MAT 152 : MATHEMATICS IN THE MODERN WORLD

J.R. | BS Psychology | 1st Semester | Final Examination

MODULE 13: SIMPLE INTEREST AND IMPORTANCE

MATURITY VALUE
➔ Simple interest is an important idea in learning
SIMPLE INTEREST about money because it shows us how much it
➔ Is a type of interest that is calculated only on the costs to borrow money and how much we might
original principal amount of a loan or investment. make from investing it.
➔ It does not take into account any interest that
accumulates over time. REFLECTION QUESTIONS ON THE CONCEPT
1. What is simple interest? Can you explain it in your own
MATURITY VALUE words?
➔ Is what the lender or investor gets back at the end Simple interest is a straightforward method used to
of the loan or investment time. calculate the interest on a loan or an investment. It's
➔ It's the total amount that includes the money called simple because it's based solely on the
originally borrowed or invested plus the extra original amount of money, called the principal.
money earned as interest during the loan or
investment period. 2. How do you calculate simple interest? What are the
main things you need to know to figure it out?
Let's say you borrow some money, or you invest
KEY POINTS some money, and there's an agreed-upon interest
★ Simple interest is straightforward to calculate and rate per vear. With simple interest, you calculate
is commonly used for short-term loans or the interest you owe or earn by multiplying three
investments. things: the principal amount (the initial sum of
★ It is called simple because it is calculated only on money), the annual interest rate (expressed as a
the original principal amount. decimal), and the time the money is borrowed or
★ Simple interest is often used in situations where invested for (usually in years).
interest payments are made at regular periods,
such as monthly or annually. 3. How might knowing about simple interest help you
when you're dealing with money, like saving or borrowing?
Understanding simple interests helps you make
MATHEMATICAL FORMULAS better decisions with your money. Whether you're
borrowing or saving, knowing how interest works
★ Simple Interest
gives you more control over your finances. It helps
➔ I=Pxrxt
you avoid surprises and unnecessary costs by
allowing you to plan ahead more effectively.
★ Maturity Value
➔ F=P+I
4. How does changing the amount of money or the
➔ F = P (1 + rt)
interest rate affect the total interest earned or paid?
When you borrow more money or put more money
★ P = is the principal or initial amount of money
into an investment, or if the interest rate goes up.
borrowed or invested.
you'll end up paying or earning more interest. But if
★ r = is the annual interest rate, expressed as a
you borrow less or invest less, or if the interest rate
decimal.
goes down, you'll end up paying or earning less
★ t = is the time or duration for which the money is
interest.
borrowed or invested, usually in years.
5. What do you think are the potential risks associated
REAL-LIFE APPLICATIONS with loans or investments that involve simple interest?
One problem with loans or investments using
★ Simple interest is commonly used in personal loans,
simple interest is that borrowers might not know
car loans, mortgages, and savings accounts.
they have to pay back more money than they
★ Understanding simple interest helps borrowers and
thought. Since simple interest doesn't change,
investors calculate the total amount they will owe
borrowers might be surprised by how much they
or earn over time.
owe later on. Also, if borrowers don't understand
simple interest. they might agree to loans with high
interest rates, making it harder for them to repay
what they owe.
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MAT 152 : MATHEMATICS IN THE MODERN WORLD
J.R. | BS Psychology | 1st Semester | Final Examination

