity
1. Fernanborrows money to buy a motorcycle. He will c. FV – future value of annuity
repay the loan by making monthly payments of d. r – nominal rate of interest
1500 php per month for the next 24 months at an e. k – frequency of interest, conversion in a year
interest rate of 9 % per year compounded monthly. f. j – interest rate per conversion period; j = r/k
How much did Fernanborrow? Simple Ordinary g. t – term of the annuity (in years)
Annuity h. n – total number of interest conversion; n = kt
2. A person deposits 500 php every month for the
next 10 years in an account with an annual rate of 9 Example #1: Suppose Ms. Monica would like to save Php
% compounded monthly. Assume that the deposits 2000 at the end of each month, for six months, in a fund that
are made at the beginning of each month what is gives 9 % compounded monthly. How much is the amount
the balance at the end of 10 years? Simple Annuity or future value of her savings after 6 months?
Due 1. Illustrate the cash flow of Ms. Monica in a time
3. Steve purchased a laptop through the credit diagram.
cooperative of their company. Steve decided to pay
after 3 months of purchase. His monthly payment is
computed as P2500 payable in 14 months. How
much is the cash value of the laptop if the interest
rate is 9 % convertible monthly? Simple Deferred 2. Future value of all the payments at the end of
Annuity the term.
4. In order to save P 50,000 at the end of 2 years,
what equal investments at the end of each month
must be made if money is worth 4 % compounded
quarterly? General Ordinary Annuity

Simple Ordinary Annuity & Simple Annuity Due

Review
1. Simple Annuity
➢ Interest conversion or compounding
period is equal or the same as the payment
interval.
2. Simple Ordinary Annuity
➢ A simple annuity in which the periodic
payment is made at the end of each
payment interval.
 3. Sum of all the future values obtained from the Let’s try to utilize the derived formula for the Future Value
previous observations represents the overall of Simple Ordinary Annuity on the same example:
Future Value of her savings.

Example #2: If money is worth 5% compounded semi-

annually, find the future value of an annuity of Php 12 000
Derivation of Formula for the Future Value of Simple payable at the end of every six months for 5 years.
Ordinary Annuity

Example #3: If you pay 100 php at the end of each month
for 20 years on account that pays interest at 8 %
compounded monthly, how much money do you have after
20 yrs?
Example #4: Consider a series of regular payments of Php
10,000 at the end of each year for 5 years. Assume an
interest rate of 10 % per annum compounded annually,
determine the corresponding present value of the annuity.
1. Illustration of the cash flow in the time diagram.

2. Present value of each payment.

Let’s try to utilize the derived formula for the Present Value
of Simple Ordinary Annuity on the same example!

3. Sum of all the present values obtained from the

previous observations represents the overall
present value of the given annuity.

Example #5: If money is worth 4% compounded quarterly,

find the present value of an annuity of Php 10 000 payable at
the end of every three months for 10 years.

Derivation of Formula for the Present Value of Simple

Ordinary Annuity
Example #6: The buyer of a lot will pay Php 200 000 cash 3. Sum of all the future values obtained from the
and Php 15 000 at the end of every month for 15 years to previous observations represents the overall
settle the principal and interest charges at the rate of 8% Future Value of his savings.
compounded monthly. Compute the equivalent cash price of
the lot.

Derivation of Formula for the Future Value of Simple

Annuity Due

Example #7: Mr. Torres invested Php 10 000 yearly in an

annuity due on January 01, 2010 until Dec 31, 2014. The
bank credits 2.2 % interest compounded annually to Mr.
Torres’ account. Find the Future Value of Mr. Torres
annuity.
1. Illustration of the cash flow of Mr. Torres in a
time diagram.

2. Future value of all the payments at the end of

the term.
 Example #8: Mr. Chandler signed a lease contract with an
owner of a commercial space worth Php 100 000 per year
for 5 years and made a first payment on January 1. Evaluate
the present value of Mr. Chandler’s 5-year lease on the same
day the first payment was made assuming a 2.2 % annual
compound interest.
1. Illustration of the cash flow of Mr. Chandler in
a time diagram.

2. Present value of each payment.

3. Sum of all the present values obtained from the

previous observations represents the overall
present value of the given annuity.

Example #8: Suppose Mrs. Mariano deposited 3,000 php at

the beginning of each year for 5 years in an investment that
earns 10 % per year compounded annually, what is the
amount or future value of the annuity?

