Problems - Set 10 Simple and Compound Interest PROBLEM 10-1 PROBLEM 10-2 PROBLEM 10-3 EE Board PROBLEM 10-4 PROBLEM 10-5 PROBLEM 10-6 PROBLEM 10-7 Find the interest on P6800.00 for 3 years at 11% simple interest. A. P1,875.00 CC. P2,144.00 B. P1,987.00 D,-P2,244.00 A man borrowed P10,000.00 from his friend and agrees to pay at the end of 90 days under 8% simple interest rate, What is the required amount? Ae P10,200.00 C. 9,500.00 B. P11,500.00 D. P10,700.00 Annie buys a television set from a merchant wKo offers P 25,000.00 at the end of 60 days. Annie wishes to pay immediately and the merchant offers to compute the required amount on the assumption that money is worth 14% simple interest. What is the required amount? ‘A. P20,234.87 L. P24,429.97 B. P19,222.67 D. P28,456.23 What is the principal amount if the amount of interest at the end of 2¥ year is P4500 for a simple interest of 6% per annum? ‘A. P-35,000.00 C. P-40,000.00 B. P-30,000.00 D. P-45,000.00 How long must a P40,000 note bearing 4% simple interest run to amount to P 41,350.00? ‘A. 340 days C. 304 days B. 403 days D. 430 days If P16,000 earns P480 in 9 months, what is the annual rate of interest? A. 1% C. 3% B. 2% D. 4% ‘Aman lends P6000 at 6% simple interest for 4 years. At the end of this time he invests the entire amount (principal plus interest) at 5% compounded annually for 12 years. How much will he have at the end of the 16 A P1361 5 20 C. P13,333.20 B. P13,633.20 D. P 16,323.20engineering Mathematics PROBLEM 10-8 (CE May 1997 PROBLEM 10 - 9 MEApril 1998 PROBLEM 10 - 10 CE May 1999 PROBLEM 10 - 11 PROBLEM 10 - 12 PROBLEM 10-13 PROBLEM 10 - 14 PROBLEM 10-15 PROBLEM 10-16 Part7 344 Engineering Economics A time deposit of P110,000 for 31 days earns P890.39 on maturity date after deducting the 20% withholding tax on interest income. Find the rate of interest per annum. A. 12.5% C. 12.25% B. 11.95% D. 11.75% A bank charges 12% simple interest on a P300.00 loan. How much will be repaid if the load is paid back in one lump sum after three years? A. P408.00 C. P415.00 B. P551.00 D. P450.00 The tag price of a certain commodity is for 100 days. If paid in 31 days, there is a 3% discount. What is the simple interest paid? A. 12.15% C. 22.32% B. 625% D. 16.14% Accumulate P5,000.00 for 10 years at 8% compounded quarterly. ‘A. P12/456.20 C. P10345.80 B. P13,876.50 D. P11,040.20 Accumulate P5,000.00 for 10 years at 8% compounded semi-annually. ‘A. P10,955.61 C. P9,455.67 B. P10,233.67 D, PIL 876.34 Accumulate P3,000,00 for 10 years at 8% compounded monthly. A. P15A56.75 C. P14,768.34 B. P11,102.61 D. P12,867.34 Accumulate P5,000.00 for 10 years at 8% compounded annually. A, P10,794.62 C. P10,987.90 B, 78,567.98 D. P7 87687 How long will it take P1,000 to amount to P1346 if invested at 6% compounded quarterly? A, 3years 5 years B. 4 years D. 6 years Jong will it take for an investment to double its How Tong, wisted af an interest rate of 6% compounded bi-monthly? A 10 years C. 1B years B. 12 years D. 14 yearsPart 7 Engineering BLZ_ Engineering Eeonomics Mathematics RR PROBLEM 10-17 PROBLEM 10-18 PROBLEM 10-19 PROBLEM 10-20 PROBLEM 10 - 21 PROBLEM 10 - 22 PROBLEM 10 - 23 PROBLEM 10 - 24 If the compound interest on 3,000.00 in 2 years years ig 500.00, then the compound interest on P3,000.00 in 4 years is: if ‘A. P956.00 C. P1,125.00 B. P1,083.00 D. PL526.00 The salary of Mr. Cruz is increased by 30% every 2 years beginning January 1, 1982. Counting from that date, what year will his salary just exceed twice his original salary? A 1988. C. 1990 B. 1989 D, 1991 If you borrowed P10,000 from