Credit cards & Interests
What do we call the unpaid balance on a credit card that accumulates interest?
The outstanding balance
What is an installment?
A fixed periodic payment over time.
What is an annuity?
A series of equal periodic payments.
What is the present value of a lump sum?
The amount you must deposit today to reach a future goal
What is a sinking fund?
A savings plan where you deposit a fixed amount to reach a future goal.
If you plan to pay ₱1,000 per month for 12 months to clear a purchase, what type of payment structure is this called?
Ordinary Annuity
A ₱24,000 phone payable for 12 months at 0% costs how much per month?
₱2,000
Is a mortgage an example of an annuity?
A: Yes — an ordinary annuity.
What is the PV of ₱100,000 due in 5 years at 5%?
PV=₱78,353
If you want ₱60,000 in 2 years at 6% annual interest, do you deposit more or less monthly?
Less, because interest helps.
A ₱10,000 balance with 3% monthly interest becomes how much after one month?
₱10,300
Compute the monthly payment for ₱30,000 at 1% per month for 12 months using the annuity formula.
₱2,659.15 (approximately)
What does “ordinary annuity” mean?
Payments are made at the end of each period.
Lump-sum formulas use which key concept—compounding or discounting?
Discounting
Compute the monthly deposit to get ₱120,000 in 3 years at 8% annual interest.
₱2,913 approx.
Why is paying the minimum payment risky mathematically?
Because interest grows faster than the principal reduces.
You buy a phone worth ₱12,000 and agree to pay it in 6 equal monthly installments with 2% simple interest per month. How much will your monthly payment be?
Answer: ₱2,240 per month
Total interest for 6 months:
12,000×0.02×6= 1,440
Total amount to pay:
12,000+1,440= 13,440
Monthly payment:
13,440÷6= 2,240
Compute the future value of ₱1,000 monthly at 5% annual interest for 3 years.
₱38,000
If interest increases, what happens to the present value?
It decreases
Sinking fund = future value of what type of annuity?
Ordinary annuity