to

GENERAL MATHEMATICS
"What are the ways in handling hard
– earned money like the salary of
your parents or your own salary if you
are working. "
OBJECTIVES
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OBJECTIVES
❑ Illustrates simple and compound interests;
❑ Distinguishes between simple and compound interests;

❑ Computes interest, maturity value(future value) and present

value in simple interest; and
❑ Solves problems involving simple interest.
Directions: Identify each term that matches each given description. Choose the correct
answer from the given word box below. Write the letter on the space provided for.

Principal Borrower or Debtor Repayment date or Maturity date

Lender or Creditor Time or Term Origin or Loan date
Rate Compound Interest Simple Interest
Maturity Value or Future Value Interest

Lender or creditor person or institution who invests the money or makes the funds available.

Borrower or debtor person or institution who owes the money or avails of the funds from the lender.

Origin or loan date date on which the money is received by the borrower.

Maturity value or future value (𝐹) amount after t years that the lender receives from the borrower on the maturity date.
the amount of time in years the money is borrowed or invested, length of time
Time or term (𝑡) between the origin and maturity dates.
Principal (𝑃) the original amount of money invested or borrowed.
– also known as the capital
 Principal Borrower or Debtor Repayment date or Maturity date
Lender or Creditor Time or Term Origin or Loan date
Rate Compound Interest Simple Interest
Maturity Value or Future Value Interest

annual rate, usually in percent, charged by the lender, or rate of increase

Rate (𝑟) of the investment.
Interest (𝐼) amount earned or paid for the use of money.

Simple Interest (𝐼𝑠 ) interest computed on the principal amount of loan or money invested.

Compound Interest (𝐼𝑐 ) interest is computed on the principal amount and also on the accumulated past
interests.

Repayment date or maturity date date on which the money borrowed or loan is to be completely repaid.
OBJECTIVES LESSONS
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Virtual Classroom Rules

SIMPLE VS COMPOUND
INTEREST INTEREST
Example: Supposed you have Php 10,000 and you plan to invest it
for 5 years. A Cooperative group offers 2% simple interest rate
per year. A bank offers 2% compounded annually. Which will you
choose and why?
Example: Supposed you have Php 10,000 and you plan to invest it for 5 years.
A Cooperative group offers 2% simple interest rate per year. A bank offers
2% compounded annually. Which will you choose and why?

Investment 1: Simple Interest

Time Interest Amount after t years
(t) Principal (P) Rate (r) Simple Interest 𝑰𝒔 ( Maturity Value)

1 10,000 2% 10,000(0.02)(1) 200 10,000 + 200 = 10,200

2 10,000 2% 10,000(0.02)(2) 400 10,000 + 400 = 10,400
3 10,000 2% 10,000(0.02)(3) 600 10,000 + 600 = 10,600
4 10,000 2% 10,000(0.02)(4) 800 10,000 + 800 = 10,800
5 10,000 2% 10,000(0.02)(5) 1,000 10,000 + 1,000 = 11,000
Example: Supposed you have Php 10,000 and you plan to invest it for 5 years.
A Cooperative group offers 2% simple interest rate per year. A bank offers
2% compounded annually. Which will you choose and why?

Investment 2: Compound Interest

Time Interest Amount after t years
Principal (P) Compound Interest 𝑰𝒄
(t) Rate (r) ( Maturity Value)
1 10,000 2% 10,000(0.02)(1) 200 10,000 + 200 = 10,200
2 10,200 2% 10,200(0.02)(1) 204 10,000 + 204 = 10,404
3 10,404 2% 10,404(0.02)(1) 208.08 10,000 + 208.08 =10,612.08
4 10,612.08 2% 10,612.08(0.02)(1) 212.24 10,000 + 212.24 = 10,824.32
5 10,824.32 2% 10,824.32(0.02)(1) 216.49 10,000 + 216.49 = 11,040.81
Simple interest remains constant throughout the investment term.
In compound interest, the interest from the previous year also
earns interest. Thus, the interest grows every year.
Given: P = Php 5,000 r= 5% = 0.05 t = 3yrs.

