MAT 152: P3 EXAM REVIEWER Where :

P = the principal or initial amount of

money borrowed or invested
MODULE 13:
r = the annual interest rate, expressed
as a decimal
MATHEMATICS OF FINANCE: t = the time for which the money is
COMPUTING SIMPLE INTEREST AND borrowed or invested, usually in
MATURITY VALUE years

To understand simple interests, we will adapt Real-Life Applications:

Polya’s problem-solving framework.
Simple interest is commonly used in:
1. Understand the problem - Personal loans
2. Make a Plan - Car loans
3. Carry out the plan - Mortgages
4. Look back - Savings accounts

Simple interest - a type of interest that is Importance:

calculated only on the original principal amount of a
loan or investment. Simple interest shows us how much it costs to
borrow money and how much we might make
Key notes: from investing it.

● Simple interest is commonly used for EXAMPLE PROBLEM

short-term loans or investments.
Arthur took out a loan from her local bank to
● It is called simple because it is
renovate her sari-sari store. She borrowed a
calculated only on the original principal
total of PHP 50,000 at a simple interest rate of
amount.
12% per year. If the loan needs to be repaid in
● Simple interest is often used in 3 years, calculate the total interest Maria will
situations where interest payments are: pay, and the total amount she needs to repay at
monthly or annually. the end of the 3 years.

Maturity Value - the total amount that includes 1. Understand the problem
the money originally borrowed or invested plus the
extra money earned as interest during the loan or P = PHP 50,000
investment period. r = 12% interest or 0.12 in decimal
t = 3 years (to be repaid)
“Maturity value is what the lender or investor gets
back at the end of the loan or investment time” FIND:
- Total interest
Mathematical Formula: - Total amount Arthur needs to repay after
3 years
Simple Interest:
I=Pxrxt 2. Make a plan
Maturity Value: We will use the formulas for simple interest and
F=P+I or F = P(1+rt) maturity value.
 3. Carry out the plan Mathematical Formula:

a. Solve the simple interest (I)

I = P × r × t = PHP 50,000 x 0.12 x 3
I = PHP 18,000
Where:
b. Calculate the total repayment amount or the
maturity value (F). A = the amount of money accumulated after m
F=P+I periods, including interest.
P = the principal amount (the initial amount of
Since the calculated simple interest is PHP 18,000 money).
r = the annual interest rate (decimal).
F = PHP 50,000 + PHP 18,000 t = the time the money is invested or borrowed
F = PHP 68,000 m = the number of interest periods for one year.

4. Look back (Conclude) Note:

The compounding or conversion periods (m)
Arthur will pay PHP 18,000 in simple interest, and may be done:
the total amount he needs to repay after 3 years is
PHP 68,000 (maturity value). monthly (every month) - m = 12
bi-monthly (every 2 months) - m=6
quarterly (every 3 months) - m=4
semi-annually (every 6 months) - m=2
MODULE 14:
annually (every 12 months) - m=1

PRESENT AND FUTURE VALUE AT Real-Life Applications:

COMPOUND INTEREST
● Savings Accounts - Banks often
INTRODUCTION compound interest on savings accounts,
leading to higher returns over time.
Compound interest - a fundamental concept in ● Loans and Mortgages - Interest on
finance that has a profound impact on wealth loans and mortgages can be
accumulation and financial planning. compounded.
● Investments - Compound interest is a
Compound interest - the interest on a deposit
critical concept in investing.
or loan calculated based on both the initial
principal and the accumulated interest from
Importance:
previous periods.
Wealth Accumulation - enables individuals to
KEY POINTS: build substantial wealth over time.

- Compound interest allows money to Retirement Planning - Importance of starting

grow faster by earning interest on to save early for retirement security
interest.
- Compound interest is calculated on the Debt Management - for debt repayment
initial principal and the interest that has strategies and the importance of minimizing
been added to it. interest costs.
 EXAMPLE PROBLEM MODULE 15:

Juan borrowed PHP 75,000 from Tulay sa BUSINESS AND CONSUMER LOAN
Pag-Unlad, Inc. to start a small business. The
loan terms are an annual interest rate of 15%,
INTRODUCTION
compounded quarterly, and a loan term of 4
years. Juan wants to know how much he will
Compound interest - a fundamental concept in
owe at the end of the loan term.
finance th
1. Understand the problem
Loans - a common way for people to get the
money they need for various purposes such as
P = PHP 75,000
meeting financial needs, growing a business,
r = 15% annual interest or 0.15
paying off an appliance, and more.
t = 4 years

Amortization schedule - a table that shows

FIND:
how much you need to pay each month to
- Total amount (A) Juan will owe at the
repay your loan over time.
end of 4 years.