Derivation of Formula for the Present Value of Simple

Annuity Due:
 Important Reminders:
✓ If an annuity is deferred for 7 periods, the first
payment is made on the 8th period.
✓ If the first payment is made at the end of 15
periods, the annuity is said to be deferred for 14
periods.

Future and Present Value of Simple Deferred Annuity

Present Value of Deferred Annuity

𝑷𝑽𝒅 = 𝒑𝒓𝒆𝒔𝒆𝒏𝒕 𝒗𝒂𝒍𝒖𝒆 𝒐𝒇 (𝒏 + 𝒅) 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔

− 𝒑𝒓𝒆𝒔𝒆𝒏𝒕 𝒗𝒂𝒍𝒖𝒆 𝒐𝒇 𝒅 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔

[𝟏 − (𝟏 + 𝒋)−(𝒏+𝒅) ] [𝟏 − (𝟏 + 𝒋)−𝒅 ]
𝑷𝑽 = 𝑹[ − ]
𝒋 𝒋

Note: Present Value of SOA

𝑹[𝟏 − (𝟏 + 𝒋)−𝒏 ]
𝑷𝑽𝑶 =
𝒋
Cash Price or Cash Value = PV + Down Payment

Future Value of Deferred Annuity

(𝟏 + 𝒋)𝒏 − 𝟏
𝑭𝑽𝑫 = 𝑹( )
𝒋
Note: The future value of deferred annuity is the same as the
future value of simple ordinary annuity.

Note: Future Value of SOA

Simple Deferred Annuity (𝟏 + 𝒋)𝒏 − 𝟏

𝑭𝑽𝑶 = 𝑹( )
𝒋
Simple Deferred Annuity
✓ First payment does not coincide with the first
interest period.
✓ It is put off to a later date.
✓ The length of time for which there are no payments
is called the period of deferment (d).
Example #1: Find the present value of 10 semi-annual Formulas:
payments at Php 100 each if the first payment is due at the
end 3 ½ years and if money is worth 12 % compounded Future Value of GOA
semi-annually. (𝟏 + 𝒋)𝒏 − 𝟏
𝑭𝑽𝑮𝑶 = 𝑹[ ]
(𝟏 + 𝒋)𝒃 − 𝟏

Present Value of GOA

𝟏 − (𝟏 + 𝒋)−𝒏
𝑷𝑽𝑮𝑶 = 𝑹 [ ]
(𝟏 + 𝒋)𝒃 − 𝟏
𝒑
𝒃=
𝒄
p – no. of months in a payment interval
c – no. of months in a compounding period
Cash Value or Cash Price = PV + Down Payment

Future Value of GAD

(𝟏 + 𝒋)𝒏 − 𝟏 𝒋
𝑭𝑽𝑮𝑫 = 𝑹 [ ][ + 𝒋]
𝒋 (𝟏 + 𝒋)𝒃 − 𝟏

Present Value of GAD

𝟏 − (𝟏 + 𝒋)−𝒏 𝒋
𝑷𝑽𝑮𝑫 = 𝑹 [ ][ + 𝒋]
𝒋 (𝟏 + 𝒋)𝒃 − 𝟏
𝒑
Example #2: If money is worth 8% compounded quarterly, 𝒃=
find the present value of a Php 70 annuity every 3 months, 𝒄
p – no. of months in a payment interval
the first of which is due at the end of 4 years and last at the
c – no. of months in a compounding period
end of 10 years.
Cash Value or Cash Price = PV + Down Payment

Tips in Deriving the Formulas:

✓ The method of derivation involves changing the
original payments to an equivalent set of payments
made on the given interest conversion dates and
then applying the annuity formulas derived in the
simple case.
✓ This method consists of the following steps:
1. Find the set of payments X made at the end/beginning
of each interest period that is equivalent to the given set
of payment R at the end/beginning of each interest
periods.
2. Find the present value and the future value of the
annuity whose payment is X made at the end/beginning
of each interest period for a total of n periods. This is
now a simple case of annuity.

Example: Find the future value of an annuity of Php 10.000

payable at the end of every quarter for 3 years if money is
worth 12 % compounded monthly.
General Annuity

General Annuity
✓ An annuity whose interval of periodic payment is
different from the frequency of interest conversion.

General Annuity Due

✓ A general annuity in which the periodic payment is
made at the beginning of each payment interval.

