Mathematics as a tool for Business and Finance

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Course Title : MATHEMATICS IN THE MODERN WORLD

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MODULE NO. 4
Mathematics as a tool for Business and Finance

In this topics the real world scenarios referring on the business and financial management are
given much significance wherein, students are given the privilege to search and studies
literatures that expound on how investing and borrowing impacted one’s life as to their living
standards, and on how advantageous if anyone could manage their savings, stocks, bonds, loans
and credit cards. Perhaps, it is worth enough to realize that this topics profoundly helps everyone
understood the importance of Mathematics in business and finance.
LESSON NO. 3
LESSON
TITLE
Investing and Borrowing (Personal Finance)
Specific
Learning
Outcomes:
During the learning engagements, the students should be able to:
1. Explain the following concepts on personal finance: savings, stocks and
bonds, loans and loan repayment;
2. Explain how credit works and how is it beneficial or disadvantageous to
people;
3. Solve real-world problems related to personal finance
TEACHING LEARNING ACTIVITIES
Processing Activities:
Activity 1 – Calculating Simple Interest:
Investing or Borrowing Funds.
Student should define and explain the algorithms on Simple and Compounded Interest. It is
advantageous if they are going to visit these links:
 https://www.youtube.com/watch?v=IIzpoxjzy8g;
 https://www.investopedia.com/terms/c/compoundinterest.asp#what-is-compound-interest
The links display detailed information on how to solve simple interest and compounded interest.
There are numerous sample on problems and answers about the topic wherein students are
guided on how to apply simple and compounded interest. Simple definition and procedures of
the terms, below are revealed:
What Is Simple Interest?
Simple interest is a quick and easy method of calculating the interest charge on a loan. Simple
interest is determined by multiplying the daily interest rate by the principal by the number of
days that elapse between payments.
Simple Interest=P×I×N
where: P=principal
I=daily interest rate
N=number of days between payments

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NOW, DO THE TASK:
 Use simple interest in finding the ending balances,
*Ending Balances may be obtained when you add principal amount plus interest earned…
Hint: visit this link to guide you (https://www.youtube.com/watch?v=IIzpoxjzy8g)
(The link provides samples on finding the ending balance of money using simple interest.)
1. CIMB Bank offers as low as 3% interest rate for loans payable in 3 years
 If you loan an amount of Php15, 000, how much interest will you earn within the payable
duration of the loan and how much is the total amount you are going to pay in the bank?
2. A commercial bank in the country offers at least 9% interest rate for investments within a
decade…
 If you invest an amount of Php25, 800, how much interest will you earn within the
duration of investment and how much is the total amount you are going to earn after
investing in this particular commercial bank?

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Activity 2. Calculating Compounded
Interest
What Is Compound Interest?
Compound interest (or compounding interest) is interest calculated on the initial principal,
which also includes all of the accumulated interest from previous periods on a deposit or loan.
Thought to have originated in 17th century Italy, compound interest can be thought of as
“interest on interest,” and will make a sum grow at a faster rate than simple interest, which is
calculated only on the principal amount.
Calculating Compound Interest
Compound interest is calculated by multiplying the initial principal amount by one plus the
annual interest rate raised to the number of compound periods minus one. The total initial
amount of the loan is then subtracted from the resulting value.
The formula for calculating compound interest is:
Compound Interest = Total amount of Principal and Interest in future (or Future
Value) less Principal amount at present (or Present Value)
= [P (1 + i)n] – P
= P [(1 + i)n – 1]
(Where P = Principal, i = nominal annual interest rate in percentage terms, and n = number of
compounding periods.)
NOW, DO THE TASK:
1. Take a three-year loan of $10,000 at an interest rate of 5% that compounds annually.
What would be the amount of interest?
Self-study Task: Understanding Mathematics as a tool in business and finance
 Tracing interest rates and its exponential effect for a period of time. For more detailed
information visit this link https://www.youtube.com/watch?v=DGwp_jsvauE;
 Privilege of having share of stocks and bonds, borrowing, and lending discussed in this
link: https://economictimes.indiatimes.com/definition/Stocks; and
https://www.econlib.org/library/Topics/Details/bonds.html;
 Risks of using a credit card to buy investments, detailed information on this link:
https://www.moneysmartmanitoba.ca/preservation-risk-management/scams-fraud/types
of-fraud/credit-card-investing/;