It breaks down each payment into the amount

2. Make a plan
that goes towards paying off the principal and
the amount that goes towards the interest.
We will use the formula for compound interest:

Introduction to Loans

– Loans are financial transactions where one

party (borrower) receives money from another
3. Carry out the plan party (lender) with the agreement to repay the
amount borrowed.
a. Solve the compound interest
– The borrower typically uses loans for various
purposes, such as making purchases, funding
projects, or covering expenses.
– Loans play a crucial role in both personal
finance and business operations
A = PHP 135,167.0855

4. Look back (Conclude)

Types of Loans

Arthur will owe approximately PHP 135,167 at the 1. Business Loans:

end of the 4-year loan term with Tanglaw ng Buhay - Used by businesses to finance operations,
Microfinance. expansions, equipment purchases, or other
investments.
- Business loans often require detailed business
plans, financial statements, and collateral.
- Business loans include term loans, lines of
credit, and Small Business Administration(SBA)
loans.
2. Consumer Loans: EXAMPLE PROBLEM
- Used by individuals to finance personal
expenses or purchases, such as buying a car, John decided to take out a loan of ₱45,000
home renovations, or paying for education. from a local bank to purchase a motorcycle.
- Consumer loans may have varying interest The loan has an annual interest rate of 10%,
rates, repayment terms, and eligibility criteria and he has to repay it over a year with monthly
based on the borrower's credit history and payments.
financial situation.
Questions:
- Consumer loans include personal loans, auto 1. What is John's monthly payment?
loans, mortgages, and credit cards. 2. Make an Amortization table based on this
problem.
Mortgage and Amortization
1. Understand the problem
Mortgage - a special loan you get from a bank
to buy a house. - The loan is ₱45,000
- Annual interest rate is 10%,
With a mortgage, the bank helps you pay for the compounded monthly
house, but there's a catch. The bank can take - The loan is to be amortized with monthly
your house away if you don't pay them back on payments over 1 year (12 months).
time and you call this collateral.
We need to find the monthly payment and
construct an amortization table.
Amortization - the process of breaking down
your mortgage into monthly payments called 2. Make a plan
installments.
a. Calculate the monthly payment: Use the
NOTE: amortization formula for the monthly payment.

Over time, each payment reduces both the b. Construct the amortization table: For each
principal and interest until the mortgage is fully month, calculate the interest payment, principal
paid off. payment,and outstanding balance

Amortization Formula (Monthly): 3. Carry out the plan

a. Monthly Payment Calculation

Where:

A = monthly amortization or periodic payments

P = principal amount or loan’s initial amount
i = the monthly interest rate (i=r/m)
Let’s calculate the monthly payment A:
n = total number of payments (n=mt)
*m = is the number of interest periods for one
year
b. First Month Payment Breakdown MODULE 16:

Interest payment (IP) for the period: FUNCTIONS & RELATIONS, AND
IP = 𝑃 = (₱45,000)(0.008333) = ₱375
MODELING REAL
Principal repayment (PR) for the first period:
Definition of Functions, Relations, Domain, and
PR = A − IP = ₱3,956.21 − ₱375 = ₱3581.21
Range

Outstanding Balance (OB) for the first period:

A relation is a set of ordered pairs and a function
is a relation in which for each element in the
domain there corresponds exactly one element in
Repeat Step b. until the Outstanding Principal will the range.
be zero
A. This relation is a function (f) which shows
one-to-one correspondence

The set of first numbers is called the domain of the

function and the set of the second numbers is
called the range of the functions.
Upon completing the table, there is a small number
difference due to each monthly calculation involving B. The following relation is a function since it shows
rounding off to the nearest cent, which can a many-to-one correspondence.
accumulate over the term of the loan.

