General Mathematics

Quarter 2 – Module 12:

Solving Problems on Business
and Consumer Loans

CO_Q2_General Mathematic SHS

Module 12
General Mathematics
Alternative Delivery Mode
Quarter 2 – Module 12: Solving Problems on Business and Consumer Loans
First Edition, 2021

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General Mathematics
Quarter 2 – Module 12:
Problems on Business and
Consumer Loans
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear learners,
can continue your studies and learn while at home. Activities, questions, directions,
exercises, and discussions are carefully stated for you to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you step-by-
step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in each

SLM. This will tell you if you need to proceed on completing this module or if you
need to ask your facilitator or your teacher’s assistance for better understanding of
the lesson. At the end of each module, you need to answer the post-test to self-check
your learning. Answer keys are provided for each activity and test. We trust that you
will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are also
provided to our facilitators and parents for strategies and reminders on how they can
best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on any part
of this SLM. Use a separate sheet of paper in answering the exercises and tests. And
read the instructions carefully before performing each task.

If you have any questions in using this SLM or any difficulty in answering the
tasks in this module, do not hesitate to consult your teacher or facilitator.

Thank you.
 What I Need to Know

In previous lessons, you learned how to solve simple and compound interests. In the
most recent lesson, you studied the basic concepts of business and consumer loans.
You understand definitions such as annuities, interests, loans and collaterals. In
this lesson, you will study the application of business and consumer loans in real-
life situations. To better appreciate this module let us first consider the following
situations:
(a) Mario came from a poor family. His parents have no stable jobs. But due to
Mario’s determination, he excelled and was able to graduate college. After
being permanent for 2 years in his work, Mario dreamt of providing a simple
and decent shelter for his family. What do you think Mario should do?
(b) Cathy finished Senior High School in her hometown. She took a TVL strand in
dressmaking, However, because of financial problems she was not able to
continue in college. She decided to help her mother in their small business of
dressmaking. Their business increased in production due to her hardwork.
Subsequently, Cathy decided to venture in a larger scale and wished to export
their Filipiniana-style products. But this would need a bigger capital. What do
you think Cathy should do?
(c) During his STEM high school years, Albert was fond of experimenting on RC
motors. In his engineering years in college, he creatively thought of
experimenting about perpetual motion that could provide energy to machines.
However, he was short of finances to start this project which is primarily
Filipino-made. What do you think Albert should do?
Well, you should probably answer all three situations by finding money. Generally,
it is correct. But what are the options to do that? One of the options can be found in
this module. So, study diligently this module because these are all situations in
which you might find yourself in the future. So, by studying this module you may
be given an idea of different decisions you can make to fulfill your dream.

After going through this module, you are expected to solve problems on business and
consumer loans (amortization and mortgage).

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 What I Know

Let’s find out how far you might already know about this topic! Please take this
challenge! Have Fun!

Read and analyze each item carefully. Choose the letter that corresponds to your
answer for each statement and write it on a separate answer sheet.

1. It is a loan from a bank or other financial institution that helps a borrower

purchase a home.
a. collateral b. mortgage c. mortgagee d. balance

2. It is the process of paying off debt with regular payments made over time.
a. capital b. insurance c. mortgage d. amortization

3. The mortgagor is the one who _______ a mortgage.

a. borrows b. lends c. gives d. transacts

4. The remaining debt at a specified time is called _____________.

a. outstanding balance c. consumer debt
b. foreign debt d. maintaining balance

5. Fill in the blank to make the statement true:

It is your _________ to repay a mortgage loan when you buy a house.
a. duty b. responsibility c. obligation d. task

6. Mr. Santos borrowed ₱1,500,000.00 to be repaid in full after 5 years with an

interest rate of 6% per annum. What is the amount of the principal?
a. 5 b. 6% c. ₱2,007,338.00 d. ₱1,500,000.00

7. For the purchase of his car worth ₱400,000.00, Nilo requested the buyer Lito to
pay him 30% down payment. How much will Lito pay Nilo for the down
payment?
a. ₱100,000.00 b. ₱280,000.00 c. ₱120,000.00 d. ₱150,000.00

8. A student loan of ₱50,000.00 was applied by Rica to support her final year in
college payable in 60 consecutive months after her graduation. In how many
years will she need to pay fully her student loan?
a. 3 years b. 5 years c. 7 years d. 10 years

