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Simple vs. Compound Interest Lessons

Mathematics 11 - simple and compounded interest

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Pedelyn Ligan
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0% found this document useful (0 votes)
32 views7 pages

Simple vs. Compound Interest Lessons

Mathematics 11 - simple and compounded interest

Uploaded by

Pedelyn Ligan
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

DAILY LESSON PLAN – GENERAL MATHEMATICS G-11 ( DAY 1 )

MELCS -illustrates simple and compound interest

- distinguishes between simple and compound interests.

I- Objectives

At the end of the lesson, the students can:

a. Illustrate simple and compound interest;


b. Distinguishes between simple and compound interests.
II- Subject Matter

Reference/s : General Mathematics 11 – General Mathematics book


Materials: Laptop, Visual aid, cartolina, marker
Topic: Illustrating Simple and Compound Interest

III- Procedure
A. Introduction
a. Warm Up Question
Ask students to give their own answers to the question "What are some ways to take
care of hard-earned money?"
b. Preparatory Activity
Group the students into 3. For each group, write down a starting amount of cash
(e.g., P100,000). Prepare some cards that give certain options (e.g, invest in a bank
that offers 3% interest, buy clothes for P200, and so forth) and even some possible
real-life concerns (e.g., pay P100 for water, pay P5,000 for medical bills). After each
group selects a card, compute the amount of money of that group. The point is to set
the tone for thinking about how to prepare for the future.
B. Lesson Proper
a. Definition of Terms
• 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 money is received by the borrower
• Repayment date or maturity date on which the money borrowed or loan is to be
completely repaid
• Time or term (t) - amount of time in years the money is borrowed or invested;
length of time between the origin and maturity dates
• Principal (P) - amount of money borrowed or invested on the origin date
• Rate (r) - annual rate, usually in percent, charged by the lender, or rate of increase
of the investment • Interest (I) - amount paid or earned for the use of money
• Simple Interest (Is) - interest that is computed on the principal and then added to it
• Compound Interest (Ic) - interest is computed on the principal and also on the
accumulated past interests
• Maturity value or future value (F) - amount after t years; that the lender receives
from the borrower on the maturity date

b. Illustration of Simple and Compound Interest


EXAMPLE
1. Suppose you won P10,000 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?
c. Let the students compare the interests gained in the two investments.
Simple Interest (in pesos): 11,000 - 10,000 = 1,000 Compound Interest (in pesos):
11,040.81 - 10,000 = 1,040.81
Ask the students to distinguish between simple and compound interests based on
their illustrations. Possible answers: 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.

C. Homework
Let the students generalize the procedures in finding simple and compound interests.
Allow them to express these generalizations using formulas.

DAILY LESSON PLAN – GENERAL MATHEMATICS G-11 ( DAY 2 )


MELCS -illustrates simple and compound interest

- distinguishes between simple and compound interests.

I- Objectives

At the end of the lesson, the students can:

a. Finding simple interest


b. Finding the unknown principal, rate, or time
c. Finding maturity value d.
d. Solving real-life problems involving simple interest.

II- Subject Matter

Reference/s : General Mathematics 11 – General Mathematics book


Materials: Laptop, Visual aid, cartolina, marker
Topic: Simple Interest

III- Procedure
A. Introduction
a. Review
Let the students recall from the previous lesson how to find the interest and maturity
value of an amount earning simple interest. Allow students to present their
generalizations or formulas.
b. Lesson Proper
Discuss the procedure/formula in finding simple interest. An annual simple interest is
based on the 3 factors:
a. Principal which is the amount invested or borrowed
b. Simple interest rate, usually expressed in percent
c. Time or term of loan, in years

EXAMPLE 1. A bank offers 0.25% annual simple interest rate for a particular deposit.
How much interest will be earned if 1 million pesos is deposited in this savings account
for 1 year?

Solution:

Given: P = 1, 000, 000 r = 0.25% = 0.0025 t = 1 year

Find: Is

=Is = P rt = (1, 000, 000)(0.0025)(1) = 2, 500


Answer: The interest earned is P2,500.

EXAMPLE 2. How much interest is charged when P50,000 is borrowed for 9 months at
an annual simple interest rate of 10%?
Given: P = 50, 000 r = 10% = 0.10 t = 9 12 year = 0.75 years

Find: Is

EXAMPLE 3. When invested at an annual interest rate of 7%, an amount earned


P11,200 of simple interest in two years. How much money was originally invested?

