ACTIVITY NO.

3_ENGECON_APRIL 29, 30, MAY 2, 3, 2024

SOLUTIONS TO BE WRITTEN LEGIBLY AND CLEAN IN THE NOTEBOOKS. UNDERLINE OR BOX OR

HIGHLIGHT YOUR FINAL ANSWERS.

1. P10,000 loan is to be paid at a rate of P500 per month with an annual effective rate of 19.56%
charged against the unpaid balance. What principal remains to be paid after the FIFTH payment?

ANSWER

2. A loan was made today and the payment scheme was P10,000 annually starting at the end of the 6th
year until at the end of the 10th year. P20,000 at the end of the 11th year until at the end of the 15th year.
P30,000 annually for the succeeding 5 years. With 12% compounding annually, what is the present value
of the loan and the equivalent annuity payment he should pay for 20 years to settle the amount equally?

ANSWER

3. Calculate the capitalized cost of a project that has an initial cost of 50 million pesos, an additional
investment cost of 5 million every 10 years and expected major expansion costs of 25 million every 15
years. The annual operating cost will be Php 500,000 at the end of every year for the first 5 years, Php
700,000 for the next 5 years and 1 million thereafter. Assume interest rate is 15% per year. Draw the
Cash Flow Diagram.

ANSWER

4. Given the following cash flow with i = 10% per year, n = 5 years. Find the present value P and future
value F.

ANSWER

0 1 2 3 4 5

$400
$600
$800
$1000
$1200

5. Find the present value P and the equivalent uniform annual amount A that is equivalent to a
gradient series in which the first annual payment is P10,000, the second is P12,000, the third is
P14,000, and so on, and there are a total of 10 annual payments. The interest rate is 16% c.a.

ANSWER