9. Magda purchased a condominium worth ₱2,000,000.00. However, the bank

demands a 25% down payment. How much is the mortgaged amount?
a. ₱500,000.00 b. ₱1,500,000.00 c. ₱2,000,000.00 d. ₱2,500,000.00

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10. A motorcycle seller offers John a 12% down payment. How much would be the
mortgaged amount if the motorcycle is sellable at ₱120,000.00?
a. ₱300,000.00 b. ₱225,600.00 c. ₱200,000.00 d. ₱105,600.00

11. Anita borrowed ₱500,000.00 from the bank to renovate her house. The
effective rate of interest is 6%. How much is to be paid if the loan is to be paid
in 3 years?
a. ₱595,508.00 b. ₱530,000.00 c. ₱470,000.00 d. ₱561,800.00

12. Belle applied in a financing company for a ₱200,000.00 worth of business loan
to expand her computer business. Suppose she is required by the company to
pay this in 3 years, what is the amount to be paid if the effective rate of interest
is 7%
a. ₱171,735.00 b. ₱228,980.00 c. ₱245,008.60 d. ₱224,720.00

13. Mr. Arevalo borrowed from a bank to purchase a car worth ₱1,200,000.00. If
he has to pay ₱30,000.00 monthly for 5 years, how much will he pay for the
total interest?
a. ₱600,000.00 b. ₱500,000.00 c. ₱400,000.00 d. ₱300,000.00

14. Ms. Binibini obtained a loan of ₱100,000.00 for a 5-year mortgage. How much
will be its total interest if his monthly payment is ₱5,000.00?
a. ₱400,000.00 b. ₱200,000.00 c. ₱500,000.00 d. ₱300,000.00

15. Aling Puring, through VIP Financing Inc, purchased a building for her new
merchandise. It costs ₱2,500,000.00. She paid the financing company
₱500,000.00 as down payment. She plans to pay the remaining balance by
paying monthly for 10 years with an interest rate of 12% monthly. How much
would be her monthly payment?
a. ₱28,000.50 b. ₱50,000.00 c. ₱30,000.00 d. ₱28,694.19

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 Lesson Solving Problems on
1 Business and Consumer
Loans
In your previous lesson, you learned about the basic concepts of business and
consumer loans. In that module, you were able to learn the definition of different
terms such as consumer loans, business loans, collaterals, etc. In this module, you
are going to expand and apply that knowledge in solving real-life situations
concerning business and consumer loans, specifically, amortization and mortgage.
This may seem new to you but as you go along through this module, it would be
easier for you to sense that the contents of this module have wider applications in
our daily lives. Basic definitions of amortization and mortgage, as well as mortgagee
and mortgagor, will be tackled in this module. Problem-solving that entails the
calculation of mortgage amount, total amount of interest, monthly payments,
outstanding balance, are just some of the keywords that you will encounter in this
module. So, relax and focus and who knows, you may be able to use this in the near
future.

The lesson and activities in this module will explain what you have to know about
real-life situations concerning consumer and business loans.

After going through this module, you are expected to solve problems on business and
consumer loans (amortization and mortgage).

What’s In

In your most recent lesson, you learned the basics of consumer and business loans.
Moreover, in previous lessons, you were taught how to calculate simple and
compound interests as well as annuities. As a review, ready yourself in doing this
first activity.

Activity 1
Based on your knowledge of the previous lessons, try solving the following problems:
1. How much interest is charged when ₱100,000.00 is borrowed for 6 months at
an annual simple interest rate of 12%?
2. Find the maturity value and the compound interest if ₱15,000 is compounded
annually at an interest rate of 3% in 3 years.
3. Rina started to deposit ₱3,000.00 quarterly in a fund that pays 2%
compounded quarterly. How much will be in the fund after 5 years?

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Activity 2
Identify which of the following statements belong to either consumer or business
loans. Write the number of each statement to its corresponding column inside the
table below.
1. Maria wants to borrow money from a financing agency for her college
education.
2. Mang Pedro would like to improve his auto-repair shop. He went to the bank
to borrow money to finance his plan to buy some equipment.
3. Rico finds it hard to travel to and from his workplace. So, he filed a loan from
a bank for him to purchase a motorcycle.
4. Mr. Ramsy would like to open a computer shop, but he was short of capital.
So, he went to the bank and file for a loan to purchase computers and other
equipment.
Consumer Loans Business Loans

What’s New

Most people think about the security and comfort of their families. This security and
comfort include the provision of a house and in case of a far workplace by having a
personal car or motorcycle. However, a large amount of money is needed to buy them
in straight cash. Recently, the government implemented a program called the Balik-
Probinsya, Balik-Pag-asa program that will provide resources for those who will be
coming back to provinces from Manila to start a new life. This may mean having
something to provide for the stability of a family such as a house or maybe a
motorcycle in less amount. A house to provide for the family shelter while a
motorcycle may be necessary as a means of transportation to report to work. But
despite the help the government may provide, this still seems difficult to have if you
have no cash on hand. So, you will resort to what we call a loan. In this module, we
will call it a mortgage.