4. Look back (Conclude)

Consistent Monthly Payments:

John makes 12 equal monthly payments of C. The following correspondence is called a

₱3956.21. relation and not a function since it shows a
one-to-many correspondence.
Interest Decreases, Principal Increases:

Over time, the interest portion of each payment

decreases, while the principal portion increases.

Clear Financial Plan:

The amortization table helps John understand how NOTE: All functions are relations, but not all
his payments are applied, ensuring transparency relations are functions.
and aiding in financial planning.
Function notation is a way of expressing a II. Devising a Plan:
relationship between two variables. ● We'll use the given function S(x) to represent
the cost of buying x kilograms of sugar.
To indicate that y depends on x, we can set ● Total cost = (cost per kilogram)(number of
function notation and written symbolically as f(x) = kilograms a customer will buy)
y which is read as “f of x equals y.” This does not
mean “f times x”, but it is instead a method of Can be represented with a function:
saying that y corresponds to x. S(x) = 105x

III. Carrying Out the Plan:

Solving real life situations represented as ● Total cost calculation if a customer buys 8
functions. kilograms:
S(x) = 105x
Cost - expenses incurred in the process of S(8) = 105(8)
producing goods or providing services. = ₱840
IV. Looking Back:
Revenue - total income generated from sales of ● We found the total cost of buying 8 kilograms
goods or services. of sugar using the given function S(x).
● This solution confirms the cost based on the
Profit - amount of money remaining after price per kilogram and the quantity purchased.
subtracting expenses (costs) from revenue. Therefore, the total cost of buying 8 kilograms
of sugar is ₱840 pesos.
Break-even - is the point at which you will have
sold enough units to cover all of your costs.
Consider the cost, revenue and profit functions
for other real life situation problems:
To refresh our memory, here are the four steps
that we need to follow: Cost function
1. Understand the Problem:
2. Make a Plan: Total cost C(x) - expenses for the production of
3. Carry out the plan: an item or a product.
4. Look back: ● variable cost (Vx) - cost that varies
depending on the level of production or activity.
● fixed cost (F) - cost that remains constant
Example Problems: regardless of the level of production or activity.
C(x) = Vx + F
1. Given a function S that can represent the cost
of buying "x" kilograms of sugar if it costs 105
pesos per kilogram. Determine the total cost if a Revenue function
customer buys 8 kilograms.
Total revenue R(x) - amount received for sale
I.Understanding the Problem: of goods or payments of service rendered.
● We need to find the total cost of buying 8 ● Revenue function = (price per unit,
kilograms of sugar at a rate of 105 pesos per p)(number of units, x)
kilogram. R(x) = px
Profit function System of Linear Inequalities: A set of two or
more linear inequalities involving the same
Total profit - money earned after paying the variables, with a solution that satisfies all
costs of producing and selling products or inequalities.
services.
● Profit function = Revenue function - Cost Solution Set: All values that satisfy an
function inequality or system of inequalities.
P(x) = R(x) + C(x)
Feasible Region: The overlapping region on a
graph where all inequalities in a system are
true, representing all possible solutions.
REMEMBER:
Graphing Inequalities: Plotting an inequality
Functions can be used to represent
on a coordinate plane by drawing boundary
relationships and patterns found in real-life
lines and shading regions that satisfy it.
phenomena such as population growth,
financial investments, temperature changes, Boundary Line: The line representing the
and physical motion.To create a function to equation in an inequality; solid lines for ≤ or ≥,
model a real-life situation, first identify the dashed lines for < or >.
relevant variables and their relationships. Then,
choose an appropriate mathematical Intercepts: Points where a graph meets the
expression or equation that represents the x-axis or y-axis, used to help plot lines.
relationship between the variables.
Vertex (Vertices): Corner points of the feasible
region where boundary lines intersect.

