Illustration 5.1.

3 Let G be a graph, where V(G) =

5.1 Mathematics of Graphs
{a, b, c, d, e} and E(G) = {ab, ea, ed, db, dc, bc}.
The graph shown below is a possible diagram of
Basic terminologies G.

Many real-world situations can conveniently be

described by means of a diagram consisting of a
set of points together with lines joining certain pairs
of these points.

We begin by considering Figures 5.1.1 and 5.1.2,

which represent part of a park map and part of
an electrical network.
For simplicity, we may write an edge as uv. If e =
uv is an edge in G, we say that u and v are
adjacent vertices; the vertex u and the edge e
are incident with each other. If two distinct edges
are incident with a common vertex, then they are
adjacent edges.

Illustration 5.1.4

Either of these situations can be represented Vertices 𝒂 and 𝒃 are adjacent vertices because
diagrammatically by means of points and lines, as there is an edge joining them, while 𝒂 and 𝒄 are
in Figure 5.1.3. The points 𝑃, 𝑄, 𝑅, 𝑆 and 𝑇 are called not.
𝒗𝒆𝒓𝒕𝒊𝒄𝒆𝒔, the lines are called 𝒆𝒅𝒈𝒆𝒔, and the
whole diagram is called a 𝒈𝒓𝒂𝒑𝒉.

Note that the intersection of the lines 𝑃𝑆 and 𝑄𝑇 is

not a vertex, since it does not correspond to an
end of the cross-roads or the meeting of two wires.

Degree of a vertex

Let 𝑣 be a vertex of a graph 𝐺. The 𝑑𝑒𝑔𝑟𝑒𝑒 of a

vertex 𝑣 deg(𝑣), is the number of edges
connected with that vertex as an end-vertex.

Illustration 5.1.5

Definition 5.1.1 A graph G is a pair (V(G), E(G)), Consider the graph with vertices A, B, C, D, E and
where V(G) is a nonempty set of elements called f. Using the definition of a degree of a vertex. The
vertices, and E(G) is a family of two element degree of each of the vertex in the given graph
subsets of V(G) called edges. The set V(G) is called are as follows:
the vertex set of G, and the set E(G) is called the
edge set of G.

It is customary to represent a graph by means of

a diagram or a drawing. Each vertex is indicated
by a point, and each edge by a line or an arc
joining the points that represent its ends. There is
no unique way of drawing a graph; the relative
positions of points representing vertices and lines
representing edges have no significance.

Remark 5.1.5 In other books, the term graph

defined in

Definition 5.1.1 is often called simple graph.

Note that the following figures are not possible for
Euler Graph
Definition 5.1.1
The Swiss mathematician Leonhard
Examine that the edge with end vertices 1 and 2
Euler solved this problem. His solution,
in Figure 5.1.6 (a) must be written twice because
published in 1736
there are two edges connecting 1 and 2. These
edges are called multiple edges.

An Euler path is a path using every edge of the

graph G exactly once.

An Euler circuit is an Euler path that returns to its

In Figure 5.1.6 (b), the edge joining 3 and itself is start.
called a loop.
Remark: A graph is Eulerian if and only if the graph
If there are multiple edges but no loops, we call it has an Euler circuit.
a multigraph. If there are loops and multiple
edges, we call it a pseudograph. The diagram Given the graph below. Can you pass each edge
given in Figure 5.1.6(a) is an example of a exactly once that begins and ends at the same
multigraph while the diagram given in Figure vertex?
5.1.6(b) is an example of a pseudograph.

Simple graphs are graphs without multiple edges

or self-loops.

A graph G is connected if every pair of points can

be joined by an edge. Otherwise, we say that G is Thus, the given graph has an Euler circuit. Hence,
disconnected. it is an Eulerian Graph.

Example 5.1.7 The graph given below is Theorem 5.2.1 (Euler 1736)
connected.
A connected graph 𝐺 is Eulerian if and only if the
degree of each vertex of 𝐺 is even.

