1.

The purchase price of a small generator is P12, 000 and its estimated
maintenance costs are P500 for the first year, P1, 500 for the second year and P2,
500 for the third year. After three years of use the generator is replaced with no
salvage value. Compute the present equivalent cost of the generator using 10%
interest. (3 points)
2. A single independent woman purchased a house and lot. She paid 10% down
payment of P200,000 and agreed to pay the balance on monthly installment for
60 months at an interest rate of 15% compounded monthly. Compute the
amount that the single independent woman will pay each month. ( 5 points)
3. A solar power plant project involves an initial investment of P100, 000 now and
another P100,000 at the end of one year. The revenues of P150, 000 is expected
to be generated beginning on year 2 and year 3. What is the net present value of
this project if the effective annual interest rate is 10%. (7 points)
4. A construction firm wanted to rent a trailer as its temporary facility at a budget
of P3, 000 a month for 5 years. The leasing company offers a lump sum payment
of P240, 000 at the end of 5 years as an alternative plan, but is willing to discount
this amount. The construction firm places a value of 10% effective annual rate on
investment capital.

How much discount should the leasing company give for its alternative plan to be
an acceptable equivalent to the initial plan of the construction firm? (10 points)