Esssential terms in financial Mathematics

This is all about financial mathematics in Grade 11

1. Essential Term in FINANCIAL MATHEMATICS

2. APPRECIATION Appreciation is the increase in the value of an asset (like house, land, or investments) over time. It often happens because of factors like demand, improvements, or inflation. Example: A lot owner bought a piece of land for P500,000. The value of the land appreciates by 8% every year.

3. DEPRECIATION Depreciation is the decrease in the value of an asset over time. It usually happens due to usage, aging, or becoming outdated. Example: A car bought for P80,000 drops in value to P500,000 after several years.

4. SIMPLE INTEREST Interest that is computed on the principal and then added into it Interest is computed on the principal and n accumulated past interest COMPOUND INTEREST Formula: S.I.   Formula: A  

5. LOAN Loan is money borrowed from a bank or lender that you must pay back over time, usually with added interest. Example: Borrowing P1,000,000 from the bank to buy a house and playing it back monthly with interest.

6. MORTGAGE It is a specific type of loan used to buy real estate (like house or land). The property itself is used a guarantee (collateral) until the loan is fully paid. Example: You borrow money from a bank to buy a house, and if you don’t pay, the bank can take the house.

7. ACCUMULATED VALUE (or future value) of an investment is the total amount an investment is worth after a certain time, including the original investment and all growth (appreciation or interest) Example: If you invest P100,000 today and it earns P50,000 interest in 5 years, the accumulated value is P150,000.

8. Conversion or Interest Period-time Between Successive Conversion of Interest

9. If compounded annually the conversion period is 1 year . If compounded quarterly the conversion period is 3 months . If compounded monthly the conversion period is 1 month . If semi-annually the conversion period is 6 months .

10. FREQUENCY OF DISTRIBUTION It is the number of conversion periods in one year. Example: If an account earns 5% annual interest compounded quarterly, the frequency of conversion is 4 times a year

11. RATE Yearly rate of increase of the investment . PERIOD RATE The rate of interest for one conversion method. TIME OF TERM How long in years the money is borrowed or invested.

12. APPLICATION OF SEQUENCE AND SERIES IN FINANCIAL PROBLEMS

13. Financial problems such as periodic payments for loans and mortgages can be solved using sequences and series. These mathematical tools are essential in determining the accumulated value of investments over time.

14. A lot owner bought a piece of land for P500,000. The value of the land appreciates by 8% every year. What will be value of the land after 5 years A cellphone was purchased for P32,500 in 2015. If the value of the cellphone depreciated annually by 16%. Find its value now.

15. Clearly, animals know more than we think, and think a great deal more than we know. ― Irene M. Pepperberg

16. Koalas are even more lazy than cats. Koalas don’t have much energy and, when not feasting on leaves, they spend their time dozing in the branches. Believe it or not, they can sleep for up to 18 hours a day!

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18. Cats love to sleep. A fifteen-year-old cat has probably spent ten years of its life sleeping. Also, cats use their whiskers as feelers to determine if a space is too small to squeeze through.

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24. Dogs can smell feelings

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