Simple Interest (𝐼𝑠 )

P = 5,250 P = 5,500 P = 5,750
Timeline 0 1 2 3
P = 5,000 P = 5,000 P = 5,000
I = 250 I = 250 I = 250

Compound Interest (𝐼𝑐 )

P = 5,250 P = 5,512.50 P = 5,788.13
Timeline 0 1 2 3
P = 5,000 P = 5,250 P = 5,512.50
I = 250 I = 262.50 I = 275.63
OBJECTIVES LESSONS
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Virtual
❖ ComputesClassroom Rules
interest, maturity
value(future value) and
present value in simple interest

❖ Solves problems involving

simple interest.
 Magic Triangle for Simple Interest

𝐼𝑠
Formula

P r t 𝐼𝑠 = Prt

𝐼𝑠 𝐼𝑠 𝐼𝑠
P r t P r t P r t
𝐼𝑠 𝐼𝑠 𝐼𝑠
Formula P =𝑟𝑡 Formula r= Formula t =
𝑃𝑡 𝑃𝑟
 Simple Interest Principal
𝐼𝑠 = Prt 𝑃 = F − 𝐼𝑠

Maturity Value or (Future Value or Amount or Balance)

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

Where: 𝐼𝑠 = simple interest

𝑃 = principal
𝑟 = rate of interest or simply rate
𝑡 = time in year
𝐹 = future value or maturity value
Example 1: When Lianne bought a new laptop for her work, she borrowed
Php 30,000 at a rate of 15% for 9 months. How much interest will she
pay?

Given: I=? P = 30,000 r = 15% = 0.15 t = 9 months = 𝟏𝟐𝟗

Solution: I = Prt
𝟗
I= (30,000)(0.15)( )
𝟏𝟐
I = Php3,375
 Example 2: To buy the school supplies for the coming school year, you get a
summer job at a resort. Supposed you have Php4,200 of your salary and deposit
it into an account that earns simple interest. After 6 months, the balance is
Php4,240. What is the annual interest rate?

𝟔
Given: r=? P = 4,200 I = 4,240 – 4,200 = 40 t = 6 months =
𝟏𝟐
𝐼
Solution: r=
𝑃𝑡
40
r=
(4,200)(0.5)
40
r=
2,100
𝑟 = 0.019 or 1.9%
Example 3: If Php10,000 is invested at 4.5% simple interest, how long will it take to
grow to Php 11,800

Given: t=? P = 10,000 I = 11,800 – 10,000 = 1,800

r = 4.5% = 0.045

Solution:
𝐼 1,800 1,800
t= = = 𝑡 = 4 years
𝑃𝑟 (10,000)(0.045) 450
Example 4: A loan institution charges 12% simple interest for 3 –year, Php
60,000 loan.
a. Find the total interest of the loan.
b. Find the total amount that must be paid to the loan institution at the end of 3
years.

Given: I=? P = 60,000 r = 12% = 0.12 t = 3 years

Solution a: Solution b:
I = Prt F=P+I
I = (60,000) (0.12) (3) F = 60,000 + 21,600
I =𝑃ℎ𝑝 21,600 F= 𝑃ℎ𝑝 𝟖𝟏, 𝟔𝟎𝟎
Example 5: Find the maturity value of a loan amounting to Php50,000 at 9%
for 2 years .

Given: F=? P = 50,000 r = 9% = 0.09 t = 2 years

Solution:
F = P(1 + rt ) or A = P + I
= 50,000[1 +( 0.09 )(2)]
= 50,000( 1.18)
F = Php 59,000
 Example 6: Find the present value of Php86,000 at 8% for 3 years .

Given: P=? F = 86,000 r = 8% = 0.08 t = 3 years

Solution:
𝐹 86,000 86,000 86,000
P= = = = = Php 69,354.84
1 + 𝑟𝑡 [1 + 0.08 3 ] [1 + 0.24 ] 1.24
 Evaluate your learnings

Complete the table

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

1. P 2.5% 3 years Php500

7yrs.and 3
Php 5,000 2. r Php 6,000
months
Php 12,000 0.03% 3. t Php350

Php 18,000 10% 15 years 4. I

GENERAL MATHEMATICS
Lesson 2
COMPOUND INTEREST
ROMADEL R. PERALTA
Subject Teacher
 Review
1. What is simple interest? On what real – life situation
does interest occur?