Example 1: An employee takes out an SSS salary loan of

THE COMPOUNDING OR CONVERSION PERIODS (m)
P30,000 at an annual interest rate of 10% for 2 years.
MAY BE DONE:
Determine the interest charged and the total repayment
amount.
monthly m = 12 every month
Example 2: Maria is a member of the Pangasinan
bi-monthly m=6 every 2 months
Development Cooperative (PANDENCO) and decides to
invest P150,000 with the cooperative. PANDENCO offers an quarterly m=4 every 3 months
annual simple interest rate of 4.5%. Maria plans to keep her
investment for 4 years and 3 months. Calculate the interest semi-annually m=2 every 6 months
Maria will earn and the total amount she will have at the
end of the investment period. annually m=1 yearly or every 12
months
MODULE 14: PRESENT AND FUTURE VALUE AT
COMPOUND INTEREST
REAL-LIFE APPLICATIONS
COMPOUND INTEREST
★ Savings Accounts: Banks often compound interest
➔ Is the interest on a deposit or loan calculated based on savings accounts, leading to higher returns over
on both the initial principal and the accumulated time.
interest from previous periods. ★ Loans and Mortgages: Interest on loans and
mortgages can be compounded, affecting the total
KEY POINTS amount owed.
★ Investments: Compound interest is a critical
★ Unlike simple interest, which is only calculated on concept in investing, where reinvested earnings
the principal amount, compound interest allows generate more earnings.
money to grow faster by earning interest on
interest. Compound interest is calculated on the
initial principal and the interest that has been IMPORTANCE
added to it. ➔ Wealth Accumulation: Discussion on how
compound interest enables individuals to build
MATHEMATICAL FORMULA substantial wealth over time, even with modest
contributions.
➔ Retirement Planning: Importance of starting to
save early and allowing investments to compound
over several decades for retirement security.
➔ Debt Management: Understanding the impact of
compound interest on debt repayment strategies
and the importance of minimizing interest costs.
★ A = is the amount of money accumulated after m
periods, including interest.
★ P= is the principal amount (the initial amount of REFLECTION QUESTIONS ON THE CONCEPT
money). 1. What is compound interest? Can you explain it in your
★ r = is the annual interest rate (decimal). own words?
★ t = is the time the money is invested or borrowed When you save money in a bank account, they give
for, in years. you extra money over time, called interest. But with
★ m = is the number of interest periods for one year. compound interest, you don't just earn interest on
the money you put in, you also earn interest on the
interest you've already earned!

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MAT 152 : MATHEMATICS IN THE MODERN WORLD
J.R. | BS Psychology | 1st Semester | Final Examination

2. How do you calculate compound interest? What are the MODULE 15: BUSINESS AND CONSUMER
main things you need to know to figure it out? LOAN
Calculating compound interest involves using a
formula that takes into account the initial principal, INTRODUCTION TO LOANS
the interest rate. the number of compounding ➔ Loans are financial transactions where one party
periods per year. and the time period for which the (the borrower) receives money from another party
interest is calculated. (the lender) with the agreement to repay the
amount borrowed, usually with interest.
3. How might knowing about compound interest help you ➔ The borrower typically uses loans for various
when you're dealing with money, like saving or borrowing? purposes, such as making purchases, funding
Understanding compound interest helps you save projects, or covering expenses.
more effectively by showing how your money grows ➔ Loans play a crucial role in both personal finance
over time. It also helps you choose loans wisely, and business operations, providing individuals and
avoiding high-interest debt and saving money on companies with access to capital they may not have
interest payments. By knowing about compound immediately available.
interest, you can make smarter financial decisions
and achieve your goals faster.
BUSINESS LOAN
4. How does changing the amount of money or the
➔ Used by businesses to finance operations,
interest rate affect the total interest earned or paid in a
expansions, equipment purchases, or other
compound interest?
investments.
Changing how much money you put in or borrow
➔ Examples include term loans, lines of credit, and
affects how much interest you earn or pay in
Small Business Administration (SBA) loans.
compound interest. If you put in more money, you'll
➔ Business loans often require detailed business
earn or pay more interest over time. And if the
plans, financial statements, and collateral.
interest rate goes up, you'll earn or pay more
interest faster. These things together decide how
much compound interest affects your savings or CONSUMER LOAN
debt.
➔ Used by individuals to finance personal expenses or
purchases, such as buying a car, home renovations,
5. What do you think are the potential risks associated
or paying for education.
with loans or investments that involve compound interest?
➔ Examples include personal loans, auto loans,
Loans or investments involving compound interest
mortgages, and credit cards.
can carry risks like rising interest rates affecting
➔ Consumer loans may have varying interest rates,
borrowing costs or investment returns, market
repayment terms, and eligibility criteria based on
fluctuations impacting investment values, and the
the borrower's credit history and financial situation.
potential for borrowers to default on loans.
Understanding these risks helps individuals make
informed decisions and take steps to manage them MORTGAGE
to protect their financial well-being.
➔ A mortgage is like a special loan you get from a
bank to buy a house. It's not like borrowing money
Example 1: Pedro, a farmer, wants to expand his farm and
for a new bike or clothes. With a mortgage, the
needs a loan from MAPMC. He plans to borrow PHP
bank helps you pay for the house, but there's a
150,000 to purchase additional land and equipment.
catch. The bank can take your house away if you
NMAPMC offers loans at an annual interest rate of 12%,
don't pay them back on time and you call this
compounded annually. Pedro wants to know how much he
collateral. So, it's like promising the bank that you'll
will owe at the end of a 3-year loan term.
give them money every month until you've paid
back what you owe.

