MODULAR LEARNING MATERIALS

BACHELOR IN SECONDARY EDUCATION MAJOR IN

Course
MATHEMATICS (BSEd-MATH)

Subject MCMATH 08 – MATHEMATICS OF INVESTMENT

Units 3 UNITS

Module Title EXACT & ORDINARY INTEREST

SOUTHERN LUZON TECHNOLOGICAL COLLEGE

FOUNDATION PIO DURAN, INC.
Bonifacio Street, Brgy 3, Pio Duran, Albay

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 BACHELOR IN SECONDARY EDUCATION MAJOR IN
MATHEMATICS (BSEd-MATH)

MODULAR LEARNING MATERIALS

SUBJECT CODE MCMATH 08

SUBJECT DESCRIPTION MATHEMATICS OF INVESTMENT

SUBJECT UNIT 3 UNITS

LIST OF MODULES

NO MODULE TITLE

1 THE SIMPLE INTEREST FORMULA

2 Exact and Ordinary Interest

3 Simple Discount

4 Promissory Notes

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 HOW TO USE THIS MODULE

Welcome to the Module “Exact & Ordinary Interest”. This module

contains training materials and activities for you to complete.

The desired learning outcome for “Exact & Ordinary Interest

“contains the knowledge, skills and attitudes required for the subject MCMATH
08 – Mathematics of Investment. It is one of the required subject under
Bachelor of Secondary Education Major in Mathematics (BSEd-MATH).

You are required to go through a series of learning activities in order

to complete each desired learning outcomes of the module. In each desired
learning outcome there are Lessons, Activities, Assignments, Projects and
Additional Resource (Reference Materials for further reading to help you
better understand the required activities. Follow these activities on your own
and answer the Quiz at the end of each desired learning outcome. If you have
questions, don’t hesitate to ask your teacher / facilitator for assistance.

The deadline of all given tasks in this module is 2 weeks after the
student/learner have receive the Learning Module “Exact & Ordinary
Interest”.

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 DESIRED LEARNING OUTCOME
MATHEMATICS OF INVESTMENT (Exact & Ordinary Interest)

CONTENT COURSE/ SUBJECT MATTER:

1. Exact & Ordinary Interest

2. Accumulating and Discounting

TEXBOOKS / REFERENCES:

1. Mathematics of Investment Made Simple – Dr. Felina C. Young; Mathematics of

Investment 2010 Edition (Based on CMO 03 Series 2007)
2. PPT(Instructor Made)
3. Video Tutorials
4. (This Module)

TEACHING AND LEARNING ACTIVITIES (TLA):

1. Online Activities (optional for those who has adequate resources)

using various online platforms such as Google Classroom, Facebook or Messenger

2. Modular Approach (alternative for those who are incapable of online instruction)
The content is synchronous with Online Approach but delivered with less demanding of
resources involved

3. Video Outputs/Presentations of Board Work (To assess student’s capability on

explaining certain mathematical concepts)

4. Reflection Activity: (Online/Modular)

The students are asked to write down 3 things they learned about simple interest and discount (after
the discussion of each main subtopic: Simple Interest, approximate & actual number of days, ordinary
& exact interest, simple discount, equivalent rates, discounting promissory notes), what they find
difficult in the topics presented, and questions that they can generate from the discussion...

ASSESSMENT OF TASK (AT):

1. Exercise 2.1, and 2.2

2. Activity 2.1
3. Assignment 2.1

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RESOURCE MATERIALS:

1. Online Learning Platforms (e.g. Google Classroom, Facebook, Messenger, Zoom, etc.,)
2. Learner’s Modules
3. Course Guide
4. Mini White/Black Board
5. Chalk/White Board Marker
6. Teacher Made Video Presentations (PPT’s)
7. Video Tutorials (Online Resource or Direct On-site Transfer)
8. Book references: Mathematics of Investment, & Business Mathematics

TIME TABLE:

6 HOURS

Lesson
2.1

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 Ordinary and Exact Interest

MODULE LEARNING OBJECTIVES:

After reading lesson, you should be able to:

