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https://youtu.be/H5V9aDhA3ag
REVIEW
The formula for simple interest is:
I = PRT
Where
=I interest
principal (the amount of money borrowed)
=P
R rate at which the interest is to be paid
=
term or length of time the debt (money
=t
owed) has to be paid
6
REVIEW PROBLEM
Simple Interest What is the simple interest
on P16,000 for 5 years at 4% interest per
year? How much should the lender receive at
the end of the term?

P19,200
7
 LESSON 2
CONVERTING CURRENCIES

LEARNING STRAND 3- MATHEMATICAL

AND PROBLEM-SOLVING SKILLS
BUSINESS MATH 1
 INTRODUCTION

• In Lesson 1 you learned how to compute for interest on loans and

calculate monthly amortization for goods bought on installment basis.
These are skills that an entrepreneur needs in order to run a business
well. But what if you have a customer who comes from another
country and wishes to pay using his/her country’s currency (money)?
Would you refuse to do business or sell something to him/her? That
would not be a good idea. Businesses are now beginning to become
global. The more people you make transactions or do business with,
the more chances you have to earn. In this lesson, you will learn how
to convert currencies (money) from one country to another.
LET’S READ THIS
 If you were Mr. Santos, would you accept this customer’s
money? How sure are you that what he pays is really equivalent
to P2,500?
 CONVERTING CURRENCIES

A currency is a unit of exchange. It refers to money used to buy goods and

services. Within one country, a single currency is usually used. The country’s
government issues these currencies or bank notes or bills. Do you know what
the currency of the Philippines is? If you answered pesos, you are correct.
Do you know the currencies used in other countries? Take this test and find out.
LET’S TRY THIS MATCH THE COUNTRY ON COLUMN A WITH
THE CURRENCY ON COLUMN B. WRITE ONLY THE LETTERS.

Column A Column B
Country Currency
_____ 1. Mexico a. Pound
_____ 2. Russia b. Yen
_____ 3. U.S.A. c. Francs
_____ 4. Japan d. Lira
_____ 5. Saudi Arabia e. Peso
_____ 6. India f. Rubles
_____ 7. Great Britain g. Dollar
_____ 8. Italy h. Rupee
_____ 9. Switzerland i. Rial
_____10. Thailand j. Baht
Countries often do business with one another. The
Philippines exports (sells to another country) products like
abaca and coconut oil. We import (buy from other
countries) products like electronics devices and machinery.
For an entrepreneur in an export or import business to
succeed, he/she must know how to convert one currency to
another. People whose business often deals with foreigners
also need this skill. Since a lot of Filipinos now work abroad
and bring in foreign money, knowing how to convert one
currency to another is needed by almost all businessmen.
To convert one currency to another, you must
first consult the exchange rate for currencies.
This is a list of currencies all over the world
with their equivalent exchange rate in the
Philippine peso. These are changed daily and
can be found in newspapers, in banks and in
money changers.
STUDY THE
EXCHANGE
RATE FOR
DATE:
______________
FOUND IN
______________
NEWSPAPER.
 TO USE THIS EXCHANGE RATE, FIND
THE EQUIVALENT VALUE IN PESO OF
THE CURRENCY YOU WISH TO
CONVERT.

For example: Based on the above exchange rate, write down the
exchange rate to pesos of the following currencies:
1. U.S. dollar _______________
2. Saudi rials _______________
3. Thai baht _______________
4. Hongkong dollar _______________
5. Japanese yen _______________
6. Kuwaiti dinar _______________
Currencies have different exchange
rates. These rates change every day.
The U.S. dollar, for example, has an
average exchange rate of $1 to
P50.00. The Hongkong dollar is about
HK$1 to P7.00. Converting currencies
use simple multiplication or division.
Study how to convert currencies below.
1. How much would U.S.$45.00 be in Philippine pesos
if the exchange rate is $1.00 = P51.20?

2. How much would HK$342.20 be in Philippine pesos

if the exchange rate is HK$1.00 = P7.20?
What do you notice about the above
computations? Converting currencies is simple
because only multiplication or division is used.
Note, too, that the values are placed so their
signs (like US$ or P) cancel out. Signs are
cancelled out as shown above.
Study how to convert currencies below.
3. Convert P93,500 into U.S. dollars if the exchange
rate is $1.00 = P51.20.

5. Convert P450.00 to Hongkong dollars. The

exchange rate is HK$1.00 = P7.20.
• Do you now know how to convert
currencies?
• It’s quite simple, isn’t it?
• Use a calculator if you have one. It
will make conversion easier for you.
Let’s go back to Mr. Santos and his
Arab customer.
HOW MUCH SHOULD THE CUSTOMER PAY IN SAUDI RIALS?