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MAT 152 : MATHEMATICS IN THE MODERN WORLD
J.R. | BS Psychology | 1st Semester | Final Examination

AMORTIZATION MODULE 16: FUNCTIONS & RELATIONS, AND

MODELING REAL LIFE SITUATIONS USING
➔ Amortization is the process of breaking down your
mortgage into monthly payments called
FUNCTIONS
installments. Each installment covers both the loan RELATION
amount (principal) and the interest owed to the
bank. Over time, each payment reduces both the ➔ Is a set of ordered pairs and a function is a relation
principal and interest until the mortgage is fully in which for each element in the domain there
paid off. corresponds exactly one element in the range.

★ Let X and Y be the sets of real numbers.

MATHEMATICAL FORMULA
★ Amortization (Monthly) FUNCTION
➔ Is a correspondence that assigns to each element
of some set a single value of another set.

A. This relation is a function (f) which shows one-to-one

★ Interest Payment (IP) correspondence.
➔ IP = P x i

★ Principal Repayment (PR)

➔ PR = A - IP

★ Outstanding Balance (OB)

➔ OB = OBprevious - PR

★ A = monthly amortization or the periodic payments

★ P = principal amount or loan's initial amount
★ i = the monthly interest rate (i=r/m)
★ n = total number of payments (n=mt)
★ m - is the number of interest periods for one year The set of ordered pairs is: S = {(1,1), (2,4), (3,5)}

Example 1: Maria is planning to borrow PHP 660,000 to ★ The set of first numbers is called the domain of the
renovate her home in the Philippines. She intends to repay function and the set of the second numbers is called
the loan annually over a 10-year period, with an interest rate the range of the function.
of 4.8%, compounded annually. Construct an amortization
table to illustrate the annual repayment schedule. B. The following relation is a function since it shows a
many-to-one correspondence.

The set of ordered pairs is: G = {(1,3), (2,3), (3,3)}

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MAT 152 : MATHEMATICS IN THE MODERN WORLD
J.R. | BS Psychology | 1st Semester | Final Examination

C. The following correspondence is called a relation

and NOT a function since it shows a one-to-many
correspondence.

The set of ordered pairs is: K = {(3,1), (3,4), (3,5)}

FUNCTION NOTATIONS
➔ Is a way of expressing a relationship between two
variables.
➔ To indicate that y depends on x, we can set function
notation and write it symbolically as f(x) = y which is
read as "f of x equals y."
➔ This does not mean "f times x", but it is instead a
method of saying that y corresponds to x.

Example 1: f(x) = 2x² + 13x + 2

1. f(-4)
2. f(5)
3. f(-3)

Example 2: Emma starts with 50 calories burned and burns

an additional 10 calories per minute while running. Create a
function to model the total calories burned over time and
determine the total calories burned after running for 45
minutes.

C(t) = mt + b