Example 5.2.3 Consider the graphs G and H

below. Graph G is Eulerian because every vertex
is of even degree.
Example 5.1.8 The graph G given below is a
disconnected graph.
Remark: A connected graph with exactly two odd So, let us start at a vertex with an odd degree—
vertices has at least one Euler path but no Euler either room C or room D. By trial and error, one
circuit. Each Euler path must begin at one of the such path is C–B–F–B–A–F–E–D–C–F–D.
two odd vertices, and it will end at the other odd
vertex. Brief History
Which of the following graphs has an Euler Circuit? The Mathematics of Graphs focuses on the
creation of models that represent real-world
contexts involving networks and graphs.

The Swiss mathematician Leonhard

Euler solved this problem. His
solution, published in 1736, may be
the first use of graph theory.

In this example. Given graphs a, b, and c,

Several uses of graph theory are the following…
determine which of these graphs has an Euler
Circuit. Pause the video and examine. Hamiltonian Graphs

In the given graphs only William R. Hamilton

graph c has an Eulerian
circuit.

The floor plan of the art gallery is pictured below.

Draw a graph that represents the floor plan, where
vertices correspond to rooms and edges
correspond to doorways. Is it possible to take a
stroll that passes through every doorway without
going through the same doorway twice?

Trees in Electric Circuits

We can represent the floor plan by a graph if we

let a vertex represent each room. Draw an edge
between two vertices if there is a doorway
between the two rooms, as shown below

Enumeration of Chemical Isomers

In the graph, since the two vertices are of odd

degree and the rest of it are of even degree. Thus,
by Euler Theorem’s remark, an Euler path exists,
but not an Euler circuit. Therefore, we pass through
each doorway once but we cannot return to the
starting point .
Four Colors of Maps
Hamiltonian Graph
Sir William Rowan Hamilton who, in 1857, invented
a puzzle-game which involved hunting for a
Hamiltonian cycle. The game, called the Icosian
game, was distributed as a dodecahedron graph
with a hole at each vertex.

To solve the puzzle or win the game one had to

use pegs and string to find the Hamiltonian cycle
Most commonly known applications of graph — a closed loop that visited every hole exactly
theory once.

A Hamilton path in a graph G is a path which visits

Genetic interaction network
every vertex in G exactly once.

A Hamilton circuit is a Hamilton path that returns

to its start.

Remark: A graph G is Hamiltonian if and only if the

graph has a Hamilton circuit.

Finding Hamilton Circuits

Ecological Networks
Which of these three figures has a Hamilton
circuit? Or, if no Hamilton circuit, a Hamilton path?

• G1 has a Hamilton circuit: a, b, c, d, e, a

• G2 does not have a Hamilton circuit, but does

have a Hamilton path: a, b, c, d

• G3 has neither.

Hamilton Circuits

Is there a circuit in this graph that passes through

each vertex exactly once? Try it.
 By inspection, there are five paths from A to F,
5.2 Weighted of Graphs
namely,
A weighted graph is a graph in which each edge
is associated with a value, called a weight.

Example: Shown in Figure 5.2.1 a weighted graph

where the number of kilometers (as weight)
between the corresponding cities.

Thus, the shortest path from A to F is ACEF of length

21.

In the previous example, there are only five

possibilities to consider, but in a more complex
graph, enumerating all paths would become
impractical.

One of the applications for weighted graphs is

finding the shortest path between two vertices.

One of the several algorithms that find the shortest

path between vertices in connected weighted
graph is the one discovered by Dutch
mathematician Edsger Wybe Dijkstra.
•Maps with weights representing distances

•Water networks with weights representing water

capacity of pipes

•Electrical circuits with weights representing

resistance or maximum voltage or maximum
current

•Computer or phone networks with weights Dijkstra’s Algorithm

representing length of wires between nodes
Objective: This algorithm aims to find the shortest
(vertices)
path from the start vertex to every other vertex in
A path from a vertex u to a vertex v of a graph is a weighted graph.
a sequence of adjacent edges starting u and
Dijkstra’s Algorithm
ending in v such that the end of each edge other
than the last one is the start of the next edge in the Step 1 Label the start vertex with permanent label
sequence. 0 and order label 1.

The length of a path is the sum of the weights of Step 2 Assign temporary labels to all the vertices
the edges of the path. that can be reached directly from the start vertex.

Example Step 3 Select the vertex with the smallest

temporary label and make its label permanent.
Add the correct order label.