If you answered that P2,500 is equivalent to 7850.00 Saudi rials,

you are correct.
 LET’S THINK ABOUT THIS

• Why do the money of different countries

have different values?
• Why do exchange rates change daily?
• What does the value of the Philippine peso
say about our economy?
• Currency values depend on the economic status of that country and
other factors. Usually, the richer the country is, the more valuable
its currency becomes. For example, the Philippine peso currently
has a lesser value than the US dollar. This is because the United
States is more economically powerful than the Philippines.
• Exchange rates change daily because factors called “market
forces” affect the value of each currency. For example, if a country
goes to war, it’s currency’s value can either go up or down
depending on the outcome of the war.
• Learning how to convert one currency to another is important yet it
is very easy to do. A good entrepreneur should have this skill.
 A N S WE R TH ESE Q U ES TI O N S O N C U R R E N C Y C O N V ER S I O N S . U S E A
SE PA R ATE S H E ET O F PA P ER F O R Y O U R C O M P U TATI O N S . I F Y O U
H AV E A C A L C U L ATO R A N D K N O W H O W TO U SE I T, Y O U M AY D O
S O . IT WO U LD M A K E C O M P U TI N G EA S I E R A N D FA S T ER .

1. How much would Lira 150,000 be in Philippine pesos if the exchange rate is Lira 4.20 = P1.00?
2. Convert P105,500 into U.S. dollars if the exchange rate is $1.00 = P51.20.
3. How much would Saudi rials 360.20 be in Philippine pesos if the exchange rate is Saudi rials 1.00 =
P3.42?
4. Convert P4,378.00 to Hongkong dollars. The exchange rate is HK $1.00 = P7.20.
5. If the exchange rate is Pounds 1.00 = P65.00, how much would 356 Pounds be worth in Philippine
pesos?
6. Convert P10,450 into U.S. dollars if the exchange rate is $1.00 = P50.25.
7. How much would Saudi Rials 550.50 be in Philippine pesos if the exchange rate is Saudi Rials 1.00 =
P4.20?
8. If the exchange rate is Pounds 1.00 = P66.00, how much would P1,600 Pounds be worth in Philippine
pesos?
 LESSON 3
COMPUTING TAXES
LEARNING STRAND 3: MATHEMATICAL
AND PROBLEM SOLVING SKILSS
BUSINESS MATH 1
 C O M P U T I N G TA X E S

When a business starts to earn profits, it is the

duty of the owner to pay taxes. Taxes are used by the
government to build roads, run hospitals, build schools
and fund other projects. A good citizen of the
country pays his/her taxes honestly and on time. How
are these taxes computed? In this lesson, you will
study how to compute income taxes using a
progressive taxation scheme.
 C O M P U T I N G TA X E S

Taxes are collected by the government from earning individuals and

businesses. These taxes are used to pay the salaries of government
workers, construct roads and provide other basic services. A good
citizen of the country pays his/her taxes regularly and honestly.
 L E T ’ S T RY T H I S

Ask your parents or any working person in your community who

pays taxes how he/she paid last year in tax. Find out if they know
how these taxes are computed. Also, identify things in your
community that are funded by the taxes that working people and
business paid.
There are many forms of taxation. Direct taxes are levied
(imposed) on people. They are paid directly to the tax-collecting
agency of the government, the BIR (Bureau of Internal Revenue).
Income, inheritance and residence taxes are examples of direct
taxes.
 L E T ’ S T RY T H I S

Indirect taxes are levied against goods and services. The

people pay for these taxes, too, but not directly. These taxes
are already included in the price of goods we buy. Examples of
these are sales taxes and duties paid when businesses import
goods from other countries.

In this lesson, you will study a form of direct taxation. It

applies to income taxes that are computed and paid yearly. This
is the progressive tax system..
 L E T ’ S T RY T H I S

Do you know what income taxes are? Income taxes are the taxes that
people who work or earn pay to the government yearly. In a progressive
income tax system, the more you earn, the more taxes you pay. For example,
people who earn less than P2,500 a year are not required to pay taxes.
Those who earn from P2,500 to P5,000, a year have to pay taxes amounting
to 1% of the amount above P2,500.

Study the problem below.

If Mang Kanor, a fisherman, earned P4,000 in a year. How much
tax does he have to pay under the progressive tax system?
 L E T ’ S T RY T H I S

According to the tax table used by the people who work with the BIR, he has
to pay 1% of the amount above P2,500. There is a sample tax table on the next
slide.
To compute for the tax that he has to pay, you must first determine how much
Mang Kanor earned above P2,500.
P4,000 – P2,500 = P1,500
Why was this computed? According to the tax table, only yearly income above
P2,500 are taxable. Read on.
Compute for 1% of P1,500
P1,500 × .01 (1% is equal to1/100 or 0.1) = P15
Mang Kanor has to pay P15 per year in income taxes.
L E T ’ S T RY T H I S
 LET’S THINK ABOUT THIS

If you were Mang Kanor, would it be easy for you to

pay your tax? Why?

Although P15 is relatively small to a lot of people, it is

could already be a big amount for those who have a
very small income. P15 out of P1,500 could already be a
significant amount for Mang Kanor.

How about somebody who earns much more?

 LET’S THINK ABOUT THIS

Julia works as a salesclerk in a department store.

