Problem 1 (ECE November 1996)
Find the nominal rate that if converted quarterly could be used instead for 25% compounded semi-annually?
A. 14.93% C. 15.56%
B. 14.73% D. 15.90%
Problem 2 (CE November 1999)
Which of the following has the least effective annual interest rate?
A. 12% compounded quarterly C. 11.7% compounded semi-annually B. 11.5% compounded monthly D. 12.2% compounded annually Problem 3 (CE November 1998)
One hundred thousand pesos was placed in a time 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. 4.56 C. 4.32
B. 4.47 D. 4.63
Problem 4 (ECE November 1996)
The amount of P2,825.00 in 8 years at 5% compounded quarterly is:
A. P4,166.77 C. P4,188.56
B. P4,397.86 D. P4,203.97
Problem 5
The amount of P2,825.00 in 8 years at 5% compounded continuously is:
A. P4,166.77 C. P4,397.86
B. P4,188.56 D. P4,214.97
Problem 6 (CE May 1998)
What rate (%) compounded quarterly is equivalent to 6% compounded semi-annually?
A. 5.93 C. 5.96
B. 5.99 D. 5.9
Problem 7 (ECE April 1998)
The amount of P12,800 in 4 years at 5% compounded quarterly is:
A. P15,614.59 C. P16,311.26
B. P14,785.34 D. P15,847.33
Problem 8
Fifteen percent (15%) when compounded semi-annually is what effective rate?
A. 17.34% C. 16.02%
B. 18.78% D. 15.56%
Problem 9 (ECE November 1997)
What rate of interest compounded annually is the same as the rate of interest of 8% compounded quarterly?
A. 8.24% C. 6.88%
B. 8.42% D. 7.90%
Problem 10 (ECE November 1997)
How long will it take the money to triple itself if invested at 10% compounded semi-annually?
A. 13.3 years C. 11.9 years
B. 11.3 years D. 12.5 years
Problem 11 (ECE November 1997)
What is the accumulated amount after three (3) years of P6,500.00 invested at the rate of 12%
per year compounded semi-annually?
A. P9,500.00 C. P9,221.00
B. P9,321.00 D. P9,248.00
Problem 12 (ECE November 1997)
What interest rate, compounded monthly is equivalent to 10% effective rate?
A. 9.75% C. 9.68%
B. 9.50% D. 9.57%
Problem 13 (ECE November 1997)
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. P145,345.34
Problem 14 (ME October 1997)
A savings association pays 4% interest quarterly. What is the effective annual interest rate?
A. 18.045% C. 16.985%
B. 17.155% D. 17.230%
Problem 15 (ME October 1997)
A bank offers 1.2% effective monthly interest. What is the effective annual rate with monthly compounding?
A. 15.4% C. 14.4%
B. 8.9% D. 7.9%
Problem 16 (ME October 1997)
What is the present worth of P27,000.00 due in 6 years if money is worth 13% and is compounded semi-annually?
A. P12,681.00 C. P15,250.00
B. P13,500.00 D. P21,931.00
Problem 17 (ME October 1997)
A student deposits P1,500.00 in a 9% account today. He 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. P1,260.00
Problem 18
If money is worth 4% compounded monthly, what payment at the end of each quarter will replace payments of P500.00 monthly?
A. P1,500.00 C. P1,505.00
B. P1,525.000 D. P1,565.00
Problem 19
What amount would have to be invested at the end of each year for the next 9 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
Problem 20
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
Problem 21
A contract calls for semiannual payments of P40,000.00 for the next 10 years and an additional payment of P250,000.00 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. P752,777.00
Problem 22
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. P352,533.00 D. P200,000.00
Problem 23 (CE November 1999)
To maintain its newly acquired equipment, the company needs P40,000 per year for the first five years and P60,000 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. At 6%, what is the present worth of these costs?
A. P689,214 C. P549,812
B. P512,453 D. P586,425
Problem 24
A man receives P125,000.00 credits 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 P12,500.00 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. P33,650.00
B. P28,750.00 D. P35,340.00
Problem 25
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 C. P15,000.00
B. P30,000.00 D. P17,546.04
Problem 26
A man borrowed P200,000.00 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. P2,869.42 C. P3,013.10
B. P2,927.10 D. P3,124.12
Problem 27
What is the present worth of a P1000.00 annuity over a 10-year period, if interest rate is 8%?
A. P7896.00 C. P6234.80
B. P8976.00 D. P6710.00
Problem 28 (ME October 1995)
How much money must you invest today in order to withdraw P1000 per year for 10 years if interest rate is 12%?
A. P5650.00 C. P5560.00
B. P6550.00 D. P7550.00
Problem 29
A machine 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 C. 2.155
B. 2.233 D. 2.677
Problem 30 (ME April 1996)
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, if the annual interest rate is 8%?
A. 153.44 C. 154.99
B. 152.89 D. 156.33
Problem 31
Consider a project which involves the investment of P100,000 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. P65,421.50 C. P68,421.50
B. P67,421.50 D. P69,421.50
Problem 32
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. 3.728x
B. 3.287x D. 3.782x
Problem 33 (ME October 1995)
If P500 is invested at the end of each year for 6 years, at an effective annual interest rate of 7%, what is the total amount available upon the deposit of the 6th payment?
A. P3455.00 C. P3577.00
B. P3544.00 D. P3688.00
Problem 34
How much money must you deposit today to an account earning 12% so that you can withdraw P25,000 yearly indefinitely starting at the end of the 10th year?