Step 4 Put temporary labels on each vertex that

can be reached directly from the vertex you have
just made permanent. The temporary label must
be equal to the sum of the permanent label and
the direct distance from it. If there is an existing
temporary label at a vertex, it should be replaced
only if the new sum is smaller.

Step 5 Repeat from Step 3 until the destination

vertex has a permanent label.

Step 6 To find the shortest path, use the

permanent labels to trace back from the end
vertex to the start vertex. Write the route forwards
and state the length.

Example 1

The network below give estimated times in

minutes to travel along roads joining some places
in Caraga Region. Suppose you wish to use the
quickest route from Butuan to Tandag. Use
Dijkstra’s algorithm to find the quickest route
(shortest path).
Example 2 Find the shortest path from A to G using Definition The Chromatic Number
Dijktra’s Algorithm:
A coloring of a graph 𝑮 is an assignment of colors
to its vertices so that no two adjacent vertices
have the same color. The chromatic number
denoted by 𝝌(𝑮)is defined as the minimum
number of colors for which the graph G may be
colored. [Harary]

Example. Find the chromatic number of the graph G.

Shortest path/length: ABDEG of length 9

5.4 Graph Coloring

Example The fictional map in Figure 5.3.4 shows the
Suppose the map in Figure 5.3.1 shows the boundaries of
countries labeled with letters. We can represent countries on a
each country by a vertex and connect two rectangular
vertices with an edge if the two counties share a continent.
common border. So that it would be easy to Represent the map
distinguished the countries, different colors are as a graph, and
assigned whenever the countries share a find a coloring such
common boundary. that no two
countries with the
same boundary is
of the same color
using the fewest
number of color.

Solution:

First represent each country as a vertex and draw an

edge between two neighboring countries when they
share the same boundary, see Figure 5.3.5.
After several attempts, the graph in Figure 5.3.2
requires three colors. Observe closely that vertices
A, D and F are colored green, vertices B and E are
colored blue and the vertices C and G are
colored pink. As in Figure 5.3.3 the countries are
colored in three different colors such that no two
countries sharing the same boundary is of the
same color
Definitely we need at least two colors, so we need
to pick a vertex and assign with first color. One
strategy is that reuse the color to the vertices not
adjacent to the first vertex that we picked.

Try to reuse the same color, and use only another

color when the is no option. Okay, we pick vertex
A and the vertices not adjacent to A, those are
vertices E, G and J with color blue.

We need to pick another color say yellow and

assign this color to vertices B, D and H. We cannot
assign yellow to the remaining vertices, hence we
need to use red to color the vertices C and F but
not to vertex I because vertices C and I are
adjacent vertices.

Therefore there is no option but to use another

color to color vertex I, say green. The minimum
number of colors that we used to color the map is
four. That is, the chromatics number is 4. See Figure
5.3.6.
 when you need money, assuming you will pay it
6.2 CREDIT CARDS
back.
• CREDIT CARD You borrow money from a credit
(PART 1) card issuer and you pay later (with interest, if you
do not pay the balance in full and on time).
What is a Credit Card?
• DEBIT CARD The card issuer pays the merchant
A CREDIT CARD is a small plastic or metal card issued right away by deducting the money from your
by a bank or financial company, that allows checking or savings account.
cardholders to borrow funds with which to pay for
goods and services with merchants that accepts WHERE CAN I GET A CREDIT CARD?
cards for payment.
➢ MAIL In other countries like United States, a huge
This means….
number of offers are mailed to consumers.
➢ FINANCIAL INSTITUTIONS Banks and credit unions
➢ A credit card is a convenient tool that allows you usually offer credit cards.
to buy items now and pay for them later. ➢ DEPARTMENT OR CHAIN STORES The credit cards
they offer can be used to purchase products
and services from their particular stores.
If you buy something with a credit card,
you are in debt.
7 Basic Credit Card Features

Credit Card Type There are several types of credit

This means you owe money to the cards, and a single credit card issuer may issue any
company that gave you the credit card. or all of them, sometimes even multiple versions of the
same type of credit card.

Balance The balance on your credit card at any

If you don’t pay the entire amount at the given time is the total amount you owe, including
end of each month, you pay a fee for the purchases, finance charges and fees. The higher your
credit card called interest. credit card balance, the lower the available credit
you have to make additional purchases.