1. Compute for exact interest and ordinary interest

Exact Interest and Ordinary Interest

Earlier, we learned that we can count on the number of days between two dates by
considering either the actual time or the approximate time factor. Moreover, we
learned that we can express the number of days as a fraction of a year, using either
365 days or 360 days. Putting these numerical variables together, we can come up
with four distinct categories. To compute for exact interest ( I e), we can use any of
the following time factors:

Actual time
- - 365
E Exact Interest
Approximate time
-
365

To compute for ordinary interest ( I o), we can use the following time factors:

Actual time
- - 360
E Ordinary Interest
Approximate time
-
360

In other words to compute for exact interest, use 365 or 366 days as denominator in
converting the number of days to year. Ordinary interest uses 360 days. When we
use actual time with respect to 360 days, we are using the Banker’s rule. Unless
specified, the type of interest to be used in our discussions is Banker’s rule.

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 EXAMPLES:

1. On March 23, 2007, Mary Ann applied for a P48,000 loan at 9.5% simple interest.
She promised to pay on July 12, 2007. Compute for the interest of the loan using:
 Actual time, exact interest
 Approximate time, exact interest
 Actual time, ordinary interest
 Approximate time, ordinary interest

Solution:
To compute for actual time, exact interest, we have

I e = 48,000(.095)¿) = P1,386.74

To compute for approximate time, exact interest, we have

I e = 48,000(.095)¿) = P1,361.75

To compute for actual time, ordinary interest, we have

I o = 48,000(.095)¿) = P1,406.00 (Banker’s rule)

To compute for approximate time, ordinary interest, we have

I o = 48,000(.095)¿) = P1,380.67

Based on the results arrived at, the solution using Banker’s rule yielded the highest
interest.

2. Find the ordinary and exact interests on a P230,000 loan at 16% from April 12, 2007 to
August 8, 2007. Use the following:

 Actual time, exact interest:

I e = 230,000(.16)¿) = P11,896.99

 Approximate time, exact interest

I e = 230,000(.16)¿) = P11,896.99

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  Actual time, ordinary interest

I o = 230,000(.16)¿) = P12,062.22

 Approximate time, ordinary interest

I o = 230,000(.16)¿) = P11,857.78

In certain cases, remember the following:

 If the day of the origin date and the day when the loan is due are the same, say,
February 8, 2009 to August 8, 2009, count the number of months between them.
In this case, it is 6 months.
 If the month day are the same for both origin date and maturity date, say, April
14, 2007 and April 14, 2012, count the number of years between these dates. In
this case, it is 5 years.
 If the origin date is given and we are asked to get the due date of the loan or
deposit in days, months, and years, count the exact number of days, exact
number of months, and exact number of years.

Examples:

1. A three-month loan made on September 16, 2008 is due on December 16, 2008.

2. A five-year loan made on March 12, 2008 is due on March 12, 2013

3. A five-year, 3 month loan made on July 6, 2010 is due on October 6, 2015

DEFINITION OF TERMS:
Exact Interest – Interest paid based on the basis of a 365-day/year schedule by a bank or
other financial institution. Denoted as
Ordinary Interest – Interest paid based on the basis of a 360-day/year schedule by a bank
or other financial institution. Denoted as
Actual time – The time of a loan or investment that is obtained by counting the * actual
number of days* between the origin date and the maturity date based on a Julian
Calendar
Approximate time – Same manner as the actual time but on the assumption that each
month has 30 days
Banker’s rule – calculating interest on a loan based on ordinary interest and exact time
which yields a slightly higher amount of interest. Uses a basis of a 360-day/year
schedule by a bank.