She earns P4,000 a month. How much does she have to
pay in taxes per year?

To compute for her income tax, find out how much she
earns in a year.

P4,000 × 12 (for 12 months in a year ) = P48,000

 LET’S THINK ABOUT THIS

According to the progressive tax table, earnings over P40,000 but

not over P60,000 must pay a tax base (fixed amount to be paid) of
P3,075 + 15% of excess over P40,000 in taxes. To compute for Julia’s
income taxes, you must first determine how much Julia earned above
P40,000.

P48,000 – P40,000 = P8,000

15% of the excess over P40,000 is computed as

P8,000 × .15 (for 15% since it is equal 15/100 of .15) = P1,200

Therefore, Julia must pay P3,075 + P1,200 in income taxes. How much is
her total tax due?
 LET’S THINK ABOUT THIS

If you computed P4,275, you are correct.

Note that for employees receiving monthly salaries, taxes are automatically
deducted from their salaries. Usually, the people in the Human Resources
Department (HRD) of a company handle this.
How much should be deducted monthly from Julia’s salary if her yearly tax
due is P4,275?

Monthly tax due = P4,275/12 = P356.25

 LET’S THINK ABOUT THIS

The amount of P356.25 is automatically deducted from Julia’s salary

by her company. If her gross income is P4,000 a month, how much is her
take home pay after taxes are deducted?

Gross income – Monthly tax due = Take home pay

P4,000 – P356.25 = P3,643.75

Julia’s take home pay is P3,643.75. This is the amount that she actually
receives and “takes home” with her. How much is her take home pay for a
year?

P3,643.75 × 12 months = P43,725

 LET’S THINK ABOUT THIS

You noted that in the progressive tax scheme for income taxes, the more you
earn, the more tax you pay. Do you think this system of taxation is fair? Why?
 L E T ’ S T RY T H I S

Compute for the yearly tax due based on the

progressive tax table above for the following incomes:

1. P56,000
2.P3,000
3.P458,000
4.P67,000
5.P670,000
 L E T ’ S T RY T H I S

Of course, computing for taxes is not easy. There

are other things you have to compute for aside from
the tax due. You also have to consider tax exemptions,
withholding taxes and other items. These are not to be
covered in this lesson anymore. You may read the
module Filling Up Forms Accurately to learn how to fill
up Income Tax Return forms.
 LET’S TRY TH I S

A. Compute the yearly tax due and the monthly tax

due based on the progressive tax table ofor the
following incomes:
1. P26,000
2. P78,000
3. P158,000
 LET’S TRY TH I S

B. Answer the following questions:

1. Mang Tinoy is a mechanic. If he earns P5,000 a month,
how much would he earn in a year not including the 13th
month pay? How much is his yearly income tax based on
the tax table on page 26?
2.If the auto shop where he works automatically deducts
his monthly tax due from his salary, how much should this
be? How much is his take home pay?
3. Why should Mang Tinoy pay income taxes?
 LET’S REMEMBE R

• The government collects taxes from earning individuals and businesses.

A good citizen of the country pays his/her taxes regularly and honestly.
• Direct taxes are levied (imposed) on people and are paid directly to the
tax collecting agency of the government.. Indirect taxes are levied
against goods and services.
• In a progressive income tax system, the more you earn, the more tax
you pay.
• The yearly tax due is computed based on a progressive tax table. For
employees receiving monthly salaries, taxes (a fraction of the yearly
tax due) are automatically deducted from their salaries.
 LET’S SU M U P

• In this module on business math, you learned how to solve

business related math problems.
• In Lesson 1, you studied how to compute for simple and
compounded interest and compute for monthly
amortization on goods bought on installment.
• In Lesson 2, you learned how to convert one currency to
another.
• In Lesson 3, you learned how to compute income taxes
using a progressive income tax table.
 WH AT H AVE YO U L EA RN ED ?

Congratulations! You are now finished studying this module. By this time you
already have the needed knowledge and skills for solving number problems in
business. Test what you have learned by answering the following. You may use
a separate sheet of paper for your computations.

A. What is the simple interest on P10,000 for 1 year at 5% interest per year?
B. What is the compounded interest on the same amount and term if the
interest is compounded quarterly?
C. What is the monthly amortization for a refrigerator bought by installment
if the unit costs P8,600 if paid in cash? The appliance store has a surcharge
of 20% a year for purchases on installment basis. The term the customer
chose is 4 months.

BU S I NESS MATH 1 PA GES 29 -30

 WHAT HAVE YOU LEARNED?

D. Currency Conversion
1. Convert P5,400 into U.S. dollars if the exchange rate is $1.00 = P50.25.
2. How much would Saudi rials 600 be in Philippine pesos if the exchange
rate is Saudi rials 1.00 = P4.20?
E. Compute the yearly tax due and the monthly tax due based on the
progressive tax table on page 26 for the following incomes:
3. P1,000
4. P47,000
5. P158,000

BU S I NESS MATH 1 PA GES 29 -30

THANK YOU
AND GOD
BLESS!