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    Problem Set Interests, Present Worth, Future Worth, Inflation

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    Hane Minasalbas
    This document contains 23 multiple choice questions related to financial concepts like interest rates, present and future values, inflation, and real rates of return. The questions cover calculating equivalent interest rates, determining interest earned on investments over different periods of time, accounting for inflation in determining future values, and calculating real rates of return and interest.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Problem Set Interests, Present Worth, Future Worth, Inflation

    Uploaded by

    Hane Minasalbas
    52 views2 pages
    This document contains 23 multiple choice questions related to financial concepts like interest rates, present and future values, inflation, and real rates of return. The questions cover calculating equivalent interest rates, determining interest earned on investments over different periods of time, accounting for inflation in determining future values, and calculating real rates of return and interest.

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    Original Title

    PROBLEM-SET-Interests-Inflation-Q

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    This document contains 23 multiple choice questions related to financial concepts like interest rates, present and future values, inflation, and real rates of return. The questions cover calculating equivalent interest rates, determining interest earned on investments over different periods of time, accounting for inflation in determining future values, and calculating real rates of return and interest.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    52 views2 pages

    Problem Set Interests, Present Worth, Future Worth, Inflation

    Uploaded by

    Hane Minasalbas
    This document contains 23 multiple choice questions related to financial concepts like interest rates, present and future values, inflation, and real rates of return. The questions cover calculating equivalent interest rates, determining interest earned on investments over different periods of time, accounting for inflation in determining future values, and calculating real rates of return and interest.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PROBLEM SET

    Interests, Present Worth, Future Worth, Inflation


    1. A nominal interest rate of 12% per annum compounded monthly is equal to what nominal interest compounded semi-
    annually?
    a. 12.304% b. 12.12% c. 12,05% d. 11.495%

    2. Find the nominal interest compounded quarterly


    equivalent to 12.00% effective interest?
    a. 12.304% b. 12.12% c. 12,05% d. 11.495%

    3. A nominal interest rate of 12.12% per annum compounded quarterly is equal to what nominal interest compounded
    monthly?
    a. 12.00% b. 12.12% c. 12,05% d. 11.495%

    4. What is the simple annual rate of interest if P350 is earned in six months on an investment of P7000.
    a. 10% b. 20% c. 15% d. 16.67%

    5. A man borrowed P12,000 and agreed to pay the loan in one year. The bank discounted the loan and gave him P10,000 in
    cash. What was the rate of discount?
    a. 10% b. 20% c. 15% d. 16.67%

    6. What was the effective interest? (Refer to previous number) )


    a. 10% b. 20% c. 15% d. 16.67%

    7. A nominal interest rate of 12% per annum compounded monthly is equal to what nominal interest compounded
    quarterly?
    a. 12.49% b. 12.12% c. 12.68% d. 13.34%

    8. What is the effective interest rate? (refer to the previous problem)


    a. 12.68% b. 12.12% c. 12.58% d. 13.34%

    9. An item presently costs P500. If inflation is at the rate of 5% per year, what will be the cost of the item in 2 years?
    a. P453.51 b. P531. 15 c. P515.25 d. P551.25

    10. An economy is experiencing inflation at an annual rate of 5%. If this continues, what will P500 be worth two years from
    now in terms of today’s pesos?
    a. P453.51 b. P531. 15 c. P515.25 d. P551.25

    11. What is the real worth of P1000, five years from now if invested at 10% pa, and inflation is expected at 8%
    pa?
    a. 116.5 b. 109.61 c. 110.35 d. 118.5
    12. What is the real interest rate?
    a. 16.5% b. 1.75% c. 18.5% d. 1.85%

    13. A company borrowed P100,000 today to be repaid after 3 years at a market interest rate of 11%..
    What is the actual amount owed at the end of 3 years.
    a. P136,763 b. P118,141 c. P136,410 d. P1180,400

    14. What is the real interest earned by the lender if the general inflation rate is 5% per year
    a. 16.5% b. 5.714% c. 17.55% d. 18.5%

    15. What is the real peso equivalent in purchasing power to the actual-peso amount at the end of the third year?
    a. P136,763 b. P118,141 c. P136,410
    16. The unit price of the goods is P100. The company plans to increase its selling price by 10% ( ej’ ). What will its actual
    unit selling price be if inflation projected for the year is 5%.
    a. P115.50 b. P111.00 c. P141.00 d. P100.40

    17. A credit card company charges an interest rate of 1.375% per month on the unpaid balance of all accounts. The annual
    interest, they claim, is 12(1.375%) =16.5%. What is the effective interest rate per year being charged by the company?
    a. 16.5% b. 17.81% c. 17.55% d. 18.5%

    18. Determine the ordinary simple interest on P12,000 from the period Jan 15, 1997 to October 30, 1997 if the rate of
    simple interest is 12%.
    a. P1,140 b. P1,110 c. P1,410 d. P1,040

    19. A vendor borrows P5,000 from a savings credit association. Instead of giving him the full amount, the interest was
    deducted from his loan to cover the interest for one year, thus he only received P 4,500. What is the discounted rate of
    interest?
    a. 10% b. 11.11% c. 12% d. 12.5%

    20. What is the ordinary simple annual rate of interest if P175 is earned in 8 months on an investment of P5000.
    a. 5.25% b. 7.5% c. 15% d. 16.67%

    21. In how many years will loan of P 1000 will double in amount if invested at 10% pa simple interest?
    a. 5 b. 10 c.15 d. 20

    22. It is desired to have a certain sum of money 12 years from now. When the present value is 0.5 times the compounded
    value, what is the discreet value of interest to attain this value?
    a. 5.95% b. 11.90% c. 12.00% d. 12.90%

    23. What will be the future worth after 18 months if a sum of P1,000 is invested at a simple interest of 10% per year?

    a. P 1,150 b. P 1,157.62 c. P 1,153.69 d. P1,510

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