REFERENCES

Books: Mathematics of Investment Made Simple Dr. Felina C. Young

Mathematics of Investment 2010 Edition REX Bookstore

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Website: https://www.mathexpression.com/finding-the-exact-simple-interest.html
https://businessandfinance.expertscolumn.com/how-calculate-ordinary-interest-
and-exact-interest

Ordinary and Exact Interest. Answer the following word problems. Write
Exercise your answers on the Worksheet page given after the page. Show your
2.1 solutions. (Note: No solution means zero)

1. If P30,000 is invested at 12.5% simple interest rate for 150 days find the
following:
a. Exact interest
b. Ordinary interest

2. Jack borrowed P80,000 from Mark at 15% simple interest rate. He promised to
pay the principal and interest on May 12, 2011. If the loan was made on May 12,
2006, how much is the following:
a. Exact interest
b. Ordinary interest

3. Find the exact interest and amount paid on May 23, 2007 if a loan of P58,000 was
made on December 12, 2006 at 9% simple interest rate?

4. How much must be deposited now at 16.5% simple interest rate in order to have
P10,000 in 180 days? Use ordinary interest.

5. Tintin borrowed P9,000 last July 3, 2007 and promised to pay 8% simple interest rate
and principal 150 days after. When is the maturity date?

6. How much must deposited at 10.5% simple interest rate to P12,000 in 240 days?
Use exact interest.

7. If P25,000 is borrowed at 14% simple interest rate on May 1, 2008 and is to be

repaid on September 25, 2008, find the following:

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 a. Exact interest, actual number of days
b. Ordinary interest, actual number of days
c. Exact interest, approximate number of days
d. Ordinary interest, approximate number of days

8. What principal invested on January 15 will amount to P43,500 on March 23 if the

interest rate is 12.25%? Use exact interest rate for actual time used.

9. Find the simple interest rate that will make P12,500 amount to P12,900 if it was
invested on May 4 and withdrawn on October 16. Use ordinary interest.

10. Mr. Soda borrowed P27,000 from Michael on December 12. He promised to pay the
principal and simple interest at 7.5% discharge the debt on March 23 of the next
year. What amount will Mr. Soda pay?

Name: ________________________________ Block/Yr: _____________________

Ordinary and Exact Interest. Write your answers and

Worksheet solutions below from the given exercise. (5 points on each
(Exercise 2.1) item; scores varies upon your solutions given)

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1.

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___________________________ Date Finished/Submitted: ___________
Student’s Signature over Printed Name
Date Received (Worksheet): _________
NICKO L. BUSTILLO______
Instructor’s Signature

Lesson Accumulating and Discounting

2.2
LEARNING OBJECTIVES:

After reading lesson, you should be able to:

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 2. Accumulate a given principal and discount a given amount

INTRODUCTION
Accumulating and Discounting

Business transactions generally involve money that is due on different dates. When
money has an attached date, these amounts are commonly referred to as dated
values. The principal, P, or the sum of money on the origin date is said to
accumulate to the value of the amount, F, at the end of t years. Another term used
for the principal is present value. Stated in another way, the amount F, is discounted
to the present value, P. In other words,

 To “accumulate’ is to find the amount, F.

 To “discount” is to find the present value, P.

The present value of a loan or an investment is the current value of a future amount.
Other terms used for the present value are the principal and face value. Referring to
our previous formulas, we can solve the following examples.

Examples:

1. Accumulate P75,000 at 8% simple interest for 15 years.

Solution:

Given: P = 75,000
r = .08
t = 15 years
F=?

F = P( 1 + r t )
= 75,000 [ 1 + (.08) (15) ] = P165,000 (amount)

An alternative solution is as follows:

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 Solve for I: I = Prt = 75,000 (.08) (15) = P90,000
Solve for F: F = P + I = 75,000 + 90,000 = P165,000

2. Compute for the amount if P24,000 is invested at 9.5% for 5 years.

Solution:

Given: P = 24,000
r = .095
t = 5 years
F=?

F = P( 1 + r t )
= 24,000 [ 1 + (.095) (5) ] = P35,400 (amount)

3. If money is worth 12% simple interest, what must be invested now to have P69,000
at the end of 4.5 years

Solution:

Given: F = 69,000
r = .12
t = 4.5 years
P=?

F 69,000
P= = = 44,805.194 (present value)
1+ rt 1+ (.12 )( 4.5)

4. Discount P45,000 at 11.25% simple interest at the end of 240 days?

Solution:

Given: F = 45,000
r = .1225
t = 240 days
P=?

