SMED9 Due: July 8, 2020

Problem Set 3

1. Marc’s father deposits P4,000 at the end of 3 months in a fund paying 10% interest,
compounded quarterly. What amount will the fund contain just after Marc is 18 years old, if the
first deposit was made when he was 6 years old?

2. Feddie received an inheritance of P45,000 a year when he was 12 years old. However, this
was to be invested and allowed to accumulate at 7% interest rate until he reaches the age of
21. What will be its amount when he reaches the age of 21?

3. A contract calls for 20 semiannual payments of P750,000 each. Find the present value of the
contract if money is worth 7.2% compounded semiannually.

4. On his 45th birthday, a man buys an annuity from an insurance. Company which credits
interest at 9% compounded monthly. The annuity will provide 15 years of P6,000 monthly
payments to himself or his wife, and its term will begin oh his 50th birthday. What single
payment does he make on his 45th birthday?

5. Gabby has an obligation of P65,000 due at the end of ½ year. How much must be set aside
every month at 9%, compounded monthly, in order to repay the loan when it is due?

6. A P370,500 debt due in 8 years is to be repaid by x quarterly payments for the first 3 years
and 2x quarterly payments for the next 5 years. Find x if money is worth 8.6%, compounded
quarterly.

7. If P25,000 is deposited every quarter in an account paying 8%, compounded quarterly, how
much time will be required to accumulate P800,000 and what will be the amount of the last
deposit?

8. If monthly deposits of P3,000 for 5 years amount to P235,000. What is the rate compounded
monthly?