PRELIMS

in year zero, you invest p10,000.00 in a 15% security for 5 years. during that time, the average
annual inflation is 6%. how much in terms of zero pesos, will be in the account of maturity?

how much should you put into a 10% savings account to have p50,000.00 in five years if
compounded annually?

what is the present worth of two 500 payments at the end of the fourth year and fifth year, if the
interest rate is 10% compounded annually?

joseph buys a new house using an interest only loan where he pays only the interest on the
value of the home each month. the home is valued at $200,000.00 and joseph pays 5% interest
per year on the home. how much is his monthly interest payment?

a mechanical engineer borrowed the amount of p10,000.00 for 80 days at 12% per annum
simple interest. how much will be due at the end of 80 days?

the amount of p20,000.00 was borrowed from a lending investor at an interest rate of 5% per
month. how the interest is he going to pay at the end of 10months?

Determine the exact simple interest on ₱5,000 for the period from Jan. 15 to Nov. 28, 1992, if
the rate of interest is 22%.

MIDTERMS

If the effective annual interest rate is 4% compute the equivalent nominal annual interest
compounded continuously.

Compute the difference in the future amount of P500 compounded annually at nominal rate of
5% and if it is compounded continuously for 5 years at the same rate.

an engineer purchased 12years ago a heavy planner for p50,000.00 as the life of planner was
20years, a straight-line depreciation reserve has been provided on that basis. now the firm
wishes to replace the old planner with a newly designed planner possessing several
advantages. it can sell old planner for p10,000.00. the new machine will cost p70,000.00. how
much new capital will be required to make the purchase?

a plant erected to manufacture sock has a first cost of p10,000,000.00 with an estimated
salvage value of p1000,000.00 at the end of 25years. find its appraised value to the nearest
p100 by the sinking fund method assuming an interest rate of 6% at the end of 10 years and
20years.

the original cost of a certain machine is p150,000.00, has a life of 8 years with a salvage value
of p9,000.00. how much is the depreciation on the 5th year, if the constant percentage of
declining value is used.
a machine was purchased at an original cost of p400,000.00 with a salvage value of
p20,000.00. life of the machine is expected to last for 6 years. it was used for 4000hours in the
first year and 6000hours on the second year if the machine is expected to last for 38,000 hours
in a period of 6years.

Because of the peso devaluation, a car costing P150,000 is to be purchased through a finance
company instead of paying cash. If the buyer is required to pay P40,000 as down payment and
P4,000 each month for four years, what is the effective interest rate on the diminishing balance?

The average annual cost of damages caused by floods to a certain subdivision located along
the Pasig River is estimated at P700,000. To build a gravity dam to protect the area from the
floods would cost P2,500,000.00 and would involve an annual maintenance cost of P20,000.00.
With an interest at 8% compounded annually, how many years will it take for the dam to pay for
itself?

instead of paying p100,000.00 in annual rent for office space at the beginning of each year for
the next 10 years, an engineering firm has decided to take out a 10-year p1,000,000.00 of the
rent saved and earn 18% annual interest on that amount. what will be the difference between
the firm's annual revenue and expenses?

XYZ Inc. plans to construct an additional building at the end of 10 years at an estimated cost of
P5,000,000.00. To accumulate this amount, it will make equal year end deposit in the fund
earning 13%. However, at the end of 5th year it decided to have a larger building than originally
intended to an estimated of cost P 8,000,000.00. What should be the annual deposit for the last
5 years?

SEMIFINALS

A machine cost P 150,000 and will have a scrap value of P 10,000 when retired at the end of 15
years. If money is worth 4%, find the annual investment and the capitalized cost of the machine.

A bridge that was constructed at a cost of P 75000 is expected to last 30 years at the end of
which time its renewal cost will be P 40000. Annual repairs and maintenance are P 3,000. What
is the capitalized cost of the bridge at an interest of 6%?

A man wants to make 14% nominal interest compounded semi-annually on a bond investment.
How should the man be willing to pay now for a 12% - P10, 000.00 bond that will mature in 10
years and pays interest semi-annually

A P 200,000, 5% bond pays dividend semiannually and will be redeemed at 110% on January
1, 2000. It is bought on January 1, 2007, to yield 10% interest. Determine the price of the bond.

The future amount of P100,000 for a period of 8 years is equal to P341,655.49. Considering
money is worth 10% per year with an inflation rate of "x " per cent per year, find the value of
inflation rate.
In 1980 a couple invested 10,000 for 5 years at the rate of 16% annually. During that time the
rate of inflation is 5% compounded annually. How much money will he get in 1985 and how
much profit is realized over the 5 years