ST. BLAISE COMMUNITY ACADEMY, INC.

Poblacion, San Luis, Batangas

11 GENERAL
M AT H E M AT I C S

Learner’s Material
SECOND QUARTER - MODULE 6

Topic: “COMPOUND INTEREST”

Name: ______________________________________________________
Section: _____________________________________________________
 Republika ng Pilipinas
KAGAWARAN NG EDUKASYON
Rehiyon IV-A CALABARZON
SANGAY NG BATANGAS
St. Blaise Community Academy, Inc.
San Luis, Batangas/ [email protected]
 043 – 740-960609997646638 / 09218539116

Name of Student: ___________________________________________________ Section: ________________________

Present Address: ____________________________________________________ Contact no. ____________________
Subject Matter: General Mathematics
Topic: SIMPLE INTEREST (Quarter 2- Module 6)

WHAT YOU ARE SUPPOSED TO LEARN?

After going through this lesson, you should be able to:
1. illustrate simple and compound interests; and
2. distinguish between simple and compound interests.

WHAT I KNOW?
PRE-TEST
D I R E C T I O N : Choose the letter of the best answer. Write the chosen letter on a separate sheet of paper.
1. What interest remains constant throughout the investment term?
a. simple b. compound c. annuity due d. ordinary annuity.
2. It is an interest computed based on the principal amount.
a. simple b. compound c. annuity due d. ordinary annuity
3. What is the difference between simple and compound interest?
a. Simple yields higher interest than compound interest.
b. Simple interest has a shorter term than compound interest.
c. Simple interest is always better than compound interest.
d. Simple interest is computed based on the principal while compound interest is computed based on the
principal and also on the accumulated past interests.
4. If you would like to invest money, which bank offer would you prefer if you do not plan to withdraw your money in 2
years?
a. 5% simple interest per annum c. 3% compounded interest semi-annually
b. 4% compounded interest per annum d. 2% compounded interest quarterly
5. Which of the following statement is true about the borrower or debtor?
a. It is the amount of money borrowed or invested on the origin date.
b. It is the interest computed on the principal and also on the accumulated past interests
c. It refers to the person (or institution) who owes the money or avails of the fund from the lender.
d. It refers to the person (or institution) who invests the money or makes the funds available.

WHAT’S IN?

Match Me! Reveal Me, For the second time!

DIRECTION: Match the terminologies in column B to its definition or statement in column A. Write your answer on the
blanks provided below the trivia question inside the box. Your answer should reveal an important Filipino value that
everyone should possess. Finally, answer the guided questions that follow.

A B

1. It is the amount paid or earned for the use of money. O. Borrower/Debtor

2. It refers to the person or institution who owes money or N. Compound Interest

avails of the funds from the lender.

3. It refers to the person or institution who owes money or T. Interest

avails of the funds from the lender.

4. It is the percentage of the principal that will be C. rate of interest

changed for a specified period of time.

5. It is the percentage of the principal that will be U. Future Value

changed for a specified period of time.

GENERAL MATHEMATICS 11
1
 WHAT’S IS IT

LESSON 1: COMPOUND INTEREST

Compound interest (𝑰𝒄 ) is the interest computed on the principal and also on the accumulated past
interest, so compound interest is a way to earn money because you don’t just earn using your original
money, but also the interest you earned.
To give you a deeper concept of compound interest, reflect the following questions: Have you
ever lent money to someone like a friend, sibling, or relative? If so, would you let them pay more than or
less than or just equal to what you lent to them? Since you consider to help them, probably you will
answer just an equal amount is ok even though your money has been used for a period of time. But, I’m
sure some will answer that you should receive more than the amount they borrowed and no one will say
that you should receive less than the amount they borrowed. I know you have your own perspective in
life but let us see if compound interest will change your view in life regarding loans or borrowings,
savings, and investment.
Are you familiar with credit cards? We have what we called “Perma-Debt” which means a
continuous outstanding balance of a credit card where they pay the monthly minimum that fits in their
budget to lessen the burden of interest monthly but tries to add some debt again in the following month
so the debts never end. So why did I tell you this? If you are a debtor compound interest is not good for
you. Better yet pay your debt in full the soonest possible so that the burden of interest will not be on your
shoulder. Conversely, if you are an investor, compound interest is your best buddy and it is better to
invest in a long period of time for you to have a greater return of your investment through interest
earned. So, if you have the means or a way to save and invest early, you must consider it as soon as
possible for you to gain more money in the future.