A. P125,000 C. P73,767
B. P89,456 D. P75,127
Problem 35 (ME April 1996)
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. P3,345.65 C. P3,919.53
B. P3,789.34 D. P3,878.56
Problem 36
An investment of P40,000.00 has revenue 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 C. P24,604.65
B. P27,789.78 D. P21,879.99
Problem 37
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. How much principal does he still owe?
A. P130,235.20 C. P132,456.20
B. P134,567.30 D. P129,456.78
Problem 38
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 year 1 200,000.00
year 2 50,000.00
year 3 75,000.00
A. P158,124.60 C. P157,345.98
B. P158,897.50 D. P155,789.34
Problem 39
Mr. Bean borrowed P100,000 at 10% effective annual interest rate. He must pay back the loan over 30 years with uniform monthly payments due on the first day of each month. What does he pay each month?
A. P768.67 C. P856.30
B. P987.34 D. P839.20
Problem 40 (ECE November 1995)
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. P110.22
B. P150.55 D. P112.02
Problem 41
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. P137,832.05 D. P187,833.50 Problem 42
What is the accumulated value of a payment of P6,000 every six months for 16 years with interest at 7% compounded semiannually?
A. P312,345.00 C. P347,898.00
B. P345,678.00 D. P344,007.00
Problem 43
A mining property is offered for sale for P5.7M. On the basis of estimated production, an annual return of P800,000 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% D. 5.2%
Problem 44
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. P1,270,707 C. P1,345,555
B. P1,130,450 D. P1,678,420
Problem 45
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
Problem 46 (CE May 1998)
The present value of an annuity of “R” pesos payable annually for 8 years, with the first payment at the end of 10 years, is P187,481.25. Find the value of R if money is worth 5%.
A. P45,000 C. P42,000
B. P44,000 D. P43,000
Problem 47 (ECE April 1998)
How much money must you invest today in order to withdraw P2,000 annually for 10 years if the interest rate is 9%?
A. P12,385.32 C. P12,835.32
B. P12,853.32 D. P12,881.37
Problem 48 (ECE April 1998)
Money borrowed today is to be paid in 6 equal payments at the end of each of 6 quarters. If the interest is 12% compounded quarterly, how much was initially borrowed if quarterly payment is P2000.00?
A. P10,382.90 C. P10,834.38
B. P10,200.56 D. P10,586.99
Problem 49 (ME October 1997)
A car was bought on installment basis with a monthly installment of P10,000.00 for 60 months.
If interest is 12% compounded annually, calculate the cash price of the car.
A. P455,875.00 C. P678,519.75
B. P567,539.75 D. P345,539.75
Problem 50 (ME October 1997)
A steel mill estimates that one of its furnaces will require maintenance P20,000.00 at the end of 2 years, P40,000.00 at the end 4 years and P80,000.00 at the end of 8 years. What uniform semi-annual amounts could it set aside over the next eight years at the end of each period to meet these requirements of maintenance cost if all the funds would earn interest at the rate of 6%
compounded semi-annually?
A. P7,897.35 C. P8,897.35
B. P9,397.35 D. P6,897.35
Problem 51 (ME April 1998)
A house and lot can be acquired at a down payment of P500,000.00 and a yearly payment of P100,000.00 at the end of each year for a period of 10 years, starting at the end of 5 years from the date of purchase. If money is worth 14% compounded annually, what is the cash price of the property?
A. P810,100.00 C. P808,836.00
B. P801,900.00 D. P805,902.00
Problem 52 (ME April 1998)
How much must be deposited at 6% each year beginning on January 1, year 1, in order to accumulate P5,000.00 on the date of the last deposit, January 1, year 6?
A. P751.00 C. P717.00
B. P715.00 D. P725.00
Problem 53 (ME April 1998)
A piece of machinery can be bought for P10,000.00 cash, or for P2,000.00 down and payments of P750.00 per year for 15 years. What is the annual interest rate for the time payments?
A. 4.61% C. 3.81%
B. 5.71% D. 11.00%
Problem 54 (ME April 1998)
An instructor plans to retire in exactly one year and want an account that will pay him
P25,000.00 a year for the next 15 years. Assuming a 6% annual effective interest rate, what is the amount he would need to deposit now? (The fund will be depleted after 15 years.)
A. P249,000.00 C. P242,806.00
B. 248,500.00 D. P250,400.00
Problem 55
A man invested P1,000.00 per month on a bank that offers 6% interest. How much can he get after 5 years?
A. P60,000.00 C. P72,540.00
B. P69,770.00 D. P69,491.00
Problem 56 (CE November 1995)
Find the present value in pesos, of perpetuity of P15,000 payable semi-annually if money is worth 8%, compounded quarterly.
A. P371,287 C. P392,422
B. P386,227 D. P358,477
Problem 57 (CE May 1999, May 1995)
A man paid 10% down payment of P200,000 for a house and lot and agreed to pay the balance on monthly installments for 60 months at an interest rate of 15% compounded monthly.
Determine the required monthly payment.
A. P4,282.00 C. P58,477.00
B. P42,822.00 D. P5,848.00
Problem 58 (CE November 1998)
A debt of x pesos, with interest rate of 7% compounded annually will be retired at the end of 10 years through the accumulation of deposit in the sinking fund invested at 6% compounded semi-annually. The deposit in the sinking fund every end of six months is P21,962.68. What is the value of x?
A. P300,000 C. P350,000
B. P250,000 D. P400,000