a bank with 18% interest per annum, what is the total amount to be repaid at the end of one year? A. P11,800.00 . P28,000.00 B. P19,000.00 D. P10,180.00 What is the effective rate for an interest rate of 12% compounded continuously? A. 12.01% C. 12.42% B. 12.89% D. 12.75% How long will it take for an investment to fivefold its amount “if money is worth 14% compounded semiannually? AL cB B, 12 D. 14 An interest rate of 8% compounded semiannually is how ‘many percent if compounded quarterly? A. 781% Pi C7 B. 7.85% D. 8.01% A man is expecting to receive P450,000.00 at the end of 7 fears. If money is worth 14% compounded quarterly jow much is it worth at present? A. P125,458.36 C. P162,455.63 B. 147,456.36 D. PI71,744.44 A man has a will of P650,000.00 from his father. If his father deposited an amount of P450,000.00 in a trust fund earning 8% compounded annually, after how’ many years will the man receive his will? AL 455 years C. 5.11 years B. 4.77 years D, 5.33 yearsEngineering Mathematics eee PROBLEM 10 - 25 PROBLEM 10 - 26 PROBLEM 10 - 27 ME April 1996 PROBLEM 10 - 28 ME April 1996 PROBLEM 10-29 ME April 1996 PROBLEM 10-30 PROBLEM 10 - 31 ME Oct. 1997 PROBLEM 1 ME Oc. 1997, - 32 Part7 313 Engineering Economics een oe RE Mr. Adam deposited P120,000.00 in a bank who offers 8% interest compounded quarterly. If the interest is subject to a 14% tax, how much will he receive after 5 years A. P178,313.69 ©. P170.149.77 B. P153349.77 D. 175,343.77 What interest compounded monthly is equivalent to an interest rate of 14% compounded quarterly? A. 1.15% C. 10.03% B. 13.84% D, 11.52% What is the present worth of two P100.00 payments at the end of the third and the fourth year? The annual interest rate is 8%. A. P152.87 C. P187.98 B. P112.34 D. P176.67, Consider a deposit of P600.00, to be paid up in one year by P700.00. What are the conditions on the rate of interest, i% per year compounded annually, such that the net present worth of the investment is positive? Assume 1 > 0. A. 0< i <16,7% C. 12.5% B. OS 1 <14.3% D. 16.7% < 143% < 100% 7 A. P'19,387.15 C. P19,856.40 B. P 20,456.30 D. P19,232.30 What rate of interest compounded annually must be received if an investment of P54,000 made now will result in a receipt of P72,000 5 years hence? A. 5.12% . 5.92% B. 5.54% D. 6.24% With interest at 6% compounded annually, how much is required 7 years hence to repay an P8 M loan made today? A. P 12,456,789 C. P 12,029,042 B. P 12,345,046 D. P 12,567,000 If money is worth 6% compounded annually, what payment 12 years from now is equivalent to a payment of 9 years from now? A. P8765.10 C. P8337.10 B. P8945.20 D. P8234.60 If money is worth 6% compounded annually, how much can be loaned now if P6000 will be repaid at the end of 8 years? A. P3567.30 C. P3456.34 B. P3444.44 D. 3764.50 ‘A person invests P4500 to be collected in 8 years. Given that the interest rate on the investment is 14.5% per year, compounded annually, what sum, in pesos, will be collected eight years hence? A. P4504 C. P13294 B. P9720 D. P10140 If P500,000 is deposited at a rate ‘of 11.25% compounded monthly, determine the compounded interest after 7 years and 9 months. ‘A. 660,592 C. 680,686 B. 670,258 D. 690,849 200,000 was deposited on Jan. 1, 1988 at an interest rate of 24% compounded semi-annually. How much would the sum on Jan. 1, 1993? A. P421,170 ©. P401,170 B. P521,170 D. P621,170ring Patt 7 319 Mathematics Engineering Economics tht enn eee : Solutions to Set 10 _Engincering Economics Simple and Compound Interest SOLUTION 10-1 sour ¢ = 6800(0.11)(3) = P2,244.00 SOLUTION 10-2 F= P(L+ rt) Ans: A P=P10,000 90. 