Questions:
1. What do you understand about the word “loan” or “mortgage”?
___________________________________________________________________________
2. Do you think anyone can file for a loan from a bank or any financial
institution? _______________________________________________________________
3. Enumerate some government institutions or private agencies wherein you can
apply for a mortgage of a house or any vehicle?
___________________________________________________________________________

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 4. Which do you think is more proper: to buy a motorcycle, using a
straight cash or using a mortgage? Why?
_____________________________________________________________________
5. Do you think it is appropriate to pay an obligation such as a loan or
mortgage? Why?
_____________________________________________________________________

What is It

You have noticed from the beginning of this module that you were given situations
that have real-life applications. Again, this module is about solving problems
involving consumer and business loans. A loan is something borrowed, especially a
certain amount, that you are obligated to pay fully at a certain period with interest.
So, for instance a bank may lend you a capital of ₱500,000.00 for your intended
business but you must pay it fully at a certain period of time for instance in 3 years
with 12% interest per annum. The following examples will help you with amortization
and mortgage. But before that, let us learn some terms which can guide you as you
study this module:

Amortization is the process of paying off debt with regular payments made over time.
Mortgage is a loan from a bank or other financial institutions that help a borrower
purchase a home or a car.
Mortgagor is the one who borrows a mortgage.
Mortgagee is the one who lends a mortgage.
Collaterals are assets that can secure a loan.
Fixed-rate mortgage is a type of mortgage where interest remains constant.
Obligation is what parties may do under a contract or terms of agreement.
Outstanding balance is any remaining debt at a specified time.

Let us now go to the computation process.

Example 1
Mario came from a poor family. His parents have no stable jobs. But due to Mario’s
determination, he excelled and was able to graduate college. After being permanent
for 2 years in his work, Mario dreamt of providing a simple and decent shelter for his
family. He went to the bank and applied for ₱1,000,000.00 loan. The bank approved
his application with the following terms: 10% down payment, 12% total interest, and
must be paid in full after 5 years.
a. How much is his mortgaged amount?
b. How much should he have paid after 5 years?

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Solution:
(a) Down payment = (down payment rate) x (amount of loan applied)
= (0.10) (₱1,000,000.00)
= ₱100,000.00
Thus,
Mortgaged amount = (amount of loan applied) – (down payment)
= ₱1,000,000.00 – ₱100,000.00
= ₱ 900,000.00

Therefore, Mario has a mortgaged amount of ₱900,000.00.

(b) Given P = ₱ 900,000.00, j = 0.12, n = 5

F = 𝑃𝑃(1 + 𝑗𝑗)𝑛𝑛 = 900,000(1+0.12)5 = ₱1,586,107.51

Therefore, Mario should have paid ₱1,586,107.51 after 5 years.

Example 2
Cathy finished Senior High School in her hometown. She took a TVL strand in
dressmaking, However, because of financial incapacity, she was not able to continue
in college. She decided to help her mother in their small business of dressmaking.
Their business increased in production due to her hard work. Subsequently, Cathy
decided to venture on a larger scale and wished to export their Filipiniana-style
products. But this would need a bigger capital. So, she decided to go to a financing
institution, Phiram Inc., to borrow ₱500,000.00. If her monthly payment was
₱12,000.00 on a 5-year mortgage, how much was the total amount of interest?

Solution:
Given P = ₱500,000.00, monthly payment = ₱12,000.00
Total Amount = (₱12,000.00) (12 months) (5 years) = ₱720,000.00
Total Amount of Interest = Total Amount – Amount of mortgage
= ₱720,000.00 – ₱500,000.00 = ₱220,000.00
Therefore, the total amount of interest is ₱220,000.00

Example 3

During his STEM high school years, Albert was fond of experimenting on RC motors.
In his engineering years in college, he creatively thought of experimenting about
perpetual motion that could provide energy to machines. However, he was short of
finances to start this project which is primarily Filipino-made. AG Resibo Company
approached Albert, and offered to lend him a capital of ₱2,000,000.00 to be paid in
5 years with 10% monthly interest. Moreover, there is an outright deduction of
100,000 from his applied loan.
(a) How much is his monthly payment?