Test Point: A point (often (0, 0)) used to

MODULE 17:
determine which side of a boundary line to
shade.
LINEAR PROGRAMMING: SYSTEMS
OF LINEAR INEQUALITIES Solid Line: Used in inequalities with ≤ or ≥ to
include points on the line in the solution.
A linear inequality looks like a regular
Dashed Line: Used in inequalities with < or > to
equation but uses symbols like <, >, ≤, ≥ or ≠
exclude points on the line from the solution.
instead of an equal sign (=).
Origin: The point (0, 0), commonly used as a
Instead of one specific answer, the solution to a test point for shading.
linear inequality is usually a range of values.
These inequalities come up in real-life Quadrant: One of four sections on a coordinate
situations where you need to express plane, numbered I to IV counterclockwise from
conditions like "at least" or "at most." the upper right.

Coordinate Plane: A 2D plane created by the

Glossary of Terms x-axis and y-axis, used for graphing.

Linear Programming: A method for finding the

best outcome in a mathematical model with
linear functions and constraints as inequalities.
Step by Step Process in Solving System of 3. Using the origin (0, 0) as test point,
Linear Inequalities we shall have 0 > 5 which is false, thus
the test point is not included in the
I. Understand the Problem: solution set or feasible region. Lastly,
shade the right part of the x = 5 to
● Figure out what’s being asked and denote the “greater than” part of the
identify each inequality. problem is the solution set.
● Know that you’re looking for the area
where all inequalities are true.

II. Make a Plan:

● Plan to graph each inequality and test

points to find the solution region.

III. Follow the Plan:

● Graph Each Inequality:

○ Turn the inequality into an B. Sketch the graph of 2x + y ≤ 16.
equation by using "=" instead of 1.. Change the “less than or equal sign
"<" or ">". to” to equality for instance, 2x + y = 16
○ Solve for x- and y-intercepts,
draw the line (use a dashed line 2. Solve using intercepts, let x and y
for "<" or ">", and solid for "≤" or be equal to zero.
"≥"). 2x + y = 16
● Test a Point (like the origin): If it satisfies Let x = 0
the inequality, shade that side of the 2(0) + y = 16
line. y = 16 (x, y) = (0, 16)
● Find the Overlap: The shaded area that
all inequalities share is the solution. 2x + y = 16
Identify the vertices (corners) of this Let y = 0
region. 2x + (0) = 16
2𝑥 16
IV. Check Your Work: 2
= 2
*cross multiply
x = 8 (x, y) = (8, 0)
● Make sure all vertices satisfy the original
inequalities and that you’ve shaded the 3. Using the origin (0, 0) as test point,
correct solution area. substitute in 2x + y ≤ 16. It shows that
2 (0) + 0 ≤ 16⟹ 0 ≤ 16 is true. Since
(0, 0) satisfies the inequality, the area
EXAMPLES:
of the half-planes where (0, 0) is, thus
A. Sketch the graph of x > 5.
it is the solution set of the inequality.
1. Set the x > 5 to x = 5,

2. Graph it as x = 5. Secondly, cut off the

lines or use broken line to signify that x
= 5 is not included in the solution.
Key Points:
- A system of linear inequalities has multiple Decision Variables: Unknowns in a linear
inequalities with variables (e.g., x and y), programming problem that need to be
represented graphically as lines on a coordinate determined to reach the objective.
plane.
- The solution is the overlapping region where Structural Constraints: Limits on resources or
all inequalities are satisfied. factors directly affecting the objective function.

Real-Life Applications: Non-negativity Constraint: Requirement that

- Economics: A lemonade stand's limited decision variables must be greater than or
supplies (lemons, cups) create constraints equal to zero.
represented by inequalities.
- Engineering: Engineers use inequalities to Maximization Problem: A linear programming
ensure materials in bridges can handle problem where the goal is to maximize the
expected loads. objective function.
- Everyday Life: Rules like "TV only for 1
hour" or "homework before play" act as Graphical Method: Solving linear programming
inequalities setting limits. problems by graphing constraints and finding
the optimal solution visually.
Importance:
- Systems of inequalities help us understand Optimal Solution: The best solution to a linear
real-world limits, guiding decisions in various programming problem that satisfies all
areas like budgeting, construction, and daily constraints and maximizes or minimizes the
activities. objective function.