369 = 0.25 year; r= 8% 0.08 F = 10000(1 + 0.08%0.25) = P10,200.00 SOLUTION 10-3 F ‘Ans: C (1 + rf) F= P25,000.00; 14% = 0.14; 1 25,000 = Pf + 0.14x(1/6)] 24,429.97 SOLUTION 10-4 I= Prt i AnsiB 4500 = P(0.06)(2.5); P = P 30,000 SOLUTION 10-5 F=P(I + rt) ‘has: C 41350 = 40000[ 1 + 0.048] = 0.84375 year = 303.75 SOLUTION 10 - 6 Ans: D Prt 480 = 16000 x r x (9/12) r= 0.085 4% SOLUTION 10-7. For the simple interest: : Ans: A F=P(L+ rt) F = 6000[1 + 0.06(4)] = 7,440.00 For the compound interest: F=P(isiy® F = 7440(1 + 0.05)!" =13,361.2 I=Prt 1-20%1 = 89039;1= PL,112.99 1,112.99 = 110,000(7)(31/360) 1175 = 11.75% SOLUTION 10-8 Aus: Dre SOLUTION 10 - 10 Ans: D SOLUTION 10-11 ‘Ans: D SOLUTION 10-12 ‘Ans: A SOLUTION 10-13 ‘Ans: B SOLUTION 10-14 Ans: A SOLUTION 10 - 15 Ans: C SOLUTION 10-16 ‘Ans: B Engineering Mathematics F = P(1 + rt) = 300[1 + 0.12) ] = P408.00 ~ F=P(. +11) ° a ; x= 0974 1472] Bo 69 days : 1 =0:1614 = 16.14% (pa%j_— ° F F=P(+iy" F=P(+i)" P= P5,000.00; n = 10(2) = 20; F=5000(1 + 0.04)" = P10,955.62 0.08/2 = 0.04 F=P(+i" P= P5,000.00; n = 10(12) = 120; 0001 + 0.00667) = P11,102.61 = 0.00667 0.08/1, Fe F=P(1+i)" P= P5,000.00; n = 10;i = 0.08 F = 5000(1 + 0.08) = P10,794.62 Let x be the number of years required. FeP(+i" F= P1346; P = P1000 i=0.06/4= 0.015; n = ax 1346 = 1000(1 + 0,015) 1.015 = 1.346 In 1.015% = In 1.346 = 4x In 1.015 x = 4.99 years ~5 years F=P(1+i)", F=2P (double the amount) Let x be the number of years, then n= 6x, andi = 0.06/6 = 0.01 2P = PCL + 0.01)" 2=1.01% taking the logarithm on both sideSOLUTION 10-17 Aas B SOLUTION 10 - 18 ‘Ans: A SOLUTION 10-19 Ans A SOLUTION 10 - 20 Ans: SOLUTION 10 - 21 Ans: B SoLuTi AALUTION 10-22 suution 10-23 Part 7 Engineering Economics 2= In 1.01% = 6x In LOT 1.61 years say 12 years Interest, [= F- P= P(1+i)" -P 500 = 3000(1 + i)? - 3000 (1+? = 1.1667; i= 0.08012 Then [y= 3000(1 + 0.08012)* - 3000 = P1,083.00 Let P be the original salary (1982) This problem can be solved using the compound amount formula F = P(1+i)", where F = 2P and i=0.3, n = number of times his salary was increased by 30% (every two years) 2P= PU +03)" 03" taking the logarithm on both sides In2=In13"=nin13 n= 2.64 say 3 Thus, his salary was changed 3 times or for 3(2) = 6 years. Thus his salary exceed twice his original salary in 1988 F = P(1+i)"= 10,000(1 + 0.18)" = P11,800.00 2.71828)!" ~ 1 = 0.1275 = 12.75% Let x be the number of years, then n= 2x F=P(1+i)" where F = 5P and i=0.14/2 = 0.07 SP = P(1 + 0.07) 5=1.07% taking the logarithm on both sides In 1,07 = 2x In 1.07 1.89 years say 12 years in x ERo= ERs (1+ 1/4yi=L= (1+ 008/2)?-1 1 = 0.0792 = 7.92% F_ _, __450,000___ pi7i.7aa.ag (vy (a+0.14/4y322 Part? Engineering Engineering Economics Mathematics SOLUTION 10-24 Ans: B SOLUTION 10 - 25 Ans: C SOLUTION 10 - 26 Ans: B SOLUTION 10 - 27 ‘Ans: A SOLUTION 10 - 28 Ans: A SOLUTION 10-29 Ans: C SOLUTION 10 - 30 ‘Ans: D SOLUTION 10 - 31 Ans: A SOLUTION 10 - 32 Ans: B — Let x be the number of years, then 1 = x F=P (1+i)";i=008 650000 = 450000(1 + 0.08)" 1.444 = 1.08" taking the logarithm on both sides In 1.444 = In 1.08" = x In 1.08 x= 4.77 years Interest = F- P= P(1+i)" -P Interest = 120000(1 + 0.08/4)% - 120000 = 58,313.69 Net interest = P58,313.69 - 14% (58,313.69) = P50,149.77, Net amount after 5 years = 120000 + P50,149.77 Net amount after 5 years = P170,149.77 ERyontty = ERguatty G+ r/12y2-1= (1+ 0.14/4)¢-1 1= 0.1384 = 13.84% P=Py+Ph Present worth, P= F/ (1+i)" 100 100 asooa? * Groner 7 P1s287 (1+0.08)° (1 + 0,08)! Net present Worth, P= Paro - 600>0 700-5000 (hi 7/6>1 +i ori <16.7% ‘Therefore; for P > 0,0<4<16.7% Future worth of P2000 for 6 years at 8% = 2000(1 + 0.08)* : 173.75 New capital after 6 years = 3173.75 + 2000 = 5173.75. Lump sum due after 2 years at 8%. F=5173.75(1 + 0.08) = 6034.66 F=P(1+i)" = 100001 + 008)= P136050 F=P(1+i)" = 20000 (14 0.08)’ = P34,276.48, ‘The future worth F of an amou: is for 1 periods is: int P at an interest rate iec de Part7 323 aoe Engineering Economics F=P(L+ir where i = 0.115/1,n =1x1=tand F=3P (triple) 3P = P(1 + 0.115)! 