45,000
F
P= = 240 = 41,602.465 (present value)
1+ rt 1+ (.1225 ) ( )
360

5. How much must be invested now to have P98,000 at the end of 10 years if money is
worth 8% simple interest?

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 Solution:

Given: F = 98,000
r = .08
t = 10 years
P=?

F 98,000
P= = = 54,444.444 (present value)
1+ rt 1+ (.08 ) (10)

DEFINTION OF TERMS:
Accumulate – is the process on getting the total amount of interest plus principal/loan in
terms of simple interest
Discount – is finding the present value/principal/loan of a simple interest transaction
Present value – the value in the present of a sum of money, in contrast to some future value
it will have when it has been invested at simple/compound interest.
Maturity Value/Amount – is the amount payable to an investor at the end of a debt
instrument’s holding period (maturity date). It is also called in some account as future
value.
Maturity Date – is the date on which the final payment is due on a loan or other financial
instrument, such as a bond or term deposit, at which point the principal is due to be paid.

REFERENCES:

Books: Mathematics of Invest Made Simple – Dr. Felina C. Young

Websites: https://www.youtube.com/watch?v=lrZIy0rTnPY
https://www.youtube.com/watch?v=S28-TT-0sBY
Accumulating and Discounting. Answer the following word problems.
Exercise Write your answers on the Worksheet page given after the page. Show
2.2 your solutions. (Note: No solution means zero)

1. If money is worth 16% simple interest, what is the amount of a P150,000

loan due at the end of 5 years?

2. Accumulate P50,000 at 10.75% simple interest for one year and 6 months.

3. Discount P25,800 at 18% simple interest for 180 days.

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4. What is the present value of a P89,000 loan due at the end of 3 years, if
money is worth 15% simple interest?

5. What sum will accumulate to P72,000 in 8 years at 12.5% simple interest?

6. How much will a P67,000 loan be at the end of 6 years if it is invested at

8%?

7. Discount P250,000 at 14% simple interest for 7.5 years.

8. Accumulate P222,000 at 10.75% simple interest for three years and 3

months.

9. If P30,000 accumulates to P38,000 when invested at simple interest for 4

years, find the interest rate.

10. If money is worth 18% simple interest, find the present value of P48,000
due at the end of 3 years and 1 month.

11. Accumulate P92,500 from August 14 to February 17 of the new year at

8.5% simple interest.

12. Find the present value of P90,000 due at the end of 5 years and 7 months if
money is worth 6.25% simple interest.

13. Discount P50,000 for 145 days at 19.5% simple interest.

14. How much will P15,300 loan be at the end of 250 days if the interest rate
charged is 11.5%?

15. Find the maturity value of a P67,400 loan if the interest rate charged is
12.3% for 115 days

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Name: ________________________________ Block/Yr: _____________________
Accumulating and Discounting. Write your answers and
Worksheet solutions below from the given exercise. (5 points on each
(Exercise 2.2) item; scores varies upon your solutions given)

1.

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_____________________________ Date Finished/Submitted: ___________
Student’s Signature over Printed Name
Date Received (Worksheet): _________
NICKO L. BUSTILLO______
Instructor’s Signature

Create a Video recording of yourself explaining any of your

answers/solutions from the word problems you have taken
Activity 1.1 from Exercises 1.1 to 2.2 Make use of a blank canvas such as
(Video Board Work) a small blackboard/whiteboard to demonstrate your thought
process on solving chosen word problem.

Grading Criterion:
Speech Delivery (Mastery of Mathematical Concept) – 30 %
Complexity/Difficulty of Math problem selected - 40 %
Uniqueness of Problem selected - 30 %
100 %

(Note: To avoid multiple reselection of word problem, try to communicate with each other to minimize over
usage of word problems.) Be resourceful

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ASSIGNMENT 2.1
I. Define and discuss about The Simple Discount Formula
II. Answer the following:
a. Discount P25,000 for 3 years and 6 months at 10% simple discount
b. If P12,300 is due at the end of five years at 8% simple discount, find the
proceeds and simple discount.

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