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Activity 3
Projecting Savings vs. Borrowing using Thematic approach by analyzing real life scenarios
on educational cost as it goes saying that “Saving now or Borrowing later”.
PERSPECTIVE (from this link: https://www.scholarshare529.com/plan/borrowing.shtml)
Using both loans and savings to pay for college is a pretty common strategy today, but there are
definitely factors you’ll want to consider when measuring the importance of college savings
against other competing financial priorities — including the impact of debt on the student’s
lifetime earning potential and how saving versus borrowing stacks up dollar for dollar. The good
news is saving doesn’t have to be painful. There are many best practices which can make saving
an easy, budget-friendly process.
Work on the following:
 Savings
 Stocks and Bonds
 Loans
 Credit Cards
Construct a synthesis of your insights and understanding about each of the abovementioned 4
concepts… Don’t forget to cite mathematical examples (computations) on each of the 4 concepts

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FORMATION ACTIVITY:
Give your responses on the following:
1. Why is considering personal financial management an important aspect of living or surviving
especially in these times of global crisis?
2. What is your stand on the following cases:
2.1 A newly-wed couple saved money for the education of their child through an educational
plan instead of borrowing loans.
2.2 A newly-wed couple took a house loan from the PAG-IBIG fund immediately after their
wedding instead of saving for a number of years and construct a house at an old age.
2.3 An ordinary individual with minimum salary owning a credit card.
3. Is it wise to own or hold credit card? Why or why not?

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SYNTHESIS ACTIVITY:
a. What are the similarities and differences of investment, loans, and bonds? Organize it into a
Venn diagram, and explain the concept behind your diagram.
b. Cite a personal experience or a case of a close friend or relative related to managing personal
finance. What do you observe on his/her/your personal management? Honestly, are
your/your friend’s financial management measures effective or not? Write your personal
insight about the case.
Go to the following link for further understanding:
https://www.cengage.com/resource_uploads/downloads/1111990905_341397.pdf
RESOURCES: Chen, J. (n.d.). Learn About Simple Interest. Investopedia. Retrieved July 21,
2020, from https://www.investopedia.com/terms/s/simple_interest.asp;
Kagan, J. (n.d.). Compound Interest. Investopedia. Retrieved July 21, 2020,
from https://www.investopedia.com/terms/c/compoundinterest.asp;
OSAGIE, A. F. (2018). CRITICAL SUCCESS FACTORS FOR
SUSTAINABLE GREEN CLEANING SERVICES AND
ORGANISATIONAL PERFORMANCE;

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Kensler, L. A., & Uline, C. L. (2016). Leadership for green schools:
Sustainability for our children, our communities, and our planet. Taylor
& Francis; and
Freed, A. B. (2008). Environmental service learning: The clean air zone service
learning project. Science Scope, 32(4), 46;
What is Stocks? Definition of Stocks, Stocks Meaning. (n.d.). The Economic
Times. Retrieved July 23, 2020, from
https://economictimes.indiatimes.com/definition/Stocks;
Bonds, Borrowing, and Lending. (n.d.). Econlib. Retrieved July 23, 2020, from
https://www.econlib.org/library/Topics/Details/bonds.html;
Using credit cards to purchase financial investments. (n.d.). Money Smart.
Retrieved July 23, 2020, from
https://www.moneysmartmanitoba.ca/preservation-risk
management/scams-fraud/types-of-fraud/credit-card-investing/.
Nocon & Nocon (2018). Essential Mathematics for the Modern World. C & E
Publishing, Inc.

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