Solution:

Given: r = 7% = 0.07 t = 2 years IS = 11, 200


Find:P
P = Is rt = 11, 200/(0.07)(2) = 80,000

Example 4. Complete the table below by finding the unknown

Solution:

(a) The unknown principal can be obtained by P = Is/rt = 1, 500 (0.025)(4) = 15, 000

(b) The unknown rate can be computed by r = Is/Pt = 4, 860 (36, 000)(1.5) = 0.09 = 9%

(c) The unknown time can be calculated by t = Is/Pr = 275 (250, 000)(0.005) = 0.22 years

(d) The unknown simple interest is given by Is = Prt = (500, 000)(0.125)(10) = 625, 000

DAILY LESSON PLAN – GENERAL MATHEMATICS G-11 ( DAY 4 )

MELCS -illustrates simple and compound interest


- distinguishes between simple and compound interests.

I- Objectives

At the end of the lesson, the students can:

e. Finding simple interest


f. Finding the unknown principal, rate, or time
g. Finding maturity value d.
h. Solving real-life problems involving simple interest.

II- Subject Matter

Reference/s : General Mathematics 11 – General Mathematics book


Materials: Laptop, Visual aid, cartolina, marker
Topic: Simple Interest

III- Procedure
A. Introduction
a. Review

Let the students recall what they have learned.

b. Lesson Proper
Many persons or institutions are interested to know the amount that a lender will give to
the borrower on the maturity date. For instance, you may be interested to know the total
amount of money in a savings account after t years at an interest rate r. This amount is
called the maturity value or future value F.

Substituting Is by P rt gives F = P + P rt

F = P(1 + rt)

Maturity (Future) Value

F=P(1+rt)

EXAMPLE 7. Find the maturity value if 1 million pesos is deposited in a bank at an annual
simple interest rate of 0.25% after (a) 1 year and(b) 5 years?

Solution:

Given: P = 1, 000, 000, r = 0.25% = 0.0025

Find: (a) maturity or future value F after 1 year


(b) maturity or future value F after 5 years

a. When t = 1, the simple interest is given by

Method 1:

Is = P rt = (1, 000, 000)(0.0025)(1) = 2, 500

The maturity or future value is given by F = P + Is = 1, 000, 000 + 2, 500 = 1, 002, 500

Method 2: To directly solve the future value F,

F= P(1 + rt) = (1, 000, 000)(1 + 0.0025(1)) = 1, 002, 500

Answer: The future or maturity value after 1 year is P1,002,500.

[Link] t = 5,

Method 1:

Is = P rt = (1, 000, 000)(0.0025)(5) = 12, 500

F = P + Is = 1, 000, 000 + 12, 500 = 1, 012, 500

Method 2: F = P(1 + rt) = (1, 000, 000)(1 + 0.0025(5)) = 1, 012, 500

Answer: The future or maturity value after 5 years is P1,012,500

DAILY LESSON PLAN – GENERAL MATHEMATICS G-11 ( DAY 4 & DAY 5)

MELCS -illustrates simple and compound interest

- distinguishes between simple and compound interests.


I- Objectives

At the end of the lesson, the students can:

a. Finding simple interest


b. Finding the unknown principal, rate, or time
c. Finding maturity value d.
d. Solving real-life problems involving simple interest.

IV- Subject Matter

Reference/s : General Mathematics 11 – General Mathematics book


Materials: Laptop, Visual aid, cartolina, marker
Topic: Simple Interest

V- Procedure

a. Review
Seatwork

Seatwork 2. Solve the following problems on simple interest.

(a) What are the amounts of interest and maturity value of a loan for P150,000 at 6 1/2%
simple interest for 3 years?
Answer: I = P29,250 F = P179,250
(b) At what simple interest rate per annum will P25,000 accumulate to P33,000 in 5
years? Answer: 6.4%
(c) How long will P40,000 amount to P51,200 if the simple interest rate is at 12% per
annum? Answer: 2.33 years, or 2 years and 4 months
(d) In order to have P200,000 in 3 years, how much should you invest if the simple
interest is 5.5%? Answer: 171,673.82
(e) Angel deposited P20,000 in a bank that pays 0.5% simple interest. How much will be
her money after 6 years?

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