General Ordinary Annuity

✓ A general annuity in which the periodic payment is
made at the end of each payment interval.
Example: Find the present value of an annuity of Php Stocks and Bonds
20,000 payable semi-annually for 5 years if money is worth
6% per year compounded quarterly. These are some ways for the companies to grow.
1. Source of money for expansion
2. Savings and profits
3. Borrow money
4. Sell stocks or bonds

Stocks
✓ A form of equity financing or raising money by
allowing investor to be part owners of the
company.
✓ Shares of ownership in a company.

Stockholders or Shareholders
✓ Investors who buy the shares of the corporation.

Stock Certificate
✓ A paper issues to a shareholder which shows on its
face the number of shares it represents.

Example: Yumi deposits Php 1500 at the beginning of each

month in an account that earns 4% per year compounded
semi-annually. Determine the amount of annuity after 3
years.

Certificate Number
✓ An accession number or placeholder to keep track
of the number of certificates.

Par Value
✓ The face value of a stock.
Example: Find the present value of an annuity due of Php
10,000 payable quarterly for 10 years if money is worth 6% No-par Stock
per year compounded semi-annually. ✓ Stock issues without a stated value on the
certificate.

What are the benefits when someone becomes a stock

holder?
1. Dividend
o Earnings distributed to shareholders of a
corporation.
o Cash or Additional Shares of Stocks
2. Stock Price Appreciation
o Refers to the increase in the market price
of the stock.

Stock Marker
✓ A place where stocks are traded.
Market Price 4. Open
✓ Price at which a stock is sold. ✓ Opening price at which the stock traded
yesterday.
Commission 5. Close
✓ A payment to an agent or sales person based on the ✓ Price at which shares of the company traded
value or quantity of goods bought and sold; when the stock exchange closed yesterday.
broker’s fee. 6. High
✓ Highest price at which the stock traded
Two Types of Stocks yesterday.
1. Common Stock 7. Low
o Does not have a set dividend. ✓ Lowest price at which the stock traded
2. Preferred Stock yesterday.
o Is a stock where the dividend set by the 8. Volume
corporation is indicated at the time the ✓ Refers to sales volume.
stock was issued.
Example:
Philippine Stock Exchange (PSE)
✓ Governs the local stock market.
✓ An investor has a wide array of choices of stock
investments:

Reading the Stock Table

1. If Nowell bought 200 shares of stocks from ABS CBN

corp. and 500 shares of stocks from GMA Network Inc.
at the time of the open of trading, how much did he
invest?
(200 x 61.55) + (500 x 6.48) = 15,500
2. How much is the value of stock shares sold by the
GMA NW if the value of the stock per share at the time
of closing of trading is considered?
6.4 x 318700 = 2,039,680
3. Amy was able to buy 100 shares of ABS CBN Corp.
stocks at PHp40 per share, how much did he earn as of
July 29, 2015? Consider the closing.
(61.2-40) x 100 = 2120
4. If Howard bought GMA Network Inc stocks at PHp 7.8
per share, is it a good decision to sell his shares on July
29, 2015?
No, malulugi po si Howard.