• When you use a credit card to pay for

Grace Period The grace period is a period of time
something, the card issuer pays the merchant
(typically 20-25 days), beginning on the card’s billing
right away, and then you pay the card issuer
date. This is the amount of time you have to pay your
later.
balance in full before a finance charge or interest is
applied. If you carried a balance from the previous
month, you might not have a grace period for your
new purchases. In addition, balance transfers and
cash advances typically do not have a grace period.

Annual Percentage Rate (APR) This is the interest

rate applied to any balance you carry past the grace
period or the amount of interest that is charged on a
balance over the course of a year. Credit cards can
have different APRs for different types of balances,
➢ In short, a credit card is a card that represents a e.g., balance transfers or purchases. APRs can be
line of credit. A line of credit is an account with fixed or variable. A monthly percentage rate would
money that you can borrow repeatedly. be approximately 1/12 of the APR.

Credit Limit This represents the maximum balance

you can have on the credit card at a point in time.
The maximum balance includes purchases, balance
transfers, cash advances, finance charges, and fees.
When you exceed your credit limit, your creditor may
charge you a fee, or raise your interest rate.
• A credit card is not a source of free money. It is
not a scholarship, donation, gift or anything
Rewards and Perks Some credit cards offer rewards
along those lines. It’s something you can use
in several different forms: cashback, miles points to
redeem, and discounts on future purchases. You can limited period of time after you open your credit
earn rewards on some or all of your purchases. Credit card.
card perks vary by credit card and may include
things like travel and trip cancellation insurance, Credit card balance transfers are typically used by
rental car insurance, extended warranty, or purchase consumers who want to save money by moving a
and price protection. high-interest credit card debt to another credit card
with a lower interest rate. credit cards
Credit Card Fees You may occasionally be hit with
REWARDS CREDIT CARDS These cards offer rewards
credit card fees, usually based on a certain type of
on purchases. There are three types of rewards cards:
transaction or as a penalty. The most common credit
cashback, points, and travel.
card fees include the annual fee, late fee, and over-
the-limit fee. Some fees can be avoided simply based • Cashback Most straightforward and easiest
on how you used your credit card. to use, but they don’t always result in cash
in your hand, some programs allow you to
• Annual Fee. This is money that you have to redeem your cash rewards only as a credit
pay every year for using a credit card. to your account (reduce your balance).
• Application Fee. This is a fee you may have • Points These are based on how much you
to pay to apply for a card. spend. Examples of point rewards cards are
• Balance transfer Fee. This is a fee you pay if auto rewards cards and hotel rewards
you move the balance of your card to cards. Depending on the card issuer, you
another card. can also redeem it for gift cards, cash, or
• Cash Advance Fee. This is a fee that you even travel.
have to pay when you withdraw money • Travel These earn you miles that you can
from the card at an ATM. redeem for airline ticket.
• Decline Fee. This fee is charged to your
account when you try to make a payment STUDENT CREDIT CARDS Specifically designed for
on something you do not have the money college students with the understanding that these
for. young adults have often have little or no credit card
• Foreign Transaction Fee. This fee shows up history. These cards may come with additional perks
when you buy something overseas. like rewards or a low-interest rate on balance
• Late Fee. This is a fee charged to you in the transfers.
event that you do not make your payments
CHARGE CARDS These cards do not have a preset
on time.
spending limit and balances must be paid in full at
• Over-the-limit Fee. This is a charge for times
the end of each month. Typically, charge cards do
when you go over your maximum credit
not have a finance charge or minimum payment
card limit.
because the balance needs to be paid in full.
(PART 2) SECURED CREDIT CARDS These are option for
people who don’t have a credit history or who have
• The first step to choosing your first credit card is
damaged their credit status. It requires a security
to figure out the type of credit card you want
deposit to be placed on the card. The credit limit is
based on your needs.
typically equal to the amount of the deposit made
Types of Credit Cards on the card, but it could be more in some cases,
depending on the – such as defaulting on a
STANDARD “PLAIN VANILLA” CREDIT CARDS These mortgage payment (failed to make sufficient
cards offer no frills or rewards. It allows you to have a payments for an extended period).
revolving balance up to a certain credit limit. This
means it can be used repeatedly up to a certain limit SUBPRIME CREDIT CARDS One of the worst credit
as long as the account is open and payments are card products. These are geared toward applicants
made on time. You might choose this type of credit who have a bad credit history and these cards have
card if you want a credit card that is not complicated high interest rates and fees. Despite this, some
and you’re not interested in earning rewards. consumers continue to apply for these cards
because they cannot get credit elsewhere.
BALANCE TRANSFER CREDIT CARDS While many LIMITED PURPOSE CARDS These credit cards can
credit cards come with the ability to transfer only be used at specific locations. Limited purpose
balances, a balance transfer credit card is one that cards are used like credit cards with a minimum
offers a low introductory rate on balance transfers for payment and finance charge. Store credit cards and
a certain period of time. An introductory rate is a low gas credit cards are examples of limited purpose
interest rate - often a 0% rate – that applies for a credit cards.
 BUSINESS CREDIT CARDS Designed specifically for
business use. They provide business owners with an
easy method of keeping business and personal
transactions separate. Your personal credit history is
still considered for business credit cards because the
credit card issuer still needs to hold an individual
accountable for the credit card balance.