Dual Problem: Every linear programming

problem has a corresponding dual problem. For
MODULE 18: a minimization problem, the dual is a
maximization problem. Solving the dual can
provide insights into the original problem and
SOLVING LINEAR PROGRAMMING:
help verify the optimal solution.
MAXIMIZATION PROBLEM

Two Properties of Linear Programming

Linear Programming (LP): A method for Problems
finding the best solution to a problem with linear 1. Maximizing (P = ax + by)
constraints, often used in optimization. 2. Minimizing (C = ax + by)

Objective Function: The goal of a linear The function to be optimized in linear

programming problem, like maximizing profit or programming is called the objective function.
minimizing cost. This usually refers to profit maximization or cost
minimization. In linear programming problems,
Constraints: Limits or rules that must be constraints are given by inequalities (called
followed in a linear programming problem, inequality constraints).
usually represented as inequalities.

Feasible Solution: A solution that meets all the

constraints of a linear programming problem.
Two types of constraints: Example Problem:

Structural Constraint is a limit on the 1. A tutoring center offers two types of tutoring
availability of resources; it is also referred to as sessions, Mathematics, and English. Each
explicit constraint. tutoring session requires the assistance of two
tutors, Tutor 1 and Tutor 2. Each Mathematics
Non-negativity constraint is the constraint that session requires 1 hour of tutoring by Tutor 1
restricts all the variables to zero and positive and 2 hours by Tutor 2, while each English
solution; it is also referred to as implicit session requires 2 hours by Tutor 1 and 2 hours
constraint. by Tutor 2. The center has Tutor 1 available for
20 hours each month and Tutor 2 available for
30 hours each month. The profit per
Solving Linear Programming maximization Mathematics session is ₱200, and the profit per
problem graphically using Polya’s four step English session is ₱300. How many sessions of
process each type should the center schedule each
month to maximize profits?
I. Understand the problem
II. Devise a plan: I. Understand the problem:
III. Carry out the plan • The goal is to maximize profits by determining
IV. Look back: the optimal number of sessions of each type to
schedule each month.
Key Points: II. Devise a plan:
● Goal: Maximize something like profit. • To maximize profits, we need to determine the
● Choices: Decide on different actions or number of Mathematics and English sessions
quantities. that will use the available tutoring hours most
● Rules: Follow limits like budget or time. efficiently. We'll set up equations based on the
● Possible Solutions: The set of choices that constraints and then use techniques like
meet all rules. substitution or linear programming to find the
solution.
Real-Life Applications: III. Carry out the plan:
● Business: Deciding how many products to Step 1. Represent the unknown in the problem.
make to maximize profit. Let x represent the number of cookies.
● Finance: Choosing investments to earn the Let y represent the number of chocolate bars.
most profit with acceptable risk.
● Transportation: Planning the best routes to Step 2. Tabulate the data about the facts (if
save time and fuel. necessary).

Importance: Mathematics (x) English (y) Availability

● Uses resources wisely, help save money,
makes good choices based on data, makes the Tutor 1 1 2 20
best use of time, money, and materials, and
Tutor 2 2 2 30
help in long term strategy and growth.
Profit 200 300

Step 3. Set-up the functions: (objective,

structural and non-negativity)
Maximize: P = 200x + 300y - Objective Function • To check, substitute the value of x and y to
Subject to: x + 2y ≤ 20 Structural Constraints the first equation. Point of intersection = (10, 5)
2x + 2y ≤ 30 x + 2y = 20
x≥0 Non-negativity Constraints 10+ 2(5) = 20
y≥0 10 + 10 = 20
Step 4. Plot the constraints of the maximization 20 = 20
problem on a graph, with Mathematics (x)
shown on the horizontal axis and English (y)
shown in the vertical axis, using the intercept The graph looks like this:
rule.

Step 5. Solve the intersection of the lines,

which satisfies the solution simultaneously, Step 6. Substitute the feasible vertices to the
using elimination method and substitution function to get the maximum.
method. Maximize: P = 200x + 300y
P = 200(0) + 300(10) = ₱3, 000
First equation: x + 2y = 20 P = 200(15) + 300(0) = ₱3, 000
Second equation: 2x + 2y = 30 P = 200(10) + 300(5) = ₱3, 500

• We will solve the intersection of the first Step 7. Decision

equation and second equation using the Therefore, we should schedule 10 Math
elimination method. Find the Least common sessions and 5 English sessions each month to
Multiple (LCM) of x to eliminate the variable x. maximize profits.

