ESC 411

PROBLEM SET #1
NAME:___________________________________________________________ SCHEDULE:________________
Show complete solution and box the final answer. Round off intermediate and final values up to four decimal places .
1. An annual deposit of P20,000 was places on the fund at the end of year for 6 years. I f the fund invested has a
rate of 5% compounded annually, how much is the worth of the fund at the end of 9 years?
2. A house costs P2,000,000 cash. A purchaser will pay P90,000 cash, P60,000 at the end of 2 years and a sequence
of 6 annual payments starting with one at the end of 4 years, to discharge all his remaining liability as to the
principal and interest at 10% compounded annually, find the annual payments which must be made for 10
years?
3. You need 4,000 per year for four years to go to college. Your father invested 5,000 in 7% account for your
education when you were born. If you withdraw 4,000 at the end of your 17 th, 18th 19th and 20th birthday, how
much will be left in the account at the end of the 21st year?
4. A farmer bought a tractor costing P50,000, payable in 12 semi-annual payments, each installment payable at the
beginning of each period. If the rate of interest is 20% compounded semi -annually, determine the amount of
each installment.
5. Mr. dela Cruz borrowed P1,000,000 at 10% interest compounded quarterly and payable every month for 5 years.
a. how much of the load remains unpaid immediately after he has paid the 12 th payment?
b. What is effective annual interest rate?
6. To maintain the LRT, it is required to have P500,000 at the end of 5 years and annually thereafter. If money is
worth 5%, determine the cost of all future maintenance.
7. Determine the ordinary and exact simple interests on P5,500 for the period from January 5, 2002 to February
28, 2003, if the rate is 6.5%.

8. A man wishes his son to receive P 500, 000.00 ten years from now. What amount should he invest now
if it will earn interest of 10% compounded annually during the first 5 years and 15% compounded
quarterly during the next 2years and 12% compounded semiannually on the remaining years. What will
be the worth of the money on the 7th year?
9. A student plans to deposit P 1, 500 in the bank now and another P 1, 000 for the after two years. If he
plans to withdraw P 5, 000, 3 years after his last deposit for the purpose of buying shoes, what will be
the amount of money left in the bank after one year of his withdrawal? Effective annual interest rate is
10% .
10. Find the nominal rate which is converted quarterly could be used instead of 12% compounded semi-

annually.