1. Which of the following has the least effective annual interest rate?

a. 12.2% compounded annually

b. 12% compounded quarterly
c. 11.5% compounded monthly
d. 11.7% compounded semi-annually
2. P100,000 was placed in a time deposit which earned 9% compounded quarterly, tax free. After how many years
would it be able to earn a total interest of P50,000?
a. 4.47
b. 4.32
c. 4.63
d. 4.56
3. A man paid a 10% down payment of P200,000 for a house and lot and agreed to pay the balance of monthly
instalments for 5 years at an interest rate of 15% compounded monthly. What was the monthly instalment?
a. P44,528.34
b. P42,821.87
c. P43,625.92
d. P45,825.62
4. P5,000 is deposited at the end of each year for 15 years into an account earning 7.5% compounded
continuously. Find the amount after 15 years.
a. P133,545.58
b. P148,365.90
c. P152,754.20
d. P112,854.10
5. Find the present value, in pesos, of an annuity of P20,000 payable annually for 8 years, with the first payment at
the end of 10 years, if money is worth 5%.
a. P79,354
b. P77,451
c. P83,325
d. P81,424
6. An equipment having a first cost of P450,000 has a life expectancy of 10 years with a final salvage value of
P80,000. Using the double declining balance method, what is its book value after 6 years?
a. P117,964.8
b. P184,320.0
c. P230,400.2
d. P147,456.3
7. The cost of producing a certain commodity consists of P45 per unit for labour and material cost and P15 per unit
for other variable cost. The fixed cost per month amounts to P450,000. If the commodity is sold at P250 each,
what is the break-even quantity?
a. 2368
b. 2178
c. 2366
d. 2367
8. The maintenance expense on a piece of machinery is estimated as follows: maintenance for the first year is P150
and increases by P150 every year until the fourth year. If interest is 8%, find the equivalent uniform annual
maintenance cost.
a. 342.58
b. 360.59
c. 520.42
d. 421.46
9. MR Construction and Supply has purchased its transit mixer. The cost of the mixer is 5 million pesos. Salvage
value at the end of useful life (n=5) is 1 million pesos. If its book value at the end of 3 years is 1.8 million pesos,
what type of depreciation was used in computing its book value?
a. Declining balance method
b. Sinking fund method
c. Straight line method
d. Sum of the years digit
10. A house and lot can be acquired a down payment of P500,000 and a yearly payment of P100,000 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. P805,902.68
b. P801,900.20
c. P808,835.92
d. P810,100.84
11. If the sum of P12,000 is deposited in an account earning interest at the rate of 9% compounded quarterly, what
will it become at the end of 8 years?
a. P25,754.42
b. P24,457.24
c. P24,244.75
d. P22,754.52
12. A debt of P15,000 was paid for as follows: P4,000 at the end of three months, P5,000 at the end of 12 months,
P3000 at the end of 15 months and a final payment F at the end of 21 months. If the rate of interest was 18%
compounded quarterly, find the final payment F.
a. P6,112.89
b. P6,221.98
c. P6,212.98
d. P6,122.89
13. A person buys a piece of property for P100,000 down payment and ten deferred semi-annual payments of
P8,000 each starting 3 years from now. What is the present value of the investment if the rate of interest is 12%
compounded semi-annually?
a. P143,899.90
b. P143,998.09
c. P143,989.90
d. P143.999.08
14. A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The fund will
grant P5,000 for each of the first 5 years, P8,000 for each of the next five years and P10,000 each year
thereafter. The scholarship will start after the fund is established. If the fund earns 8% interest, what is the
amount of the donation?
a. P99,107.61
b. P99,701.16
c. P99,106.17
d. P99,601.71
15. Suppose a man receives an initial annual salary of P60,000, increasing at the rate of P5,000 a year. If money is
worth 10%, determine the future worth of all his salaries for a period of 8 years.
a. P875,974.96
b. P857,749.69
c. P857,947.69
d. P875,749.96
16. A certain equipment costs P7,000 has an economic life “n” years and a salvage value of P350 at the end of “n”
years. If the book value at the end of 4 years is equal to P2,197.22, compute the economic life of the equipment
using the Sum of the Years digit method.
a. 10
b. 16
c. 8
d. 11
17. A shoe manufacturer produces a pair of shoes at a labour cost of P8.50 and materials cost of P23.50. The fixed
charges on the business are P10,125 a month and variable costs are P2.50 a pair. If the shoes sell to retailers for
P48.00 a pair, how many pairs must be produced and sold each month for the manufacturer to break even?
a. 725
b. 700
c. 750
d. 775
18. Which of the following depreciation methods cannot have a salvage value of zero?
a. Declining balance method
b. Sinking fund method
c. Straight line method
d. Sum of years digit method
19. This is where equal payments are made at the end of each payment period starting from the first period.
a. Ordinary annuity
 b. Deferred annuity
c. Annuity due
d. Perpetuity
20. The amount which a willing buyer will pay a willing seller for the property when neither one is under compulsion
to buy or to sell.
a. Fair value
b. Market value
c. Book value
d. Goodwill value