1115 = 3, log (1.115) tog (1.115) log (3) log (3); f= 10.09 years SOLUTION 10-33 The future worth of P at a nominal interest rate 7 ‘Ans: C compounded continuously for # years is: F=Pert F= 10,000 x oon) F=P14,918.25, SOLUTION 10 - 34 F Ans: C The amount required is P= =; +i Where F = P2,000, i = 0.06 and 1 = 6-1=5. 20 wanes (1+ 0.06) SOLUTION 10-35 The future worth of P5000 for 10 years is: Ans: B F=P(+iyr F = 5000(1 + 0.08/4)!) = PI1,040.2 ‘The compound interest is: I= F - P= P11,040.2 - P5,000 = P6,040.2 SOLUTION 10-36 The conditions in the problem is shown in the cash flow ae diagram below. 16 Fe=P (itis ae oe Fx = 1000(1 + 0.05)* Fs = P1A77.455 SOLUTION 10-37 The amount F to be paid at the end of one year is P80,000 ee The total principal amount P is P80,000 - P11,200 = 68,800.00 F=P+i)" r »Part 7 32S Engincering Beonomics SOLUTION 10 - 38 Ans: A SOLUTION 10 - 39 Ans: SOLUTION 10 - 40 Ans: D SOLUTION 10 - 41 Ans: B SOLUTION 10 - 42 Ans: C SOLUTION 10 - 43 Ans: B SOLUTION 10 - 44 Ans: D Engineering Mathemati 80,000 = 68,800(1 + i)" a 1.1628 = 1 +i 1 = 0.1628 = 16.28% Setting 20 years ago as present time, then; F= P(L + ij jn = 20(2) =40, i= 1/2 3000 = 15001 + ‘The future worth of P at an interest rate of + compounded continuously for # years is given by the formula F = Pe, where ¢ = 2.71828... - F = 5000 x e010 F= P6749.30 F=Patiy" F=2,000(1 + 0.15)6 = P4,626.00 F=P(1+i)" = 4500(1 + 0.145) F = 13,294.02 Future worth of all funds (on the fourth year) F = 50000(1+0.2)' + 40000(1+0.2)° + 30000(1+0.2)? + 20000(1+0.2)t F = P240,000.00 ‘Additional amount needed ‘Additional amount needed Future worth ‘of P10,000 without inflation: F = 10000(1 + 0.15)° = 20,113.57 1t worth of P20,1 43.57 considering, 6% inflation P= 20113.57/(1+ 0.06)° = P15,030.03 Future worth of Pl 0,000: f= 10000(1 + 0.12) \5 = P17,623.42 17,623.42 considering 3% inflation Present worth of rate: p=17,623.42/(1 + 0 Profit = 15,202.11 - 10,000 = PS, .03)5 = P15,202.11 202.11yr sogineering Part7 395 cies neering Economics athemat RMON 7 en= (1048) 1 0 Aas A 0.16 = 16% SOLUTION 10-46 ER=(1 + 0.16/4)!-1 = 0.1698 das C ER = 16.98% SOLUTION 10-47 Two nominal rates are equal if their effective rates are ‘Ans: A equal ERsewanoaaty = ERquanerty (1+0.12/2?-1=(1+x/4)t-1 (1 +.0.25x)* = 1.062 x= 0.1183 = 11.83% SOLUTION 10-48 EReemiannuatyy = ERmonihiy Ans: B (1+ 0.12/2P-1= (1+ x/12)2-1 (1 + 0.08333x)"2 = 1.062 1171 = 11.71% SOLUTION 10 - 49 oy ao = (+4) “4 m Nominal rate, r= 9.5% effective rate = 9.84% 0.0984 = (1+0.095 /m)" -1 By trial and error using the choices, m = 4 (quarterly) BON 10-90. p= Brey Let x = number of years required: F = P45,000; i = 0.08/4 = 0. 