Republic of the Philippines

Pamantasan ng Cabuyao
(UNIVERSITY OF CABUYAO)
Katapatan Subd. Brgy. Banay-banay, City of Cabuyao, Laguna

COLLEGE OF ENGINEERING

1. You are in financial trouble and are delinquent on your mortgage payment.
Your bank has agreed to a repayment schedule of $1,600 per month, and it will
charge 0.5% per month interest on the outstanding balance. If the current
outstanding balance is $250,000, how long will it take for you to pay off the
loan?

Solution:
A=$ 1,600i=0.5 % P=$ 250,000n=?

P= A ¿ $ 250,000=$ 1,600 ¿

$ 250,000
=¿
$ 1,600

$ 156.25=¿

#Shift Solve

N=304.7244319 months

N=304.72months

Or

N=25.39370266 years

N=25.39 years

2. You are considering either buying or leasing a vehicle. The following data
have been compiled:
 Republic of the Philippines
Pamantasan ng Cabuyao
(UNIVERSITY OF CABUYAO)
Katapatan Subd. Brgy. Banay-banay, City of Cabuyao, Laguna

COLLEGE OF ENGINEERING

If your interest rate is 6% compounded monthly, at what value of the vehicle

at the end of three years (S) would make the both options economically
equivalent?

Solution:
Buying Leasing
Present Value $22,000 $22,000
Down Payment $2,000 $0
Value of vehicle(3 years) S
36 monthly payment $608 (end of month) $429 (beginning of month)
Documentation Fee $400

Buying:
PB =S ¿

PB =S ¿

PB =0.8356449188 S − $ 19,985.57787 − $ 2,000

PB =0.8356449188 S − $ 21985.57787

Leasing:
P L=− $ 400 − A − A ¿

P L=− $ 400 − $ 420 − $ 420 ¿

P L=− $ 400 − $ 420 − $ 420 ¿

P L=− $ 400 − $ 420 − $ 13454.85595

P L=− 14,274.85595
 Republic of the Philippines
Pamantasan ng Cabuyao
(UNIVERSITY OF CABUYAO)
Katapatan Subd. Brgy. Banay-banay, City of Cabuyao, Laguna

COLLEGE OF ENGINEERING
Solve for S:
PB =P L
0.8356449188 S − $ 21985.57787=−14,274.85595

0.8356449188 S=−14,274.85595+ $ 21985.57787

#Shift Solve

S=$ 9,227.270754

S=$ 9,227.27

3. Your company borrowed $150,000, agreeing to pay the balance in 24 equal

monthly installments at 9% compounded monthly. Determine the total interest

payment during the first 12 months.

Solution:
A=?i=9 % P=$ 250,000n=24 months∧12 months

Solve for A:

A=P¿

A=$ 150,000 ¿

A=$ 6,852.711342

Solve for present value from year 12 to year 0:

F 12= A ¿

P12=$ 6,852.711342 ¿

P12=$ 78,360.15577
 Republic of the Philippines
Pamantasan ng Cabuyao
(UNIVERSITY OF CABUYAO)
Katapatan Subd. Brgy. Banay-banay, City of Cabuyao, Laguna

COLLEGE OF ENGINEERING

Total Payment:

PT =$ 6,852.711342 ×12

PT =$ 82,232.5361

Interest:

I =$ 82,232.5361 −($ 150,000 − $ 78,360.15577)

I =$ 82,232.5361 −71,639.84423

I =$ 10,592.69187

I =$ 10,592.69