2. How do you find the interest and maturity value of an

amount earning simple interest?

3. What formula can you make as you generalize simple

interest? Maturity (future) value?
 Objectives
• compute interest, maturity value , and present
value in compound interest,

• solve problems involving compound interest,

• actively participate in virtual discussion.

 COMPOUND INTEREST
(or Compounding Interest)

IS THE INTEREST ON A LOAN OR DEPOSIT CALCULATED

BASED ON BOTH THE INITIAL PRINCIPAL AND THE
ACCUMULATED INTEREST FROM PREVIOUS PERIODS.
 Definition of Terms
Frequency of conversion (m) – the number of conversion
periods in one(1) year.
Interest period (t) – time between successive conversion of
interest.
Total number of conversion period (n)
n = (frequency of conversion )(time in year)
n = mt
Nominal rate(r) – annual interest rate.
 Conversion Period
annually (once a year): m=1
semi-annually(every 6 months): m=2

quarterly(every 3 months): m=4

monthly(every month): m = 12
Example 1: Nominal rate and the corresponding frequencies
of conversion and interest rate for each period

Frequency of
Conversion Interest rate per conversion period
Nominal rate (r) conversion
period (i)
(m)

2% compounded annually
r = 0.02 m=1 1year

2% compounded semi- annually

m=2 6 months
r = 0.02
2% compounded quarterly
m=4 3 months
r = 0.02
2% compounded monthly
r = 0.02 m = 12 1 month

2% compounded daily
m = 365 1 day
r = 0.02
 Maturity Value

where

F = maturity or future value at the end of the term

P = principal or present value
r = nominal rate
t = term/time in years
m= frequency of conversion
 MATURITY VALUE & COMPOUND INTEREST
Example 2: Find the maturity value and interest if Php15,000 is
deposited in the bank at 2% compounded quarterly in
5 years.

Given: P = Php15,000 r = 2% = 0.02 t = 5 years m=4

Find: a. maturity value(F)

 MATURITY VALUE & COMPOUND INTEREST
Example 3: Find the maturity value and interest if Php15,000 is deposited
in the bank at 2% compounded semi-annually in 5 years.
(round answers into 2 decimal places if needed).

Given: P = Php15,000 r = 2% = 0.02 t = 5 years m=2

Find: a. maturity value(F)

 MATURITY VALUE
Example 4: Christine borrowed Php50,000 and promise to pay the principal
and interest at 12% compounded monthly. How much must she
repay after 6 years.(round answers into 2 decimal places if needed).

Given: P = Php50,000 r = 12% = 0.12 t = 6 years m = 12

Find: maturity value(F)

PRESENT VALUE(P) AT COMPOUND
INTEREST

where
F = maturity or future value at the end of the term

P = principal or present value

r = nominal rate

t = term/time in years

m= frequency of conversion
 PRESENT VALUE and COMPOUND INTEREST

Example 5: Find the present value ofPhp50,000 due in 4 years if money is

invested at 15% compounded semi - annually.
(round answers into 2 decimal places if needed).

Given: F = Php50,000 r = 15% = 0.15 t=4 m=2

Find: Present value(P)

 PRESENT VALUE and COMPOUND INTEREST

Example 6: What is the present value of Php25,000 due in 2 years and 6

months at 10% compounded quarterly.
(round answers into 2 decimal places if needed).

Given: F = Php25,000 r = 10% = 0.10 m=4

Find: Present value(P)

 Solve the following problem:

1. What is the present value of Php50,000 due in 7 years if

interest rate is 10% compounded annually ?

2: Supposed your father deposited in your bank account

Php10,000 at an annual interest rate of 0.8% compounded
yearly when you graduate from kindergarten, and you
cannot withdraw the amount until you finish Grade 12. How
much will you have in your bank account after 12 years?
 General
Mathematics
Lesson 3

SIMPLE AND
GENERAL ANNUITIES

ROMADEL R. PERALTA
Subject Teacher
 OBJECTIVES

•Illustrates simple and general annuities

• Distinguish simple and general annuities

• Find the future and present values of simple annuities; and

• Actively participate in virtual discussion.

