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Problem #
PRESENT VALUE
Finding the Present Value (Principal) and the Compound Interest Using the Table
Compound Term of Nominal Interest
Present Value Compound Interest
Amount Investment Rate Compounded

1 60,000 3 years 9% annually

2 6,500 5 years 8% quarterly
3 500,000 25 years 10.5% annually
4 98,000 4 years 12% quarterly
5 2,500 1 year 18% monthly
Note: Round answers to the nearest cent.

Creating the New Table Factor and Finding the Present Value
Term of Nominal Interest
Principal New Table Factor Present Value
Investment Rate Compounded

1 120,000 30 years 16% quarterly

2 14,000 28 years 12% quarterly
semi-
3 1,100,000 55 years 8%
annually
4 13,000 17 years 12% monthly
5 330,000 52 years 7% annually

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Problem #2
PRESENT VALUE
Finding the Present Value (Principal) and the Compound Interest Using the Formula

Using the present value formula, solve the following:

Compound Nominal Term of Interest
Present Value Compound Interest
Amount Rate Loan Compounded

1 P20,000 6% 10 years annually

semi-
2 P9,000 9% 4 years
annually
3 P3,500 8% 4 years quarterly
4 P100,000 12% 2 years bi-monthly
5 P7,000 10% 30 years annually
6 P50,000 12% 7 years quarterly

Problem #4
PRESENT VALUE
Word Problems

1. Angelo wants to renovate his house in 3 years. He estimates the cost to be P300,000. How
much must Angelo invest now at 8% interest compounded quarterly, in order to have P300,000,
3 years from now.

2. Arnold and Azura want to save P500,000 in 5½ years to renovate their rest house. If the Bank
of Amber is paying 8% interest compounded quarterly, how much must they deposit now in order
to have the money for the project?

3. Find the present value of P85,000, if the interest rate is 6% compounded quarterly, for 10
years.

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4. Ashley and Aileen want to accumulate P300,000, 17 years from now, as a college fund for
their baby daughter, Aria. Use the present value formula to calculate how much they must invest
now, at an interest rate of 8% compounded semi-annually, in order to have P300,000 in 17 years.

5. Anne is planning a vacation in Europe in 4 years, after graduation. She estimates that she will
need P350,000 for the trip.

(a) If her bank is offering 4-year certificates of deposit with 8% interest compounded quarterly,
how much must Anne invest now in order to have the money for the trip?
(b) How much compound interest will be earned on the investment?

6. Arney Arval estimates he will need P250,000 to set up a law office in 7 years, when he
graduates from law school.

(a) How much must Arney invest now at 12% interest compounded quarterly in order to achieve
his goal?
(b) How much compound interest will he earn on the investment?

7. Find the present value of P140,000 due at the end of nine years if money is worth (a) 5%
compounded quarterly and (b) 7% compounded semiannually. How much is the compound
interest in each case?

8. Amethyst has P100,000 at the end of three years in her savings account. The interest rate is
24% compounded monthly. How much did she deposit in the account three years ago?

9. If P360,000 is due seven years from now and money is worth 5% compounded annually, find
the present value and the compound interest.

10. What principal will accumulate to P320,000 in four years at 4% compounded quarterly?

11. Arthur paid a two-year debt with P16,907.40. The interest charged was at 6% compounded
monthly. What was the principal?

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