45,000 = 25,000(1 + 0.02)*" 1.02" =18 In(1.02)* = in(1.8) 4x x In(1.02) = In(1.8) x= 7A2 years P= P25,000; n = 4x In(1.8) 5 ino F=P(1+i)" 20000 = P(1 + 0.06/4)'™ P= P11,025.25 80 fag TON 10-52 ER= (1-4 1/my-1 ER = (1 + 0.16/360) - 1 = 0.1735 = 17.35%326 Part? Enginecring Engineering Economics Mathematics SOLUTION 10-53 Ans: A SOLUTION 10-54 Ans: C SOLUTION 10-55 Ans: C SOLUTION 10 - 56 Ans: C SOLUTION 10-57 Ans: D SOLUTION 10 - 58 Ans: C SOLUTION 10 - 59 Aas: D SOLUTION 10 - 60 Ans: D F=P(1+i)" = 17200(1 + 0.02/4)» = P19,387.15 F=P(1+i)" 772000 = 54000(1 + i)® (1+ = 1.333; i = 0.0592 = 5.92% F=P(1+i)" = 8000000(1 + 0.06)’ = P12,029,042 P=E/(1+i)" P(P/F,6%,12) = P(P/F,6%,9) F/ (1+ 0.06)!? = 7000/1 + 0.06)? F= 8337.10 P=F/(1+i)" P= 6000/1 + 0.06)® = P3764.50 F=F(P/EFjin) = P(1 + i" = 4500(1 + 0.145)° F = P13294.00 Compound interest = I= F- P I=P(L+i-P n= 7(12) + 9= 93; i= 0.1125/12 = 0.009375 1'= 500000(1 + 0.009375)" - 500000 = 690,848.73 Present worth, P= 200,000.00 Future worth, F=P(1+ ij" 2000001 + 0.24/2)% P621169.64sngineering Part 7 Mathematics Engineering Economics 327 Errante een nics problems ~ Set 11 Compound Interest, Annuity PROBLEM 11-1 Find the nominal rate that if converted quarterly could ECE Nov. 1996 be used instead for 15% compounded semiannually? A. 14.93% C. 15.56% B. 14.73% D. 15.90% PROBLEM 11 - 2 Which of the following has the least effective annual CENov. 1999 interest rate? A. 12% compounded quarterly B, 11.5% compounded monthly C. 11.7% compounded semi-annually D. 12.2% compounded annually PROBLEM 11-3 One hundred thousand pesos was placed in a time CENov. 1998 deposit that earns 9% compounded quarterly, tax free. After how many years would it be able to earn a total interest of fifty thousand pesos? A. 456 C. 432 B. 4.47 D. 4.63 PROBLEM 11-4 The amount of P2,825.00 in 8 years at 5% compounded ECE Nov. 1996 quarterly is: ‘A. P4,166.77 C, P4,188.56 B. P4,397.86 D. P4,203.97 PROBLEM 11-5 The amount of P2,825.00 in 8 years at 5% compounded continuously ‘A. P4,166.77 C. P4,397.86 B. P4,188.56 D. P4,214.40 PROBLEM 11-6 What rate (%) compounded quarterly is equivalent to EMay 1998 6% compounded semi-annually? A. 5.93 C, 5.96 B, 5.99 D.5.9 rene 11-7 ‘The amount of P12,800 in 4 years at 5% compounded il 1998 a dear at 450 C. P 16,311.26 B, P 14,785.34 D, P 15,847.33 PROBLEM 11-8 Fifteen percent (15%) when compounded semi-annually Nov. 1997 will have effective rate of:Past 7 Enginecring ngineering Economics Mathematics —$<$<$<<—< io 93% B 1E7e% D. 15.56% PROBLEM 11-9 ECE Nov. 1997 PROBLEM 11-10 ECE Nov. 1997 PROBLEM 11 - 11 ECE Nov. 1997 PROBLEM 11-12 ECE Now. 1997 PROBLEM 11 - 13 ECE Nov. 1997 PROBLEM 11 - 14 ME Oct. 1997 PROBLEM 11 - 15 ME Oct. 1997 PROBLEM 11-16 ME Oct. 1997 ounded annually is the san. 8% compounded quarter|y? 6.88% D. 7.90% What rate of interest comp as the rate of interest o| ‘A. 8.24% B. 842% How long will it take the money to triple itself invested at 10% compounded semi-annually? A. 133 years C. 11.9 years B, 113 years D. 125 years What is the accumulated amount after three (3) years of 6,500.00 invested at the rate of 12% per year compounded semi-annually? ‘A. P9500.00 . P9,221.00 B. P9321.00 D. P9,248.00 What interest rate, compounded monthly is equivalent to 10% effective rate? A. 9.75% C. 9.68% B. 9.50% D. 957% ‘A man wishes his son to receive P500,000.00 ten years from now. What amount should he invest now if it will earn interest of 12% compounded annually during the first 5 years and 15% compounded quarterly during the next 5 years? A. P135,868.19 C. P123,433.23 B. P134,678.90 D. P145,345.: A savings association pays 4% interest quarterly. What is the. alloctive annual intarest rate? 7 A. 18.045% C. 16,985% B. 17.155% D. 17.230% A bank offers 1.2% effective A 3 monthly interest. What § the effective annual rate with monthly, compound"? A. 154% Cc. 144% B. 89% D. 79% What is the present worth. i ; of P27,000.00 due in 6 vee" money is worth 13% and is compounded semi-annv@!’Y C. P15,250.00 D. P21,931.00Engineering Mathematics PROBLEM 11-17 