SIMPLE INTEREST

1. How much is the interest that will be paid on a

COMPOUND INTEREST
Php20,000 loan that was made on May 1, 2002 and
repaid on August 1,2005
6. A man expects to receive P25,000 in 8 years. How
much is that money worth now considering interest
a. With ordinary simple interest at 10% per year rate at 8% compounded quarterly?

b. With exact simple interest at 10% per year

7. Which of these four has the lowest effective rate of

interest.
a. 12.35% compounded annually
b. 11.90% compounded semi-annually
2. Annie buys a television set from a merchant who
c. 12.20% compounded quarterly
ask P1250 at the end of 60 days. Annie wishes to pay
immediately and the merchant offers to compute the d. 11.60% compounded monthly
cash price on the assumption that money is worth 8%
simple interest. What is the cash price today?

3. Kenneth borrowed money from a bank. He receives

from the bank P1,340 and promised to pay P1,500 at
the end of 9 months. Determine the simple interest
rate.

8. P1,500 was deposited in a bank account 20 years

ago. Today it is worth P3,000. Interest is paid semi-
annually. Determine the nominal interest rate paid on
this account.

4. Using simple interest how many days must a

P50,000 value bearing 5% accumulate an interest of
P3,000?

5. A deposit of Php110,000 was made for 31 days. The

net interest after deducting the 20% withhold tax is P 9. By the condition of a will the sum of P20,000 is left
890.36 Find the rate of return annually (CE May 1997) to a girl to be held in trust fund by her guardian until it
amounts to P50,000. When will the girl receive the
money if the fund is invested at 8% computed
quarterly?
CONTINUOUS COMPOUND INTEREST
13. An investment that cost 10,000 will give an annual
10. The nominal interest rate is 4%. How much is my revenue of 6,000 for the first three years, then 8,000
P10,000 worth in 10yrs in a continuous compounded for the next four succeeding years. If it has annual
amount and when will the amount double? maintenance cost of 2,000. How much money is in the
hands of the investor at the end of seventh year?
a. Continuous Compound Amount

b. When will the amount be doubled?

ORDINARY ANNUITY
11. Money is deposited in a certain account for which
the interest is compounded continuously. If the 14. An employee obtained a loan of P 400,000 at the
amount triples in 8 years, what is the annual rate of 6% compounded monthly in order to build a
percentage rate? house. How much must he pay monthly to amortize
the loan within a period of 10 years?

CASH FLOW DIAGRAM

12. A man deposits P2,000 in the bank today at the 15. For their monthsary celebration James wants to
rate of 4% per annum. After two years, he deposits give surprises to Fae and each would cost P 2,000. But
another P4,000. In five years he will withdraw P6,000. James will end their BF-GF relationship after 7 years.
How much money does he have on the 6th year. How much should James have for

ANNUITY DUE

16. A contractor buys a concrete mixer at P150,000 in

cash. It can also be acquired by installment to be paid
in 6 years. Interest rate is 6%, what is the amount of
each payment if all payment are made at the
beginning of each year?
DEFERRED ANNUITY 19. A man purchased a car w/ cash price of
P350,000. He was able to negotiate w/ the seller to
17. A man loans P 187 400 from a bank with interest allow him to pay only a 20% down payment and the
at 5% compounded annually. He agrees to pay his balance payable in equal 48 end of the month
obligations by paying 8 equal payments, the first being installment at 15% interest compounded monthly. On
due at the end of 10 years. Find the annual payments. the day he paid the 20th installment, he decided to
pay the remaining balance. How much is the monthly
payment and what is the remaining balance that he
paid.

a. Monthly Payment

b. Remaining Balance

18. A man inherited a regular endowment of P100,000

quarterly for 10 years. However, he may choose to get
a single lump sum payment at the end of 4 years. How
much is this lump sum if the cost of money is 14% ARITHMETIC GRADIENT
compounded quarterly?
20. DPWH expects the cost of maintenance for a
particular piece of heavy equipment to be 25,000 in
year 1, 30,000 in year 2, and amounts increasing by
5000 through year 10. At an interest rate of 10% per
year, determine the present worth of the maintenance
cost.

GEOMETRIC GRADIENT

21. A mechanical contractor is trying to calculate the

present worth of personnel salaries over the next five
years. He has four employees whose combined
salaries thru the end of this year are 900,000php. If he
expects to give each employee a raise of 5% each
year, the present worth of his employees' salaries at
an interest rate of 12% per year is nearest to
PERPETUITY

22. Determine the present value of a perpetuity of DEPRECIATION

P1,000 payable annually, with the first payment due at
the end of 6 years. Money is worth 6%.
26. Determine the depreciation at the 3rd year.

23. Find the value of perpetuity of P100 payable semi-

annually if money is worth 4% compounded quarterly.

24. (In connection to # 15) After 7 years the two are

married, James would want that their wedding
anniversary always be remembered so he planned to
spend P 200,000 for

CAPITALIZED COST AND ANNUAL COST

25. At 6%, find the capitalized cost and annual

cost of a bridge whose cost is P200M with a life
span of 20 yrs. If it has a maintenance cost of P
1M per year and the bridge must be partially
rebuilt at a cost of P100M at the end of each 20
years.

a. Capitalized Cost 27. Find the book value after 3 years.

b. Annual Cost
BREAKEVEN ANALYSIS

The cost of producing a commodity consists of P35 per

unit of labor, P42 per unit of materials, and P10 per
unit for other variable costs. Cost of utilities and rents
amounts to P850,000 per month. If the commodity is
sold at P310 each;

28. What is the profit/loss if 3369 units were sold?

29. How many pieces must be produced each month

for the manufacturer to breakeven?