ADVANTAGES AND DISADVANTAGES OF USING A

CREDIT CARD

ADVANTAGES

• It’s convenient to use in wide variety of places –

in stores, on the phone or online.
• You can better manage your budget using your
monthly statement with the details of all your
purchases.
• It is safer than carrying a lot of cash.
• You are not responsible for charges if your card
is stolen as long as you report it immediately.
• You can build your credit history.
• You can earn prizes like frequent flyer miles,
rebates or points.
• Often, you need a credit card to make car,
hotel, airplane or other reservations.

DISADVANTAGES

• If you make a late payment, do not pay the

balance in full, or exceed you credit limit, you will
have to pay extra in fees and interest.
• Credit cards can lead to debt and negatively
affect your credit history if it is not managed
properly.
• If you do not track your purchases, it can be
difficult to know how much you spend in one
month until your statement arrives.

(PART 3)
Average Daily Balance Formula

• When one is using a credit card, the balance

changes from day to day, hence interest should
be calculated daily to consider the fact that the
principal owed is not the same for the entire
month.
(PART 4)

How to Properly Manage Your Credit Card

Do

1. Pay your bills on time.

2. Never spend up to or more than your limit.
3. Remember, credit cards are not extra cash!
4. Apply for and use three or fewer credit cards.
5. Only charge the amount you can pay at the
end of the month. Pay your entire balance at the
end of the month or as much as possible.
6. Use your credit card over a long period of time
to show consistency.
7. Read your monthly statement carefully and
notify your credit card company of any errors
right away.
DON’T The formula for the down payment is given by,

1. Pay your bills late. Down payment = purchase price x down payment %
2. Spend more than your limit.
3. Apply for and use many credit cards. Mortgage loan
4. Keep a high balance on your credit card.
➢ the amount that is borrowed to buy a real
5. Constantly change credit cards.
state.
6. Forget to review your monthly statement for
➢ the term used when you make your
errors.
property as collateral for a loan from a
financial institution (bank).

The formula for the mortgage is given by,

6.3 HOME OWNERSHIP
Mortgage = purchase price – down payment
(PART 1)
• Have you ever think of having your own house Example
just like the pictures below?

Suppose you purchase a house worth Php 2,000,000

and the seller requires a 20% down payment

a. How much is the down payment?

b. How much is the mortgage loan?

a. Down payment = Purchase price 𝑥 Down Payment %

= 2,000,000 𝑥 0.20

Real Life Scenario = Php 400,000

Supposed you are planning to buy a house that costs b. Mortgage Loan = Purchase price − Down Payment
2,000,000.00 pesos. Upon checking your savings you
= 2,000,000 − 400,000
found out that you only have 400,000.00 pesos.
= Php 1,600,000
Since your savings are not enough to pay the house
in cash, you went to a bank and applied for a
mortgage. Amortization
You used your savings as down payment, and then
you will pay the mortgage or the remaining balance
Amortization
to the bank using the house as collateral.
➢ refers to the installment payment of the
Down payment loan.
➢ is a process of spreading out or gradual
payment of a loan or a debt over a period
of time, such as monthly payments on a
Mortgage Loan mortgage loan into a series of fixed
payments.
Down payment Term
➢ A type of payment , often in cash, made in ➢ the time period until the final payoff of the
the early stages of a purchase of an mortgage
expensive good or service. ➢ total Number of Payments
➢ The first/initial payment that one makes
when one buys something with an
agreement to pay the rest later Example
➢ A certain percent of the purchase price of
the property
➢ generally called the buyer’s or Assume that you need to pay for 30 years the house
homeowner’s equity you purchased. In how many months will it take for
you to fully pay your loan?
 Mortgage Loan Amount: 2,000,000−400,000 = Php
1,600,000
30 years - term of the loan
Annual Interest Rate: 6.5% = 0.065
30 years 𝑥 12 months/years