ME Oct. 1997 PROBLEM 11 - 18 PROBLEM 11 - 19 PROBLEM 11 -20 PROBLEM 11 - 21 PROBLEM 11 - 22 PROBLEM 11 - 23 ECE Nov, 1996 Engineering Economics A student deposits P1,500.00 in a 9% account today intends to deposit another P3,000.00 at the end of two years. He plans to purchase in five: years his favorite shoes worth P5,000.00. Calculate the money that will be left in his account one year after the purchase. A, P1,280,00 . C. P1,300.00 B. P1,250.00 D. 1,260.00 If money is worth 4% compounded monthly, what payment at the end of each quarter will replace payments of P 500,00 monthly? A. P'1,500.00 C. P'1,505.00 B. P1,525.00 D. P 1,565.00 What amount would have to be invested at the end of each year for the next 8 years at 4% compounded semi- annually in order to have P5,000.00 at the end of the time? A. P541.86 C. P542.64 B. P553.82 D, P548.23 A contractor bought a concrete mixer at P120,000.00 if paid in cash. The mixer may also be purchased by installment to be paid within 5 years. If money is worth 8%, the amount of each annual payment, if all payments are made at the beginning of each year, is: ‘A. P27,829.00 C. P31,005.00 B. P29,568.00 D. P32,555.00 ‘A contract calls for semiannual payments of P40,000.00 for the next 10 years and an additional payment of ‘250,000.00 at the end of that time, Find the equivalent cash value of the contract at 7% compounded semiannually? A, P444,526.25 C. P694,138.00 B. P598,589.00 D. P752.77.00 Mr. Rankine bought a piece of property for P100,000.00 down payment and 10 deferred semiannual payments of 8,000.00 starting 3 years from now. If the interest rate is 12% compounded semiannually, what is the present worth of the property? aep143, 090.08 C. 152,444.05 B. P148,555.02 D. P166,888.01 If money is worth 8%, determine the present value of a perpetuity of P1,000 payable annually, with the first payment due at the end of 5 years.Part 7 33O Engineering Beonomics PROBLEM 11 - 24 PROBLEM 11 - 25 CE Nov. 1999 PROBLEM 11 - 26 PROBLEM 11-27 PROBLEM 11 - 28 PROBLEM 11 - 29 A. P9,187.87 C. P9,272.64 B. P9,178.87 D. P9,272.46 A man is left with an inheritance from his father. He has an option to receive P2 M at the end of 10 years, however he wishes to receive the money at the end of each year for 5 years. If interest rate is 8%, how much would he receive every year? ‘A. P400,000.00 C. P232,020.00 B. P352533.00 D. P 200,000.00 To maintain its newly acquired equipment, the company needs 40,000 per year for the first five years and 60,000 per year for the next five years. In addition, an amount of P140,000 would also be needed at the end of the fifth and the eighth years. At6%, what is the present worth of these costs? A. P689,214 C. P549812 B. P512,453 D. P586,425 A man receives P125,000.00 credit for his old car when buying a new model costing P375,000.00. What cash payment will be necessary so that the balance can be liquidated by payments of P 12,500.00 at the end of each month for 18 months when interest is charged at the rate of 6% compounded monthly? ‘A. P23,400.00 C. 33,650.00 B. P28,750.00 D. P35,340.00 Determine the present worth of an annual payment of 'P2500.00 at the end of each year for 12 years at 8% compounded annually. A. P18,840.20 . P15,000.00 B. P30,000.00 D. P17,546.04 A man borrowed 200,000.00 from a bank at 12% compounded monthly, which is payable monthly for 10 years (120 payments). If the first payment is to be made after 3 months, how much is the monthly payment? A. P2869.42 C. P3,013.10 B. P2,927.10 D. P3,124.12 What is the present worth of a P1000.00 annuity over @ 10-year period, if interest