Arithmetic of Finance SS3 Mathematics Lesson Note

SPECIFIC OBJECTIVES: At the end of the lesson, students should be able to 

• Calculate simple interest given the principal, rate and time.
• Calculate compound interest using the formula
• Determine  the depreciation value of an item 
• Compute the annuities in a given problem. 

INSTRUCTIONAL  RESOURCES ; 

• Financial magazines, 
• currencies.

LESSONS PRESENTATION :

STEP 1: Identification of prior ideas

MODE; Individual

TEACHER’S ROLE: The teacher asks the students to state the formula of compound interest.

STUDENTS` ROLE: The students answer the questions according to the teacher’s instructions.

STEP2: EXPLORATION

MODE: Entire class

TEACHER’S ROLE: The teacher explains depreciation and annuity to the students.

Depreciation to a situation in which an item loses value over some time. The amount of decrease every year is called the depreciation charge. An annuity is a sequence of equal periodic deposits. The annuity due is the payment at the commencement of the agreed interval. In addition, the period between the commencement of the first payment of the annuity and the last payment interval is called the term of the annuity.  

STUDENTS ROLE: The students are to listen to their teacher and ask questions where necessary.

STEP 3: Discussion 

MODE: The whole class

Teacher’s Role: The teacher leads the students to solve this problem.

Example: A small electricity generating set costing #30000 loses its value by 20% during the first year and 15% in the second year. Calculate its current value at the end of the second year. 

                         SOLUTION

End of the first year value: = #30000 –

                                                        = #30000 – #6000

                                                        = #24000

End of the second year value:= #24000 –

                                                      = #24000 – #3600

                                                      = #20400

Example: During every financial year, the value of a machine depreciates by 10%. Find the original value (cost) of a machine which depreciates by #2250 during the second year.

                                        SOLUTION

           Let the original cost of the machine be #x    Depreciation during the 1𝑠𝑡year = 10% of #x = #10

            Value of the machine at the beginning of the second year = #

               Depreciation during the second year =  

                    Depreciation during second year = #2250

                          𝑥 = #25000

             Therefore, the original cost of a machine is #25000.

STUDENTS ROLE: The students participate actively.

STEP 4: Application

Mode: Whole class

TEACHER’S ROLE: The teacher leads the students to solve this problem.

The addition of all payments plus accumulated interest is called the amount of annuity.

 Formula for the amount of an annuity (A) = P where p= deposit in naira made at each payment, r =interest rate per payment period, n=payment period

Example: Calculate the amount of an annuity of #3500 payable yearly for 25 years at 10% per annum compounded annually.

                 SOLUTION

                     A = P, P = #3500, r = 10% = 0.1  , n = 25

                           A = #3500

                       A = #3500x 98.35

                          = #344214.71

STUDENTS ROLE: Students participate by writing what is on the board.

STEP 5: Evaluation

MODE : The whole class

TEACHER’S ROLE: The teacher drills the students to solve this problem.

Find the amount of an annuity of #2000 payable yearly for 30 years at 15% per annum compounded annually.

STUDENTS ROLE: Students solve the problem perfectly.

ASSIGNMENT: 

1. Find the amount of an annuity of #55400 payable yearly for 43 years at 9% per annum compounded annually.
2. Calculate an annuity of #1500 for 2 years at 15% compounded annually.
3. A housewife paid #2000.00 for a small transistor radio. The value of the radio depreciates by 6% in the first year and 4% in the second year. Calculate its value at the end of the second year.

REFERENCE BOOKS: 

• New General Mathematics for SS3
• New Concept Mathematics for SS3.
• Multipurpose Mathematics for SSCE.