 What is Annuity?

Annuity is a fixed some of money

paid to someone at regular intervals,
subject to a fixed compound interest
rate.
 ANNUITIES
According to General Annuity – interest
Simple Annuity – interest conversion or compounding
payment interval conversion or compounding period
and interest period period is not the same as the
is the same as the payment interval. payment interval

Ordinary Annuity or Annuity Annuity Due – an annuity in

According to time of Immediate- an annuity in which the which the periodic payment is
payment periodic payment is made at the made at the beginning of each
end of each payment interval. payment interval.

Contingent or Annuity
According Annuity Certain – an annuity in Uncertain - an annuity payable
to duration which payments begin and end at for an indefinite duration
definite time. dependent on some certain
event.(ex.insurance)
 Can you cite an example of an
annuity?

*Rent payment
*Pension
*Monthly payment of car loan or mortgage
 Definition of Terms
Term of an annuity, (t)
- the time between the first payment interval and last payment interval.
Regular or Periodic payment, (R)
- the amount of each payment.

Future value of an annuity, (F)

- is the total accumulation of the payments and interest earned.

Present value of an annuity, (P)

- is the principal that must be invested today to provide the regular
payment of an annuity.
 FORMULA
Future Value of Simple Present Value of Simple Periodic Payment R of an
Ordinary Annuity, F Ordinary Annuity, P annuity.
Example 1: Determine if the given situation represent simple annuity
or general annuity.

a. Payments are made at the end of each month for a loan

that charges 1.05% interest compounded quarterly.
General Annuity

b. A deposit of Php15,000 was made at the end of every three

months to an account that earns 5.6% interest compounded quarterly.

Simple Annuity
Example 2: Determine whether the situation describes an ordinary annuity
or an annuity due.

a. Anton’s monthly mortgage payment for his car is Php35,148.05 at the

end of each month.
Ordinary Annuity

b. The rent of an apartment is Php 8,000 and due at the beginning of

each month.
Annuity due
Example 3: Supposed Mrs. Santos would like to save Php3,000 every month
in a fund that gives 9% compounded monthly. How much is the
amount or the future value of her savings after 6 months?.

Given: R = Php3000 r = 9%= 0.09 t = 6months = 0.5 year m= 12

n= mt = (12)(0.5) = 6

Find: Future Value (F)

) = 3000(6.113631347)

F = Php 18,340.89
Example 4: In order to save for her high school graduation, Marie decided to
save Php200 at the end of each month. If the bank pays 0.25%
compounded monthly , how much will her money be at the end
of 6 years ?

Given: R = Php200 r = 0.25%= 0.0025 t = 6 years m= 12

n= mt = (12)(6) = 72

Find: Future Value (F)

= Php 14,507.02
Example 5: Al works very hard because he wants to have enough money on
his retirement account when he reaches the age of 60. He wants
to withdraw Php 36,000 every 3 months for 20 years starting 3
months after he retires. How much must Al deposit at retirement
if 12% per year compounded quarterly for the annuity?

Given: R = Php36,000 r = 12%= 0.12 t = 20 years m= 4

n= mt = (4)(20) = 80

Find: Present Value (P)

P = Php 1,087,227.48
The cash value or cash price of a purchase is equal to the down payment (if there is
any plus the present value of the installment payment. CV= DP + P

Example 6: Mrs. Reyes paid Php200,000 as down payment for her car. The remaining
amount is to be settled by paying Php16,200 at the end of each month for
5 years. If interest is 10.5% compounded monthly, what is the cash price
of his car?

Given: DP = Php200,000 R = Php16,200 r = 10.5%= 0.105 t = 5 years m= 12

n= mt = (12)(5) = 60

Find: Present Value (F) Cash Value = Down payment + Present value

CV= DP + P
CV= 200,000 + 753,702.20
P = Php 753,702.20
CV= Php 953,702.20
Example 7: Paul borrowed Php100,000, he agrees to pay the principal plus interest
by paying an equal amount of money each year for 3 years. What should
be his annual payment if the interest is 8% compounded annually?

