Problems – Simple Interest, Compound Interest Set 27
B. 4.77 years D. 5.33 years Problem 24
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 C. P170,149.77
B. P153,349.77 D. P175,343.77
Problem 25
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%
Problem 26 (ME April 1996)
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
Problem 27 (ME April 1996)
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 i 0.
A. i 16.7% C. 12.5% i 14.3%
B. i 14.3% D. 16.7% i 100%
Problem 28 (ME April 1996)
A firm borrows P2000.00 for 6 years at 8%. At the end of 6 years, it renews the loan for the amount due plus P2000 more for 2 years at 8%. What is the lump sum due?
A. P5,679.67 C. P6,034.66
B. P6,789.98 D. P5,888.77
Problem 29
At an annual rate of return of 8%, what is the future worth of P1000 at the end of 4 years?
A. P1388.90 C. P1765.56
B. P1234.56 D. P1360.50
Problem 30 (ME October 1997)
A student has money given by his grandfather in the amount of P20,000.00. How much money in the form of interest will he get if the money is put in a bank that offers 8% rate compounded annually, at the end of 7 years?
A. P34,276.48 C. P36,279.40
B. P34,270.00 D. P34,266.68
Problem 31 (ME October 1997)
If the interest rate on an account is 11.5% compounded yearly, approximately how many years will it take to triple the amount?
A. 11 years C. 9 years
B. 10 years D. 12 years
Problem 32 (ME October 1997)
The nominal interest rate is 4%. How much is my P10,000.00 worth in 10 years in a continuously compounded account?
A. P13,620.10 C. P14,918.25
B. P13,650.20 C. P13,498.60
Problem 33 (ME October 1997)
How much must be invested on January 1, year 1, in order to accumulate P2,000.00 on January 1, year 6 at 6%.
A. P1,295.00 C. P1,495.00
B. P1,695.00 D. P1,595.00
Problem 34 (ME April 1998)
If P5000.00 shall accumulate for 10 years at 8% compounded quarterly. Find the compounded interest at the end of 10 years.
A. P6,005.30 C. P6,000.00
B. P6,040.20 D. P6,010.20
Problem 35 (ME April 1998)
A sum of P1,000.00 is invested now and left for eight years, at which time the principal is withdrawn. The interest that has accrued is left for another eight years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of the 16th year?
A. P706.00 C. P500.00
B. P774.00 D. P799.00
Problem 36 (ME April 1998)
It is the practice of almost all banks in the Philippines that when they grant a loan, the interest for one year is automatically deducted from the principal amount upon release of money to a
borrower. Let us therefore assume that you applied for a loan with a bank and the P80,000.00 was approved at an interest rate of 14% of which P11,200.00 was deducted and you were given a check of P68,800.00. Since you have to pay the amount of P80,000.00 one year after, what then will be the effective interest rate?
A. 15.90% C. 16.28%
B. 16.30% D. 16.20%
Problem 37 (ME April 1998)
The amount of P1,500.00 was deposited in a bank account offers a future worth P3,000.00.
Interest is paid semi-annually. Determine the interest rate paid on this account.
A. 3.5% C. 2.9
B. 2.5% D. 4%
Problem 38 (ME April 1998)
A merchant puts in his P2,000.00 to a small business for a period of six years. With a given interest rate on the investment of 15% per year, compounded annually, how much will he collect at the end of the sixth year?
A. P4,400.00 C. P4,390.00
B. P4,200.00 D. P4,626.00
Problem 39
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 will be collected in 8 years?
A. P13,678.04 C. P14,888.05
B. P13,294.02 D. P14,234.03 Problem 40
The following schedule of funds is available to form a sinking fund.
current year (n) 50,000.00
n+1 40,000.00
n+2 30,000.00
n+3 20,000.00
At the end of the fourth year, equipment costing P250,000.00 will have to be purchased as a replacement for old equipment. Money is valued at 20% by the company. At the time of purchase, how much money will be needed to supplement the sinking fund?
A. P12,000.00 C. P10,000.00
B. P11,000.00 D. P9,000.00
Problem 41 (ME October 1995)
In year zero, you invest P10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much, in terms of year zero pesos, will be in the account at the maturity?
A. P15,386.00 C. P13,382.00
B. P15,030.00 D. P6,653.00 Problem 42 (ME October 1995)
A company invests P10,000 today to be repaid in five years in one lump sum at 12%
compounded annually. If the rate of inflation is 3% compounded annually, how much profit in present day pesos is realized over five years?
A. P5,626.00 C. P3,202.00
B. P7,623.00 D. P5,202.00
Problem 43
Compute the effective rate for an interest rate of 16% compounded annually.
A. 16% C. 16.98%
B. 16.64% D. 17.03%
Problem 44
Compute the effective rate for an interest rate of 16% compounded quarterly.
A. 16% C. 16.98%
B. 16.64% D. 17.03%
Problem 45
Convert 12% compounded semi-annually to x% compounded quarterly.
A. 11.83% C. 11.23%
B. 11.71% D. 11.12%
Problem 46
Convert 12% compounded semi-annually to x% compounded monthly.
A. 11.83% C. 11.23%
B. 11.71% D. 11.12%
Problem 47 (ME October 1995)
A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the interest compounded?
A. daily C. bi-monthly
B. monthly D. quarterly
Problem 48 (ECE November 1995, November 1998)
By the conditions of a will, the sum of P25,000 is left to a girl to be held in a trust fund by her guardian until it amount to P45,000. When will the girl receive the money if the fund is invested at 8% compounded quarterly?
A. 7.42 years C. 7 years
B. 7.25 years D. 6.8 years
Problem 49 (ECE April 1995)
A man expects to receive P20,000 in 10 years. How much is that money worth now considering interest at 6% compounded quarterly?
A. P11,025.25 C. P15,678.45
B. P17,567.95 D. P12,698.65
Problem 50 (ECE March 1996)
What is the effective rate corresponding to 16% compounded daily? Take 1 year = 360 days.
A. 16.5% C. 17.35%
B. 16.78% D. 17.84%
Problem 51
What amount will be accumulated by a present investment of P17,200 in 6 years at 2%
compounded quarterly?
A. P19,387.15 C. P19,856.40
B. P20,456.30 D. P19,232.30
Problem 52
What rate of interest compounded annually must be received if an investment of P54,000 made now with result in a receipt of P72,000 5 years hence?
A. 5.12% C. 5.92%
B. 5.65% D. 5.34%
Problem 53
With interest at 6% compounded annually, how much is required 7 years hence to repay an P8 M loan made today?
A. P12,456,789 C. P12,029,042
B. P12,345,046 D. P12,567,000
Problem 54
If money is worth 6% compounded annually, what payment 12 years from now is equivalent to a payment of P7000 9 years from now?
A. P8765.10 C. P8337.10
B. P8945.20 D. P8234.60
Problem 55
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. P3764.50
Problem 56
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
Problem 57 (CE November 1996)
If P500,000 is deposited at a rate of 11.25% compounded monthly, determine the compounded interest after 7 years and 9 months.
A. P660,592 C. P680,686
B. P670,258 D. P690,849
Problem 58 (CE May 1996)
P200,000 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 C. P401,170
B. P521,170 D. P621,170