IV. Look back:

Interpret the solution: To maximize profits, the
tutoring center should schedule 10 Math
sessions and 5 English sessions monthly. This
balances tutor availability and session
• We will substitute the value of x in the first profitability, ensuring efficient resource
equation to obtain the coordinate of the allocation.
intersection.
MODULE 19:
Key Points of Linear Programming
Minimization:
SOLVING LINEAR PROGRAMMING:
MINIMIZATION PROBLEM - The goal is to find the lowest possible value,
like minimizing cost or time.
- Every minimization problem has a dual
Linear programming aims to minimize a maximization problem. Solving the dual gives
function under certain constraints, with all insights into the original.
variables kept non-negative. Every minimization
problem has a corresponding maximization Real-Life Applications:
problem (called the "dual"), where solving one
can help understand the solution to the other. - Manufacturing: Minimizing production costs.
The process for minimization mirrors that of - Transportation: Reducing delivery expenses.
maximization, though minimization is often - Healthcare: Efficient use of doctors and
focused on reducing costs. resources.
- Investments: Selecting low-cost, safe options.
Differences
Importance:
1. Objective Function:
- Maximization: Aims for the highest value. - Linear programming minimization helps save
- Minimization: Aims for the lowest value. money, time, and resources, improving
efficiency and reducing costs.
2. Constraints:
- Maximization: Often uses "≤" constraints Example:
(upper limits).
- Minimization: Often uses "≥" constraints 1. You're working with your dad on the farm,
(lower limits or requirements). aiming to spend less on operations to make
more profit. To do this, you need to figure out
3. Optimal Solution Strategy: how many post-harvest machines to build. Its
- Maximization: Find the highest objective objective and constraints are as follows:
function value within the feasible region.
- Minimization: Find the lowest objective Minimize monthly cost: c = ₱50x + 60y
function value within the feasible region. Subject to: x + 2y ≥ 10
3x + 2y ≤ 18
Similarities x≥2
x≥0y≥0
Both types follow a similar approach:
● Define the objective function.
● Identify and plot constraints. I. Understanding the Problem
● Determine the feasible region. • We need to minimize the monthly cost of the
● Check the objective function at the farm operations.
region's vertices. II. Make a Plan.
● Choose the optimal solution based on • We'll use the graphical method to visualize the
maximizing or minimizing needs. feasible region defined by the constraints and
then determine the optimal solution by
evaluating the objective function at the corner The graph looks like this.
points of the feasible region.
III. Carry out the Plan.
• Since all function
s are given, jump to Step 4.

Step 4. Plot the constraints of the minimization

problem on a graph using the intercept rule.

Step 5. Solve the intersection of the lines,

which satisfies the solution simultaneously,
using elimination method and substitution
method.

First equation: x + 2y = 10
Second equation: 3x + 2y = 18 Step 6. Substitute the feasible vertices to the
function to get the minimum.
• We will solve the intersection of the first Minimize: C = 50x + 60y
equation and second equation using the P = 50(2) + 60(6) = ₱460
elimination method. Find the Least common P = 50(2) + 60(4) = ₱340
Multiple (LCM) of x to eliminate the variable x. P = 50(4) + 60(3) = ₱380

Step 7. Decision
To minimize the monthly cost and increase
profit, we should build 2 units of the first type of
post production harvest equipment and 4 units
• We will substitute the value of x in the first of the second type and with the Minimum Cost
equation to obtain the coordinate of the of ₱340.
intersection.
x + 2y = 10 IV. Look back:
x + 2(3) = 10 Interpret the solution: It confirms that building 2
x = 10 – 6 units of the first type and 4 units of the second
x=4 type indeed minimizes the monthly cost while
•To check, substitute the value of x and y to the meeting all the constraints. Minimizing
first equation. Point of intersection = (4, 3) equipment costs helps the farm save money,
x + 2y = 10 making it more profitable and competitive in the
4+ 2(3) = 10 market.
10 = 10