Given: Find: Periodic payment(R)

P = Php100,000
r = 8% = 0.08
t = 3 years
m= 1

n= mt = (1)(3) = 3
R = Php38, 803.35
Example 8: Mr. Abaya would like to save Php500,000 for his daughter’s college
education. How much should he deposit in a savings account every 6
months for 12 years if interest is 1% compound semi-annually ?

Given: Find: Periodic payment(R)

F = Php500,000
r = 1% = 0.01
t = 12 years
m= 2

n= mt = (2)(12) = 24
R = Php19, 660.31
 Answer the following as quick as you can.

1.It is the amount of each payment. Regular or Periodic payment

2. A type of an annuity in which

the periodic payment is made Ordinary Annuity
at the end of each payment
interval.

3. Annuity Due – an annuity in which the periodic payment is made at the

beginning of each payment interval
 Answer the following as quick as you can.

• If you pay Php 5,000 at the end of each month for 20 years on account that
pays interest at 6% compounded monthly, how much do you have after 20
years?

Given: R = Php5,000 r = 6%= 0.06 t = 20 years m= 12

n= mt = (12)(20) = 240

Find: Future Value (F)

= 5000 (462.0408952)= Php 2,310,204.48

GENERAL MATHEMATICS

GENERAL ANNUITY, AND

DEFERRED ANNUITY
ROMADEL R. PERALTA
SUBJECT TEACHER
 OBJECTIVES
a. Finds the future and present value of general annuity.

b. Calculates the fair market value of a cash flow stream that includes an
annuity.
c. Calculates the present value and period of deferral of a deferred annuity.
d. Actively participate in the virtual discussion.
 DEFINITION OF TERMS

General Annuity – an annuity where the payment interval is not the same as the
interest period.

General Ordinary Annuity – is a general annuity in which the periodic payment is

made at the end of the payment interval.

Examples of General Annuity

1. Monthly installment of a car, lot, or house with an interest rate that is compounded
annually.
2. Paying a debt semi-annually when the interest is compounded monthly
 FORMULA
(1+𝑖)𝑛 −1 1− (1+𝑖)−𝑛
F=R P=R
𝑖 𝑖

𝑛 = (𝑚1 ) (𝑡) 𝑟 𝑚2 𝑚2/𝑚

𝑖 = (1 + ) 1 −1
𝑚2

where
R is the regular payment
i is the equivalent interest rate per payment interval converted from the
interest rate per period.
n is the number of payments
r is the nominal rate 𝒎𝟐 is the length of compounding period.
𝒎𝟏 is the payment interval 𝒕 is the term of annuity.
Example 1. Alex started to deposit of Php 2,000 monthly in a fund that pays 5% compounded quarterly .
How much will be in the fund after 10 years.

Convert 5% compounded quarterly to its

equivalent interest rate for monthly payment
Given: interval. Find the future value
𝑅 = 𝑃ℎ𝑝 2,000 𝑟 𝑚2 𝑚2/𝑚
𝑚1 = 12 𝑖 = (1 + ) 1 −1
𝑚2
𝑚2 = 4 0.05 4/12 (1 + 0.00419425119)120 − 1
𝐹 = 2,000
𝑟 𝑚2 = 0.05 𝑖 = (1 + ) −1 0.00419425119
4
𝑡 = 10 0.652447596
𝐹 = 2,000
𝑖 = 0.004149425119 0.00419425119
𝑛 = 𝑚1 𝑡 𝐹 = 2,000 (155.5575874)
= 12 10
𝑛 = 120
𝐹 = 𝑃ℎ𝑝 311,115.18
 Example 2. A teacher saves Php8,000 for every 6 months in a bank that pays 0.15% compounded
monthly. How much will be her savings after 5 years.