Example Problem Solving:

Due to COVID-19 pandemic Miss Dada a female resident of Barangay May Pagkakaisa somewhere in
Quezon Province thinks of a business that can provide for her needs as well as the need of her neighbors so she
can be of help even in this trying time. Having no money at hand she decided to borrow from a bank as the
start-up capital of ₱50,000.00 at 7% interest rate compounded annually and payable within 5 years.
Compute for the interest yield.
SOLUTION:

Compound interest includes the interest from the current year and added on the principal at the start of
the following year, which means that the previous interest earns interest as well, together with the principal until
fully paid. So the interest yielded on simple interest is lower than the compound interest. The amount at the end
of 5 years in simple interest is ₱67,500.00 while in compound interest it is ₱70,705.39. Therefore, if you are a
borrower make sure that the interest on your loan is not too high if you will find a lender that offers simple
interest better grab it that a lender who offers compound interest. On the other hand, if you are an investor
learn to invest your money to an interest that will yield higher returns like compound interest. If you will be a
lender in the future, I hope that you will not be abusive regarding the interest, be reasonable, and act
generously by helping others who needed you the most.
Notice that the formula to find the future value in a compound interest is given by

𝐹 = 𝑃(1 + 𝑟)𝑡
where:
𝐹 = future value
𝑃 = principal amount
𝑟 = compound interest rate
𝑡 = time or time in years
Also, to find the compound interest just deduct the principal (P) from the computed future value
(F). In the next module, you will encounter a situation where interest will be compounded more than
once a year.
GENERAL MATHEMATICS 11
2
 WHAT’S MORE?

DIRECTION: Write the word TRUE if the statement is correct, otherwise write FALSE on a separate answer sheet.
________________1. Perma-debt decreases the amount of money available on hand to spend in the future.
________________ 2. Compound interest works well if you save early for retirement or invest early.
________________ 3. The longer it takes for you to pay a debt the smaller the interest you pay.
________________ 4. If borrowers pay at least the minimum payment every month of their debt, their credit
standing is not good.
________________ 5. If you are planning to invest, compound interest is better than the simple interest.

WHAT I CAN DO?

Assuming that your father asks you about investment and wants to know the interest that will be
earned if he will invest ₱500,000.00 in a certain bank that offers an annual compounding interest of 8% for 5
years.

ASSESSMENT?
1. Which interest is computed on the principal and then added to it?
a. simple b. compound c. annuity due d. ordinary annuity
2. The simple interest formula is I = Prt. What does the t represent?
a. principle b. time c. interest d. percent rate
3. All of the following are used to find simple interest, EXCEPT?
a. principal b. rate of interest c. time d. future value
4. It is the amount after t years that the lender will receive from the borrower.
a. future Value b. present Value c. interest d. principal
5. Which of the following describes rate (r)?
a. It is the amount of money borrowed or invested on the origin date.
b. It is the amount paid or earned for the use of money.
c. It is charged by the lender, or rate of increase of the investment
d. It is computed on the principal and also on the accumulated past interests.
6. Rate of interest must be converted into ________ before substituting to the formula of finding the interest.
a. fractions b. decimals c. mixed numbers d. percentage
7. The principal in the formula I = Prt is ___________________.
a. the amount of money borrowed or deposited
b. the percent interest for his year
c. the amount taxed
d. the amount the bank owes you for being a customer at their bank
8. The interest from the previous year also earns interest, which of the following describes the statement?
a. simple b. compound c. rate d. time
9. Variable P in simple interest formula when you are the creditor stands for?
a. Original Amount borrowed c. Maturity Amount Borrowed
b. Original Amount invested d. Maturity Amount invested
10. The following statements are true EXCEPT ________.
a. The amount invested to a compounded interest yields to greater maturity value than to a simple
interest.
b. The amount borrowed from a simple interest yields to a smaller maturity value than a compound
interest
c. The simple interest yields interest only from initial principal amount.
d. The interest in a compound account yields interest only from initial principal amount.

WHAT CAN I SHOW?

Which 21st century skill (Communication, collaboration, creativity, critical thinking, productivity, leadership and technology
literacy) do you enhance while learning our topic? Explain your answer.
(PLEASE WRITE YOUR ANSWER ON THE PROVIDED ANSWER SHEET.)

GENERAL MATHEMATICS 11
4
 NOTE: PLEASE SUBMIT ONLY THIS PORTION OF THE MODULE TO SBCA FOR CHECKING.

Name of Student: ___________________________________________________ Section: _____________________

Present Address: ____________________________________________________ Contact no. __________________
Subject Matter: GENERAL MATHEMATICS
Topic: COMPOUND INTEREST (Quarter 2- Module 6)

WHAT I KNOW?

PRE-TEST:

1.
2.
3.
4.
5.

WHAT’S IN?

1.
2.
3.
4.
5.

WHAT’S MORE?

ACTIVITY 1

1.
2.
3.
4.
5.

WHAT I CAN DO?

1
GE NE RAL M ATHE M ATICS 11 I ANSWER SHEET
 ASSESSMENT

POST- TEST

1. 6.
2. 7.
3. 8.
4. 9.
5. 10.

WHAT CAN I SHOW?

2
GE NE RAL M ATHE M ATICS 11 I ANSWER SHEET