Bonds
▪ A form of long-term promissory note issued by a
corporation or government in exchange for a sum
1. 52-wk-high of money.
✓ Highest price at which a company stock traded ▪ Lower Risk but Lower Yield
during the past 52 weeks.
2. 52-wk-low Bond Holder
✓ Lowest price at which the company stock ▪ One who holds a corporation or government bond.
traded during the past 52 weeks.
3. Stock Bond Rate
✓ Gives the company name. ▪ Rate of interest used to compute for interest
earnings.
 Proposition
✓ A declarative sentence that can be classified as
Redemption Value true or false, but not both.
▪ Future value of the amount borrowed. ✓ It is usually denoted as ‘’p’’.
▪ As such it includes interest earnings. ✓ The being True (T) or False (F) of a proposition is
called Truth Value.
Treasury Notes
▪ The bonds issued by the government. Example: Mango is a vegetable.
Non-Example: When is your birthday?
Corporate Bonds
▪ The bonds issued by companies (banks, real estate Two Classifications of Proposition
companies, telcom and etc.). 1. Simple Proposition
2. Compound Proposition
Two Kinds of Values:
1. Par Value A proposition can be classified as:
✓ Face Value 1. Simple Proposition
2. Market Value o A proposition that conveys one thought
✓ Price at which the bond is being sold. with no connecting words.
- If Market Value > Par Value, then the bond is selling o Example:
at a premium. a. p: The month of June has 31
- If Par Value > Market Value, the bond is selling at a days.
discount. ✓ Truth Value: False
- Market Price: PAR Value x Rate b. p: The sum of 10 and 6 is 16.
✓ Note: 95 means 95% ✓ Truth Value: True
2. Compound Proposition
Example: Find the market price of one P1,000 bond at each o Contains two or more simple propositions
quoted price. that are put together using connective
96 – 960 discount words.
101 ¾ - 1017.5 premium
Types of Compound Proposition
How does an investor earn when he invests in bonds? a. Conjunction
✓ Application of Simple Interest b. Disjunction
✓ Interest Payment is done every quarter and c. Conditional
subject to 20% withholding tax. d. Biconditional
e. Negation
Ariel invested Php 100,000 on a 3-year retail treasury bond
paying 8.5% per year coupon. Compute for the net interest Conjunction
received every quarter and the net annual rate of return. ▪ Two simple propositions connected using the word
✓ Gross Annual Interest: 100,000 x 0.085 = 8500 “and”.
✓ Gross Quarterly Interest: 8500/4 = 2,125
✓ Net Interest Receiver Every Quarter (Exclude the
Tax): 2125 – (2125 x 0.2) = 1700
✓ Net Annual Rate of Return: 8500 – (8500 x 0.2) =
6,800 ▪ The following words can also be used to form a
conjunction:
Considerations: a. But
1. Price of the bond b. Whereas
2. Interest rate c. Moreover
3. Whether the bonds can or cannot be resold d. Yet
4. The earnings record of the issuer e. Although
5. The credit history of the issuer f. Still
6. The business condition g. While
h. Despite
Introduction to Logic
Disjunction
Logic ▪ Two simple propositions connected using the word
✓ The Science of Correct Reasoning. “or”.
✓ It is used to distinguish valid arguments from
invalid arguments.
 ▪ The following words can also be used to form a Parentheses tell what type of statements are being
conjunction: else, either... unless. considered.
▪ If there are no parentheses, we follow the
Conditional dominance of connectives.
▪ Two simple propositions that are connected using Connectives in their Dominant OrderL
the words if ... then. 1. Biconditional
2. Conditional
3. Disjunction or Conjunction
4. Negation

▪ The following has the same meaning as the Truth Value

proposition if p then q: ▪ The being True (T) or False (F) of a proposition.
a. q if p
b. q provided p Truth Table
c. q granted p ▪ Shows the truth value of a compound proposition
d. q is necessary for p for all possible values of its components.
▪ Note: If a compound proposition has n
Biconditional components, there are 𝟐𝒏 possible combination of
▪ A proposition that implies equivalence. truth values.

As an example, a simple proposition p has a truth table:

Since a proposition can only be True (T)
▪ The following has the same meaning as the or False (F). Additionally, there is only
proposition p if and only if q: one component (p) involve in the
a. p when and only when q proposition. This follows that there are
b. p just in case q only 𝟐𝟏 or 2 possible combinations of
c. in order for p, it is necessary and sufficient that truth values.
q
The truth value of a compound proposition can also be
Negation determined. This can be done by following the rules to be
▪ A statement that is false whenever the given discussed in the next slides.
statement is true, and true whenever the given ▪ Note: The rules are unique in every type of
statement is false. compound propositions. A truth table of each type
will also be provided to show all the possibilities of
truth values in a compound proposition.

1. Truth Value of Negation

▪ The negation of a proposition is obtained by taking
Exercise: Convert each compound proposition into its opposite.
symbols. ▪ If a proposition is true, its corresponding negation
Given: is false.
p – he has a green thumb ▪ If a proposition is false, then its corresponding
q – he is a senior citizen negation is true.
Application:
1. If he does not have green thumb, then he is a senior
citizen.
Answer: ~𝒑 → 𝒒
2. He has green thumb or he is not a senior citizen.
Answer: 𝒑 ∨ ~𝒒

Importance of Comma
▪ The use of comma indicates which simple Truth Table of a Negation:
statements are grouped together.

1. Arnold is working student (w) or under 25 years old (u),

and lives in Manila (l).
Answer: (𝒘 ∨ 𝒖) ∧ 𝒍
2. Arnold is a working student (w), or under 25 years old
(u) and lives in Manila (l).
Answer: 𝒘 ∨ (𝒖 ∧ 𝒍)
2. Truth Value of a Conjunction
▪ A conjunction is only true when both conjuncts
are true.
▪ Otherwise, its value is false.
▪ This follows that if at least one of the
conjuncts is false, the conjunction is already
false.