Convert 0.15% compounded

Given:
monthly to its equivalent interest
𝑅 = 𝑃ℎ𝑝 8,000 rate for each semi-annual payment
interval. Find the future value
𝑚1 = 2
𝑚2 = 12 𝑟 𝑚2 𝑚2/𝑚
𝑖 = (1 + ) 1 −1
𝑚2
𝑡=5 0.0015 12/2 (1+0.000750234)10 −1
𝑖 = (1 + ) −1 F = 8000
12 0.000750234
𝑟 𝑚2 = 0.0015
𝑖 = (1.000125)6 − 1 0.007527719036
F = 8000
𝑛 = 𝑚1 𝑡 = 2 5 = 10 0.000750234
𝑖 = 1.000750234 − 1
F = 8000 (10.03382816)
𝑖 = 0.000750234
F = Php 80,270.63
 Example 3. XYZ Bank pays interest at the rate of 2% compounded quarterly. How much will have in the
bank at the end of 5 years if the deposit is Php 2,000 every month.

Convert 2% compounded quarterly

Given: to its equivalent interest rate for
monthly payment interval.
𝑅 = 𝑃ℎ𝑝 2,000 Find the future value
𝑚1 = 12
𝑟 𝑚2 𝑚2/𝑚
𝑚2 = 4 𝑖 = (1 + ) 1 −1
𝑚2
𝑡=5 (1+0.001663896 )60 −1
0.02 4/12 F = 2000 0.001663896
𝑖 = (1 + ) −1
𝑟 𝑚2 = 0.02 4
0.104895538
𝑖 = 1.001663896 − 1 F = 2000 0.001663896
𝑛 = 𝑚1 𝑡 = 12 5 = 60
𝒊 = 0.001663896
F = 2000 (63.04212403)

F = Php 126,084.25
PRESENT VALUE
 FORMULA
1− (1+𝑖)−𝑛 𝑟 𝑚2 𝑚2/𝑚
P=R 𝑖 = (1 + ) 1 −1
𝑖 𝑚2

where
R is the regular payment
i is the equivalent interest rate per payment interval converted
from the interest rate per period.
n is the number of payments 𝑛 = (𝑚1 ) (𝑡)
r is the nominal rate
𝒎𝟏 is the payment interval
𝒎𝟐 is the length of compounding period.
𝒕 is the term of annuity
 Example 4. Kim borrowed an amount of money from Kate. She agrees to pay the principal plus interest
by paying Php38, 973.76 each year for 3 years. How much money did she borrow if interest
is 8% compounded quarterly.

Given: Convert 8% compounded quarterly

𝑅 = 𝑃ℎ𝑝 38,973.76 Find the present value
to its equivalent rate for each
𝑚1 = 1 payment interval. 1− (1+𝑖)−𝑛
P=R 𝑖
𝑚2 = 4 𝑟 𝑚2
𝑖 = (1 + )𝑚2/𝑚1 − 1 1− (1+0.08243216 )−3
𝑚2 P= 38,973.76
𝑡=3 0.08243216
0.08 4/1
𝑟 𝑚2 = 0.08 𝑖 = (1 + ) −1 1−0.788493175
4
P = 38,973.76 0.08243216
𝑛 = 𝑚1 𝑡 = 1 3 = 3 𝑖 = 1.08243216 − 1
0.211506824
𝒊 = 0.08243216 P = 38,973.76 0.08243216

P = 38,973.76 (0.2565828973)

P = Php 100,000
Example 5. Mrs. Morales would like to buy a television set payable for 6 months starting at the end of
the month. How much is the cost of the television set if her monthly payment is Php3,000 and
interest is 9% compounded semi-annually.

Given:
Convert 9% compounded semi- Find the present value
𝑅 = 𝑃ℎ𝑝 3,000
annually to its equivalent rate for
𝑚1 = 12 monthly payment interval. 1− (1+𝑖)−𝑛
P=R
𝑖
𝑚2 = 2 𝑟 𝑚2 𝑚2/𝑚
𝑖 = (1 + ) 1 − 1 1− (1+0.007363123 )−6
𝑡 = 6𝑚𝑜𝑛𝑡ℎ𝑠 = 0.5 𝑚2 P = 3,000 0.007363123
0.09 2/12
𝑟 𝑚2 = 0.09 𝑖 = (1 + ) −1
2 1−0.956937799
P = 3,000
𝑛 = 𝑚1 𝑡 = 12 0.5 = 6 𝑖 = 1.007363123 − 1 0.007363123
0.0430622
𝒊 = 0.007363123 P = 3,000 0.007363123

P = 3,000 (5.848360922)

P = Php
17,545.08
 Calculates the Fair Market Value of a Cash Flow Stream that
includes Annuity

Cash flow – a term that refers to payment that can either be inflows (payments
received) or outflows(payments made).

