Name: Date:

Program : Score:

Activity 5.1 Simple or Compound Interest

Directions: Complete the table.

Principal, P ( in Peso) Rate ( in %) Term ( In Total amount Interest (in Type of

Year) earned after the peso) interest
term, A (in peso )

1000 10 3 1. 1300 300 simple

2. 320. 34 9 2 378 3. 57.66 simple

5000 4. 6 2 5600 5. 600 simple

100 5 6. 3 115 7. 15 simple

5000 8 3 8. 6,298.56 1,298.56 compound

14,075.00 7.5 20 59,788.50 9. 45,713.50 compound

10. 2,249.99 6 10 4,024.39 11. 1,779.40 compound

Activity 5.2 Annuity

Direction: Determine whether or not each of the following situations describes an annuity. Write
your answers on the space provided.

ANNUITY 1. Aris pays ₱3000 each month as rent for his apartment.
NOT ANNUITY 2. Every morning, rain or shine, Evan drops by at McJo to buy her favorite café
caffe.
ANNUITY 3. In response to her church’s annual stewardship campaign, Norie pledge to
make an offering of ₱100 each week.
ANNUITY 4. Archie bought a policy from an insurance company that will pay him ₱2000 a
month guaranteed for the next 20 years.
ANNUITY 5. Every year Ken pays his insurance company ₱10000 for his car insurance
premium.
ANNUITY 6. Last month Elmer took out a ₱250,000.00 business loan. The payments are
₱5000 per month.
ANNUITY 7. Julie Ann’s monthly amortization for her housing loan in ₱3500 for the next 20
years.
ANNUITY 8. Raymond deposit ₱4000 each month into his savings account for the next 20
years.
ANNUITY 9. Yamie deposits ₱2000 into college fund every month for 5 years to prepare
for her son’s education.
NOT ANNUITY 10. Noel spends ₱1500 each month for groceries.

Activity 5.4.1 Bonds

Directions. Solve the following problems involving bond valuation.

1. The par value of each bond in the table is ₱20, 000; the life is the time to the redemption
date. Find the price.

Price Life Redeemable Bond Rate Coupon Investment Rate

at Payable

1. ₱𝟐𝟒, 𝟑𝟑𝟓. 𝟐𝟏 22 years Par 5.5% annually 4%, m=1

2. ₱𝟏𝟔, 𝟔𝟕𝟗. 33 8 years par 6% quarterly 9% m=4

3. ₱𝟏𝟖, 𝟑𝟕𝟐. 𝟕2 18 years 115% 5% semi-annually 7% m=2

4. ₱𝟐𝟒, 𝟗𝟐𝟕. 𝟓6 29 years 98% 8% annually 6% m=1

2. A ₱8,000, 5% bond with annual coupons will be redeemed at the end of 9 years. Find the
price to yield at the following investment rates:

a. 4% = Answer: ₱8, 594.69

b. 6 ¼% = Answer: ₱7, 327. 05

3. A ₱15,000, 8% bond with semi-annual coupons is priced to yield 9.5%. Find the price if the
bond is redeemable at par at the end of the following years:

a. 10 years = Answer: ₱13, 587.51

b. 15 years = Answer: ₱ 13, 238. 45

4. Zir Jay borrows ₱25,000 from Aaron and signs a note promising to pay interest semi-annually
at the rate 5%, and to pay the principal in one installment at the end of nine years. Find the price
Aaron would receive if he sold this note 3 years before it is due to yield an investor 7%
converted semiannually.
Note: A promissory note which requires the periodic payment of interest on an original principal during the
whole life of the note, and the payment of the principal in one installment, is an illustration of a bond.

Answer:

Bond Price in 9 years = ₱21, 742.09

Bond Price sold 3 years before due (6 years) = ₱22,584.17

Activity 5.4.2 Stocks

Direction. Solve the following problems involving stocks.

1. Pegie bought 30 shares of Bukidnon Sugar Corporation (BUSCO) at ₱800 per share in 2017.
₱30.75 was paid as dividends in 2017 and 32.25 was paid as dividends in 2018. If the closing
price of a share of BUSCO is ₱825 at the end of 2018, find the amount of Pegie’s gains.

2. A preferred stock with par value ₱25,000 per share, 8.5% dividend rate paid semi-annually,
and a life of 10 years. What will be (a) the amount of fixed dividends paid every six months and
(b) the value of the stock after ten years?

Activity 5.4.3 Mutual Funds

Direction. Solve the following problems involving mutual funds.

1. Adonis wants to invest ₱50,000 in a mutual fund. It has ₱108,900,000 worth of stocks,
₱34,400,000 worth of bonds, and ₱12,500,000 in cash. The fund’s total liabilities amount to
₱18,000,000 and there are 4,800,000 outstanding shares.

a. What is the Net Asset Value (NAV) of the mutual fund?

Answer:

Total Assets = ₱108,900.00 + ₱34,400,000 + ₱12,500,000

Total Assets = ₱155,800,000

NAV = (Total Assets - Total Liabilities)

Number of Outstanding Shares
 NAV = (₱155,800,000 - ₱18,000,000)
4,8000,000

NAV = ₱28.71

b. How many shares will Adonis have?

Answers:

Amount of Shares = Amount if investments

NAV

Amount of Shares = ₱50,000.00

₱28.71

Amount of Shares = ₱1,741.55

2. A mutual fund in Mindanao has ₱256,238,000 worth of stocks, ₱56,870,000 worth of bonds,
and ₱77,698,000 in cash. The fund’s total liabilities amount to ₱18,000,000 and there are
₱12,539,000 outstanding shares. An investor wishes to invest ₱65,500.

What is the Net Asset Value (NAV) of the mutual fund?

Answer:
Total Assets = ₱256,238,000 + ₱56,870,000 + ₱77,698,000
Total Assets = ₱390,806,000

NAV = (𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠)

Number of outstanding Shares

NAV = (₱372,806,000 − ₱18,000,000)

₱12,539,000

𝑵𝑨𝑽 = ₱𝟐𝟗. 𝟕𝟑

b. How many shares will an investor have?

Answer:
 Amount of Shares = 𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛s
NAV
Amount of Shares = ₱65,500.00
₱29.73

𝑨𝒎𝒐𝒖𝒏𝒕 𝒐𝒇 𝑺𝒉𝒂𝒓𝒆𝒔 = ₱𝟐, 𝟐𝟎𝟑. 𝟏𝟔

Activity 5.5.1 Linear Programming Formulation

Direction. Formulate the following as LP Models.

1. BranCo company produces two products that are processed on two production lines.
Production line 1 has 90 available hours, and production line 2 has 40 available hours.
Each product requires 10 hours of processing time on line 1, while on line 2 product 1
requires 7 hours and product 2 requires 3 hours. The profit for product 1 is 50 pesos per
unit and the profit for product 2 is 45 pesos per unit. BranCo wants to determine the
amount of product 1 and product 2 to produce to maximize the company’s profit.

2. RAN Department Store aims to increase its popularity by hiring an advertise firm.
Three types of advertising are available, namely, television and radio commercial ads.
The store aims to determine the number of each type of advertisement it should
purchase in order to maximize exposure. The table below shows the estimated potential
audience and cost of the three advertising options.

Potential Audience Exposure Cost (in pesos)

Television 20,000 15,000

Radio 12,000 6,000

The department store requires that only at most 8 commercial ads should be available
and that their budget is only 75,000 pesos.

Determine how many ads of each type should the department store avail in order to
maximize audience exposure.