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Solution:
𝑖𝑖 12 0.10
(a) Given P = ₱1,900,000.00 i12 = 0.10 j= = = .00833;
12 12
n = mt = (12)(5) = 60

Use the formula:

1−(1+𝑗𝑗)−𝑛𝑛
P=R[ ]
𝑗𝑗
In finding R, Regular (monthly) payment, we use:
1−(1+𝑗𝑗)−𝑛𝑛
R=P/[ ]
𝑗𝑗
By substitution we have,
1−(1+.00833)−60
R = ₱1,900,000.00 / [ ]
.00833
R = ₱40,365.65
Therefore, the monthly payment is ₱40,365.65.

What’s More

Read each problem carefully and answer each question to solve the problem.

Activity 1.1
1. A business loan of ₱200,000 is to be repaid in full after 2 years. What is the
amount to be paid if the effective rate of interest is 10%? (Hint: F = 𝑃𝑃(1 + 𝑗𝑗)𝑛𝑛 )
2. Johna purchased a condominium worth ₱3,500,000. However, the bank
demands a 10% down payment. How much is the mortgaged amount?
3. A motorcycle seller requires Justo ₱5,000 down payment. How much would
be the mortgaged amount if the motorcycle is sellable at ₱120,000?

Activity 1.2
Solenn decided to venture in an online business and opted to go to a financing
institution to borrow ₱50,000. If her monthly payment is ₱1,500 on a 5-year
mortgage, how much is the total amount of interest?

Activity 1.3
PC Yaw Inc. approached Rudy and offered to lend him a capital for his computer
business amounting to ₱300,000 to be paid in 3 years with 12% monthly interest.
How much would be his monthly payment?

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 What I Have Learned

A. Again, this module is about solving problems in consumer and business loans.
A loan is something borrowed, especially a certain amount, that you are
obligated to pay fully at a certain period with interest. Fill each blank with
correct term/s which are related to consumer and business loans.
____________ is the process of paying off debt with regular payments made over
time.
____________ is a loan from a bank or other financial institutions that helps a
borrower purchase a home or a car.
____________ is the one who borrows a mortgage.
____________ is the one who lends a mortgage.
____________ are assets that can secure a loan.

B. Enumerate the different formulas that you should know to solve problems
involving consumer and business loans.

What I Can Do

1. Create your own or similar real-life situation where consumer and business
loans are applied. Conduct a thorough search by looking for any Philippine
bank or institution that offer any loans. Attach the screenshot of your search.
2. In a bond paper, present the problem and write the current interest rate being
charged by your chosen bank or institution. Compute for the following:
(a) Mortgaged Amount (c) Total amount paid
(b) Monthly installment (d) Total amount of interest

Note that your grade will be according to the criteria below: Accuracy of research
data (50%), Accuracy of solution (40%), and Applicability to the current situation
(10%).

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 Assessment

Read and analyze each item carefully. Choose the letter that corresponds to your
answer for each statement and write it on a separate answer sheet.

1. These are assets used to secure a loan.

a. collateral c. mortgagee
b. mortgage d. balance

2. It is a type of mortgage where the interest remains constant throughout the term
of the loan.
a. capital c. fixed-rate mortgage
b. insurance d. amortization

3. The mortgagee is the one who _______ in a mortgage.

a. borrows c. gives
b. lends d. transacts

4. Ms. Cuyo borrowed a loan of ₱500,000.00 to be repaid in full after 3 years with
an interest rate of 12% per annum. What is its interest rate in decimal form?
a. 5000 c. 0.12%
b. 12% d. 0.12

5. Joey borrowed ₱50,000.00 from a financing institution. His final loan amount is
₱48,000.00 due to the deduction of the down payment. How much is the down
payment?
a. ₱1,000.00 c. ₱48,000.00
b. ₱2,000.00 d. ₱50,000.00

6. Mr. Santos borrowed ₱2,500,000.00 to be repaid in full after 10 years with an

interest rate of 10% per annum. What is the amount of the principal?
a. 10 c. ₱2,500,000.00
b. 10% d. ₱2,750,000.00

