MATHEMATICS OF FINANCE

ACTIVITIES

I. Solve the following problems. Round your answers to the

nearest centavo. If the answer is a percent, express the answer
to the nearest hundredth of a percent. Show your complete
solution for full credit and box your final answer.

1. If Mr. Valencia borrowed ₱10 000.00 for 8 months, what is the

total amount he will owe? The total amount of Mr. Valencia he will.owe is
10,533.33
2. A ₱150 000.00 certificate of deposit held for 75 days was worth
₱152 125.00 To the nearest tenth of a percent, what interest
rate was earned? Assume a 360-day year. 7%
3. Suppose you decide to pay off a 9% ₱300 000.00 loan early.
The bank tells you that you owe ₱11 170.00 interest.
Assuming that the bank uses a 365-day year, for how many
days are you being charged interest? 79 days
4. A newborn child receives a ₱500 000.00 gift toward a college
education from her grandparents. How much will the
₱500 000.00 be worth in 17 years if it is invested at 7%
compounded quarterly? 1, 626, 711.07
5. Mr. Alano deposits ₱70 000.00 in a savings account. The
money is left on deposit for 3 years earning 5% compounded
annually. Calculate the account balance at the end of 3 years.
81, 033.75
6. If an investment company pays 6% compounded semiannually,
how much should you deposit now to have ₱100 000.00 5
years from now? 74, 725.82
7. Ella borrowed ₱520 000.00 from her friend Gail to pay for
remodeling work on his house. She repaid the loan 10 months
later with simple interest at 3%. Gail then invested the
proceeds (original principal plus interest) in a 5-year certificate
of deposit paying 3.3% compounded quarterly. How much will
she have at the end of 5 years? 966, 333.16 and 1, 138, 915.48
II. Answer the following questions in three to five sentences. (5 pts.
each)
1. Why would you rather earn compound interest than simple
interest? It is because in compound interest, the interest is
computed on the principal and also on the accumulated past
interest while the simple interest the amount paid or earned
for the use of money. Simple interest remains constant
throughout the investment term. In compound interest, the
interest also earn interest. Thus, the interest grows every year.

2. What are the pros and cons of having a credit card? Credit
cards have become an essential life tool. They can be used to
make purchases if you don’t have cash. But there are some
advantages (pros) and disadvantages (cons) on having credit
cards. They ate very convenient to use. Today the majority of
business accept credit cards. Rewards for use, with this
features depending on using credit cards there are interest,
fees, and identity.

3. What are the differences among stocks, bonds, and mutual

funds? In stocks, when an investor buys a stock, part
ownership in the form of a share is bought. Bonds are a type of
investment designed to aid governments and corporations to
raise money. Mutual fund, money collected from various
investors is taken together to buy a large variety of securities.