Truth Table of an Exclusive Disjunction:

Truth Table of a Conjunction:

4. Truth Value of a Conditional

▪ In a conditional 𝒑 → 𝒒, p represents the
antecedent while q is called the consequent.
▪ There are two components (p & q) involve in the ▪ A conditional is only false when the antecedent
proposition. is true and the consequent is false.
▪ This follows that there are only 𝟐𝟐 𝒐𝒓 𝟒 possible ▪ Otherwise, it is true.
combinations of truth values.

3. Truth Value of a Disjunction

▪ A disjunction is only false when both disjuncts are
false.
▪ This follows that if at least one of the disjuncts is
true, the disjunction is already true.

Truth Table of a Conditional:

Truth Table of an Inclusive Disjunction:

5. Truth Value of a Biconditional

▪ A biconditional is only true when both
components have the same truth values.

Additional: Truth Table of an Exclusive Disjunction

Exclusive Disjunction
▪ Is only true when exactly one of the two
components is true.
▪ Note: The symbol for this operation is V.
Truth Table of Biconditional: ▪ Additionally, there are three components
(p,q&r) involve in the proposition.
▪ This follows that there are only 𝟐𝟑 𝒐𝒓 𝟖
possible combinations of truth values.

Try on your own!: Construct the table.

~𝒑 ∧ ~𝒒 ↔ (𝒑 ∧ 𝒒)

Short Exercise: Determine the truth value of the following

propositions.
1. A function is a relation for which each value from ▪ The very last column of the truth table is the
the set of the first components of the ordered pairs summary of the truth values of the given
is associated with exactly one value from the set of proposition with respect to all of the possible
second components of the ordered pair. combinations of the components.
Answer: True. This is just a simple proposition. ▪ Although it is the most important information in the
2. Cat is three letter word or Dog is an awesome constructed table, it is still important to show the
animal. entire table instead of simply presenting the last
Answer: True. Although the second disjunct sounds to column.
be an opinion, the first disjunct is already true which
makes the entire statement true. Forms of Conditionals
3. If 2022 is odd, then 2021 is even.
Answer: True. Both the antecedent and the consequent Given: 𝒑 → 𝒒
are false. ▪ Converse: 𝒒 → 𝒑
▪ Inverse: ~𝒑 → ~𝒒
In the previous slides, you have read all the rules that you ▪ Contrapositive: ~𝒒 → ~𝒑
must follow to know whether a compound proposition is
true or false. Given: If I live in Manila, then I live in the Philippines
▪ Converse: If I live in the Philippines, then I live in
In cases where a compound proposition is formed using Manila
more than a single connective, the truth values depend on ▪ Inverse: If I don’t live in Manila, then I don’t live
the truth values of their components. in the Philippines
▪ Contrapositive: If I don’t live in Philippines, then
To create the corresponding truth table for such cases, I do not live in Manila.
simply:
1. First, consider the truth value of the components Brief Introduction of Tautology and Fallacy
inside the parentheses.
2. If parentheses are not used, keep in mind the Tautology
dominance of the operations. ▪ The truth values of a proposition are all true for all
the possible combinations of truth values of its
Example: Construct the truth table for 𝒑 ↔ 𝒒 ∧ 𝒓 components.
Show that the given is a tautology: ~(𝒑 ∨ 𝒒) ↔ ~𝒑 ∧ ~𝒒

Contradiction or Fallacy
▪ The truth values of a proposition are all false for all
the possible combinations of truth values of its
components.
Show that the given is a fallacy: ~{[(𝒑 → 𝒒) ∧ 𝒑] → 𝒒}
▪ In completing the truth table, the conjunction
of q and r needs to be completed first since
there are no parenthesis involve and
conjunction is less dominant than
biconditional.
▪ The biconditional will then be accomplished
afterwards.
Tautology Sample of Logically Equivalent Propositions:
▪ The truth values of a proposition are all true for all
the possible combinations of truth values of its
component.

Contradiction or Fallacy
▪ The truth values of a proposition are all false for all
the possible combinations of truth values of its
components.

Contingency
▪ The truth values of a proposition are not all true or
not all false for all the possible combinations of
truth values of its components.

Arguments and Validity

a. If I will join extracurricular activities then, I will have

to learn proper time management.
b. I did not learn proper time management. Thus, I did not
join extracurricular activities.

A proposition “A” logically implies a proposition “B” if

and only if A →B is a tautology.
▪ Note: A and B can be simple or compound
propositions

Two propositions “A and B” are logically equivalent,

denoted by A≡B, if they have the same truth values for all
possible truth values of their simple components.
▪ Note: A and B can be simple or compound
propositions