= 360 months

Types of Mortgages

a. Adjustable-rate mortgage (ARM)

➢ the interest rate is fixed for an initial term

then fluctuates with market interest
rates.

b. fixed-rate mortgage

➢ has an interest rate that is set at the

b. To determine the total payments, multiply the
beginning and never changes over the
number of payments by the monthly payments.
entire term of the loan.
30 12 = 360 number of payments
Most Common fixed-rate mortgage
360 10,113.08 = Php 3,640,708.8
❖ 15-year fixed-rate mortgage
c. To determine the amount of interest paid, subtract
❖ 30-year fixed-rate mortgage
the mortgage loan amount from the total payments.
Monthly mortgage Payment
3,640,708.8 − 1,600,000 = Php 2,040,708.8
➢ refer to a monthly payment on a
mortgage. (PART 2)
The monthly mortgage payment for is given by, Amortization
After securing mortgage, the lending institution
(bank) will prepare an amortization schedule.

The amortization schedule is a list for each mortgage

payment, the payment number, the interest
payment, the amount applied toward principal
amount, and the resulting or outstanding balance to
be paid.

Procedures for Computing an Amortization Schedule

Example Step 1 Find the interest for the first month. Use 𝐼 = 𝑃𝑟𝑡,
where 𝑡 = 1/12. Enter this value in the amount of
interest.
Suppose you purchase a house worth Php 2,000,000
and the seller requires a 20% down payment. Then Step 2 Subtract the interest from the monthly
you will loan the balance from a bank that charges amortization to get the amount paid on the principal.
6.5% annual interest to be paid for 30 years. Enter this amount in a column labeled amount of
a. How much is the monthly mortgage principal.
payment?
Step 3 Subtract the amount of payment on the
b. How much is the total payments over the life
principal found in step 2 from the mortgage amount
of the loan? to get the balance of the loan. Enter this in a column
c. How much is the amount of interest paid on labeled as Outstanding Balance
the loan over 30 years?
Step 4 Repeat the steps using the outstanding
Given Purchase price: Php 2,000,000 balance found in step 3 for the new principal.
Down payment: 2,000,000 𝑥 0.20 =
Php 400,000
 Example
Mortgage Loan

➢ the amount that is borrowed to buy a real

Suppose you purchases a house and secures a loan
state.
of Php 1,600,000 pesos for 30 years at an annual
interest rate of 6.5%. Compute the first two months of Amortization Schedule
an amortization for the loan.
➢ a list for each mortgage payment, the
Solution. payment number, the interest payment, the
amount applied toward principal amount,
The value of mortgage is 1,600,000, the interest rate is
and the resulting or outstanding balance to
6.5%, and the monthly payment or amortization is
be paid.
10,113.08.

Step 1 Find the interest for the month 1.

𝐼 = 𝑃𝑟𝑡

= (1,600,000) (.065) (1/12)

≈ Php 8,666.67

Step 2 Subtract the interest from the monthly

amortization.

10,113.08 − 8,666.67 = 1,446.41

Step 3 Subtract the amount of principal from the

mortgage.

1,600,000 − 1,446.41 = 1,598,553.59

Now we repeat steps 1-3 using the balance

1,598,553.59.

Amount of Interest for the second month.

𝐼 = 𝑃𝑟𝑡 = (1,598,553.59) (.065) (1/12)

≈ Php 8,658.83

Payment toward the principal during second month:

10,113.08 − 8,658.83 = 1,454.25

Outstanding balance after second month:

1,598,553.59 − 1,454.25 = 1,597,099.34

Key Takeaways

Down payment

➢ A type of payment , often in cash,

made in the early stages of a purchase
of an expensive good or service.