Fair Market Value or economic value- refers to a single amount that is

equivalent to the value of the payment stream at the date. This
particular date is called focal date.

1− (1+𝑖)−𝑛 𝐹
𝑃=𝑅 𝑃=
𝑖
(1 + 𝑖)𝑛
Example 1. Mr. Abad received two offers on a house that he wants to sell. Mr. Cruz’s offer is Php 50,000
down payment and a Php1,000,000 lump sum payment 5 years from now. Mr. Solis has offered
Php50,000 plus Php40,000 every quarter for 5 years. Compare the fair market value of the
two offers if money can earn 5% compounded annually. Which offers has a higher market
value.

Mr. Cruz’s offer

DP= Php 50,000 𝐹 𝐹𝑎𝑖𝑟 𝑀𝑎𝑟𝑘𝑒𝑡 𝑉𝑎𝑙𝑢𝑒

𝑃=
F = Php 1,000,000 (1 + 𝑖)𝑛 𝐹𝑀𝑉 = 𝐷𝑃 + 𝑃
r = 5% = 0.05
1,000,000 𝐹𝑀𝑉 = 50,000 + 783,526.17
t=5 𝑃=
(1 + 0.05)5
m=1
1,000,000 1,000,000
𝐹𝑀𝑉 = 𝑃ℎ𝑝 833,526.17
𝑟 0.05 𝑃= =
i=𝑚= = 0.05 (1.05)5 1.276281563
1

n = mt = (1)(5) = 5
𝑃 = 𝑃ℎ𝑝 783,526.17
Example 1. Mr. Abad received two offers on a house that he wants to sell. Mr. Cruz’s offer is Php 50,000
down payment and a Php1,000,000 lump sum payment 5 years from now. Mr. Solis has offered
Php50,000 plus Php40,000 every quarter for 5 years. Compare the fair market value of the two
offers if money can earn 5% compounded annually. Which offers has a higher market value.

Find the present value

Mr. Solis’s offer Convert 5% compounded
annually to its equivalent interest 1− (1+𝑖)−𝑛
DP= Php 50,000 𝑃=𝑅
rate for quarterly payment 𝑖
R = Php 40,000 interval. 1− (1+0.012272234)−20
𝑃 = 40,000
𝑟 𝑚2 = 0.05 0.012272234
𝑟 𝑚2 𝑚2/𝑚
t=5 𝑖 = (1 + ) 1 −1 𝑷 = 𝑷𝒉𝒑 𝟕𝟎𝟓, 𝟓𝟕𝟐. 𝟔𝟖
𝑚2
𝑚1 = 4 0.05 1/4
𝑖 = (1 + ) −1
𝑚2 = 1
1 𝑭𝒂𝒊𝒓 𝑴𝒂𝒓𝒌𝒆𝒕 𝑽𝒂𝒍𝒖𝒆
𝐹𝑀𝑉 = 𝐷𝑃 + 𝑃
n = mt = (4)(5) = 20 𝑖 = (1.05)1/4 − 1
FMV = 50,000 + 705,572.68
𝑖 = 0.012272234
FMV = 𝑷𝒉𝒑 𝟕𝟓𝟓, 𝟓𝟕𝟐. 𝟔𝟖
 Mr. Cruz’s offer Mr. Solis’s offer

Down payment =𝑃ℎ𝑝 50,000 Down payment =𝑃ℎ𝑝 50,000

Present Value = 𝑃ℎ𝑝 783,526.17 Present Value= 𝑃ℎ𝑝 705,572.68

Fair Market Value = 𝑃ℎ𝑝 833,526.17 Fair Market Value = 𝑃ℎ𝑝 755,572.68
 CALCULATES THE PRESENT VALUE AND PERIOD OF DEFERRAL OF A DEFERRED
ANNUITY.