7. For the purchase of her motorcycle worth ₱200,000.00, Mila requested the buyer,
Lita, to pay him 25% down payment. How much will Lita pay Mila for the down
payment?
a. ₱50,000.00 c. ₱150,000.00
b. ₱100,000.00 d. ₱180,000.00

8. A student loan of ₱30,000.00 was applied by Bebot to support her final year in
college payable in 3 consecutive years after her graduation. In how many months
will she need to pay fully her student loan?
a. 12 months c. 36 months
b. 24 months d. 60 months

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9. A ₱20,000,000.00 worth of beach resort was bought by Mr. Sy through ABC
Bank. However, the bank demands a 20% down payment. How much is the
mortgaged amount?
a. ₱400,000.00 c. ₱4,000,000.00
b. ₱800,000.00 d. ₱16,000,000.00

10. A car dealer offers Ms. Garcia a brand-new car worth ₱420,000.00 with a 15%
down payment. How much would be the mortgaged amount?
a. ₱100,000.00 c. ₱200,000.00
b. ₱125,600.00 d. ₱357,000.00

11. Patty borrowed ₱800,000.00 from the bank to develop her piggery. The effective
rate of interest is 9%. How much is to be paid if the loan is to be paid in 4 years?
a. ₱1,129,265.00 c. ₱1,223,089.00
b. ₱1,170,000.00 d. ₱1,361,800.00

12. A ₱600,000.00 worth of business loan was applied by Basilio from XYZ Bank to
expand his poultry business. Suppose he is required by the company to pay
this in 5 years, what is the amount to be paid if the effective rate of interest is
8%?
a. ₱746,265.00 c. ₱895,008.00
b. ₱881,596.80 d. ₱924,720.00

13. Mr. Alvarez borrowed from a bank to purchase a farm lot worth ₱1,800,000.00.
If he has to pay ₱20,000.00 monthly for 9 years, how much will he pay for the
total interest?
a. ₱320,000.00 c. ₱360,000.00
b. ₱340,000.00 d. ₱380,000.00

14. Ms. Diamante obtained from a financing company a loan of ₱3,000,000.00 to

expand her jewelry business for a 6-year mortgage. How much will be its total
interest if his monthly payment is ₱50,000.00?
a. ₱200,000.00 c. ₱4000,000.00
b. ₱300,000.00 d. ₱600,000.00

15. Mang Akoy, through Alang-Ala Financing Inc. (AFI), purchased a grocery store
for her spouse that costs ₱75,000.00. He paid AFI ₱10,000.00 as down
payment. He plans to pay the remaining balance by paying monthly for 3 years
with an interest rate of 7% monthly. How much would be his monthly payment?
a. ₱3,000.50 c. ₱2,632.33
b. ₱2,807.82 d. ₱2,007.21

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 Additional Activities

Solve the following:

1. A business loan worth ₱500,000.00 is to be repaid in quarterly installment in 3

years. How much is the quarterly payment if money is worth 10% converted
quarterly?

2. A newly married couple decided to buy a brand-new car. The net amount of the
loan is ₱800,000.00. They plan to amortize the loan in a monthly installment for 3
years, if money is worth 12% convertible monthly, how much is the monthly
installment?

3. A business loan worth ₱500,000.00 is to be repaid in quarterly installment in 3

years. How much is the quarterly payment if money is worth 10% converted
quarterly?

4. A newly married couple decided to buy a brand-new car. The net amount of the
loan is ₱800,000.00. They plan to amortize the loan un monthly installment for 3
years, if money is worth 12% convertible monthly, how much is the monthly
installment?

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 Module 12
CO_Q2_General Mathematic SHS 13
What I Know What's More Assessment
1. B Activity 1.1 1. A
2. D 2. C
3. A 1. ₱ 242,000 3. B
4. A 2. ₱ 3,150,000 4. D
5. C 3. ₱ 115,000 5. B
6. D 6. C
7. C Activity 1.2 7. A
8. B 1. ₱ 40,000 8. C
9. B 9. D
10.D Activity 1.3 10. D
11.A 1. ₱ 9,964.293 11. A
12.C 12. B
13.A 13. C
14.B 14. D
15.D 15. D
Answer Key
References
DepEd BLR. 2016. General Mathematics, first ed., DepEd Philippines

Khan Academy. 2020. Mortgage interest rates. https://www.khanacademy.org/

economics-finance-domain/core-finance/housing/mortgages-tutorial/v/
mortgage-interest-rates

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