rate is 8%? ‘A. P7896.00 C. P6234.80 B. P8976.00 D. P6710.00 Engineering MathematicsME Oct. 1995 PROBLEM 11 - 31 PROBLEM 11 - 32 ME April 1996 PROBLEM 11 - 33 PROBLEM 11 - 34 PROBLEM 11 - 35 ME Oct. 1995 PROBLEM 11 - 36 Part 7 ngineering Economics 332 How much mone uch must you invest today in order to withdraw P 1000 per year for 10 years if interest rate is ‘A. P5650.00 650 C. Ps B. P6550.00 D. cn Amd hine is under consideration for investment. The cost of the machine is P25,000, Each year it operates, the machine will generate a savings of P15,000. Given an effective annual interest of 18%, what is the discounted payback period, in years, on the investment in the machine? A. 1.566 Cc. 2155 B. 2.233 D. 2677 What is the present worth of a P100 annuity starting at the end of the third year and continuing to the end of the fourth year, ifthe annual interest rate is 8%. A. 153.44 C. 15499 B. 152.89 D. 156.33, Consider a project which involves the investment of 100,000 now and P100,000 at the end of one year. Revenues of P150,000 will be generated at the end of years 1 and 2. What is the net present value of this project if the effective annual interest rate is 10% ‘A, P65A21.50 C. P68A21.50 B. P67A21.50 D. P69A21.50 ‘An investment of x pesos is made at the end of each year for three years, at an interest rate of 9% per year compounded annually. What will be the value of the investment upon the deposit of the third payment? A. 3.278x C. 37284 B. 3.287x D. 3.782 1f P500 is invested at the end of each year for 6 years, at ie offective annual interest rate of 7%. What is the total an Clint available upon the deposit of the 6th payment? ‘A, P3455.00 CC. 3577.00 B. P3544.00 D. P3688.00 40,000 per year for four years to go to her fnvested 250,000 in a 7% account Sfucation when you were born. If you for youre P40,000 at the end of your 17%, 18%, 198, witht years, how much money will be left in the artountat the end of your 21 year? You need a college. Your fatPROBLEM 11 - 37 PROBLEM 11 - 38 PROBLEM 11 - 39 ME April 1996 PROBLEM 11 - 40 PROBLEM 11-41 PROBLEM 11 - 42 Engineering Mathematics . P18,000 D. P19,000 If money is worth 10% yearly, compounded quarterly, what monthly savings iS required monthly in order to have P200,000 at the end of 10 years? A. P918.82 C. P866.99 B. P878.98 D. P981.28 How much money must you deposit today to an account earning 12% so that you can withdraw P25,000 yearly inclefinitely starting at the end of the 10th year? ‘A. P125,000 C. P73,767 B. P9456 D. P7527 In five years, P18,000 will be needed to pay for a building renovation. In order to generate this sum, a sinking fund consisting of three annual payments is established now. For tax purposes, no further payments will be made after three years. What payment is necessary if money is worth 15% per annum? ‘A. P3345.65 C. P3919.53 B. P3,78934 D. P3878.56 An investment of P40,000.00 has a revénue of x pesos at the end of the first and second year. Given a discount rate of 15% compounded annually, find x so that the net present worth of the investment is zero. ‘A, P33,789.54 CC. P24, 604.65 B. P27,789.78 D. P2187999 Mr. Jones borrowed P150,000 two years ago. The terms of the loan are 10% interest for 10 years with uniform payments He just made his second annual payment low much principal does he still owe? A. P130,235.20 C. P132456.20 B. P13456730 D. P129456.78 Given that the discount rate is 15%, what is the equivalent uniform annual cash flow of the following ‘stream of cash flows? year 0 P 100,000.00 year1 200,000.00 year 2 50,000.00 year3 75,000.00 A. P158,124.60 