DEFINITION OF TERMS

Deferred Annuity – an annuity that does not begin until a given time interval has passed.
Period of Deferral – time between the purchase of an annuity and the start of the payments
for the deferred annuity.
Annual payments of Php 2,000 for 24 years that will start 12 years from now.

𝑦0 𝑦1 𝑦2 𝑦3 𝑦4 … 𝑦11 𝑦12 𝑦13 …

Find the period of deferral in each of the following deferred annuity problems.

1. Monthly payments of Php2,000 for 5 years that will start 7 months from now.

6 periods or 6 months

2. Annual payment of Php8,000 for 2 years that will start 5 years from now.

4 periods or 4 years
 Find the period of deferral in each of the following deferred annuity problems.

3. Quarterly payments of Php5,000 for 8 years that will start 2 years from now.

7 periods or 7 quarters

4. Semi – annual payments of Php60,000 for 10 years that will start 5 years from now.

9 periods or 9 semi-annual intervals

 PRESENT VALUE OF A DEFERRED ANNUITY

1− (1+𝑖)−(𝑘+𝑛) 1− (1+𝑖)−𝑘
𝑃=𝑅 - -𝑅
𝑖 𝑖

𝑟
𝑛 = 𝑚𝑡 𝑖=
𝑚

R is the regular payment

i is the interest rate per period
n is the number of payments

k is the number of conversion periods in the deferral

Example 1. On his 40th birthday, Ms. Flores decided to buy a pension plan for herself. This plan will allow
her to claim Php10,000 quarterly for 5 years starting 3 months after her 60th birthday. What
one-time payment should she make on his 40th birthday to pay off this pension plan, if the
interest rate is 8% compounded quarterly.

Given:
1− (1+𝑖)−(𝑘+𝑛) 1− (1+𝑖)−𝑘
R = 10,000 𝑃=𝑅 - -𝑅
𝑖 𝑖
m=4
r = 8% = 0.08 1− (1+0.02)−(80+20) 1− (1+0.02)−80
𝑃 = 10,000 - - 10,000
0.02 0.02
t=5
𝑟 0.08
𝑃 = 10,000 43.09835164 - 10,000(.794890271)
i= = = 0.02
𝑚 4 𝑃 = 430,983.52 - 397,445.14
𝑛 = 𝑚𝑡 = (4)(5) = 20

𝑘 = 80 𝑃 = 𝑃ℎ𝑝 33,538.38
GENERAL MATHEMATICS
STOCKS AND
BONDS
ROMADEL R. PERALTA
SUBJECT TEACHER
STOCKS
 STOCKS
Stocks are shares in the ownership of the company.
= 1/100

TWO TYPES OF STOCK

Common Stock Preferred Stock

- Right to vote to - No right to vote

shareholders
- Priority over the
- Not a priority over the company’s income
company’s income

100 shares
 Definition of Terms in Relation to Stocks
Stocks are shares in the ownership of the company.
Dividend - are shares in the company’s profit.
Dividend Per Share – ratio of the dividends to the number of shares
Stock market – a place where the stocks can be bought or sold. The stock market in
the Philippines is governed by the Philippines Stock Exchange (PSE).

Market Value – the current price of a stock at which it can be sold.

Stock Yield Ratio – ratio of the annual dividend per share and the market value per
share. Also called current stock yield.
Par Value – the per-share amount as stated on the company certificate. Unlike the
market value, it is determined by the company and remains stable
over time.
 Php 1,434.00/share Php 985.00/share

Did you know

that…

Php 207.84/share
Php 177.70/share

Php 122.10/share Php 785.00/share Php 1,050.33/share

BONDS
Company Z Bonds
Php 1,000,000

Face Value is P1,000,000

Maturity is 5 years
Coupon Rate is 7%
Php 70,000

Mr. Yu
 DEFINITION OF TERMS
Bond – interest-bearing security which promises to pay
(a) Is stated amount of money on the maturity date, and

(b) Regular interest payments called coupons

Coupon – periodic interest payment that the bondholder receives during the time
between purchase date and maturity date; usually received semi-annually.

Coupon Rate – a rate per coupon payment period, denoted by r.

Price of a Bond – the price of the bond at purchase time; denoted by P.