C. PI57345.98 B. P158,897.50 D. P155,789.34PROBLEM 11 - 44 ECE Nov. 1995 PROBLEM 11 - 45 PROBLEM 11 - 46 PROBLEM 11 - 47 PROBLEM 11-48 PROBLEM 11-49, PROBLEM 11 - 50 ‘Part 7 Engineering Economics Bean borrowed P100,000 at 10% effective an interest rate. He must pay back the loan over 30 years with uniform monthly payments due on the first day of cach month. What does he pay each month? A. P768.67 C. P8560 B. P8734 D. P339.20 An employee obtained a loan of P10,000 at the rate of 6% compounded annually in order to repair a house. How much must he pay monthly to amortize the loan within a period of ten years? A. P198,20 C. P1022 B. P150.55 D. P112.02 What is the accumulated value of a payment of P12,500 at the end of each year for 9 years with interest at 5% compounded annually? A. P138,738.05 C. P178,338.50 B. P 137,832.05 D. P187,83350 What is the accumulated value of a payment of P 6,000 every six months for 16 years with interest at 7% compounded semiannually? A, P 312,345.00 C. P-347,898.00 B. 345,678.00 D. P-344,007.00 ‘A mining property is offered for sale for P3.7 M. On the basis of estimated production, an annual return of 800,000 is foreseen for a period of 10 years. After 10 years, the property will be worthless, What annual rate of return is in prospect? A. 6.7% C. 5.6% B. 6.1% Dz 5.2% If a down payment of P600,000 is made on a house and P80,000 a year for the next 12 years is required, what was the price of the house if money is worth 6% compounded annually? A. P1270,707 C. P1345,555 B. P1,130,450 D, P1678,420 What annuity over a 10-year period at 8% interest is equivalent to a present worth of P100,000? ‘A. P14,903 C. P13,803 B. P15,003 D, P12,003 Deposits of P1500 each were made in a sinking fund at terest of each year. If the fund earned interest ut thePart 7 334 Engineering Bconomics PROBLEM 11 - 51 CE Nov. 1996, Noy. 1994 PROBLEM 11 - 52 CE May 1996 PROBLEM 11 - 53 CE May 1998 PROBLEM LI - 54 ECE April 1998 PROBLEM 11 - 55 ECE April 1998 PROBLEM 11 - 56 ME Oct. 1997 Engineering Mathematics Guarterly, what was” neem rate of 6% per annum compounde the principal in the fund immediately after the seventh deposit was made? A. P16,243.23 CC. 14,243.00 B. 12,591.00 D. P13,643.23 ‘A man inherited a regular endowment of P100,000 every end of 3 months for 10 years. However, he may choose to Je lump sum payment at the end of 4 years. How geta sing Bruch is this lump sum if the cost of money is 14% compounded quarterly? A. 3,502,546 C. P3,702,939 B. P3,802,862 D. 3,602,431 'A service car whose cash price was P540,000 was brought with a down payment of P162,000 and monthly of 10,874.29 for 5 years. What was the rate of interest if compounded monthly? A. 20% Cc. 24% B. 26% D. 22% ‘The present value of an annuity of R pesos payable dnnuilly for 8 years, with the first payment at the enc! of 10 years, is P187,A81.25. Find the value of K if money 18 worth 5%. A. P45,000 C. P42,000 B. P44,000 D. P43,000 How much money must you invest today in order 1 Haw srnw P2,000 annually for 10 years ifthe interest rate is 9%? ‘A. P:12,385.32 C. P12,835.32 B. P12,853.32 D. P12881.37 is to be paid in 6 equal wyments at the end of each of 6 quarters: If the interest payee compounded quarterly. How much was initially Korrowed if quarterly payment is P2000.00? ‘A. P'10,382.90 CC. P 10,834.38 B. P-10,200.56 D. P 10,586.99 Money borrowed today mer! ly was bought on installment basis with 0 monthly aactallment of 290.00 for 60 months. If interest is 7° ienpounded annually calculate the cash Pose of the ca ‘A. 455,875.00 C. P678,519.75 B. P567,539.75 D. P345,539.75