economy 4

Mr. Robles plans a deposit of P500 at the end of each month for 10 years at 12% annual interest,
compounded monthly. The amount that will be available in two years is?

Select one:b. P13,486.73.

In 5 years, P18,000 will be needed to pay for a building renovation. In order to generate this
sum, consisting of three annual payments is established now. For tax purpose, no further
payments will be made after three years. What payments are necessary if money is worth 15%
per annum?

Select one:d. P3, 919.54

person buy a piece of property for P100,000 down payment and ten deferred semi annual
payments of P8,000 each starting three years from now. What is the present value of the
investment if the rate of interest is 12% compounded semi-annually?

Select one:c. P143, 999

A man will deposit P200 with savings and loan association at the beginning of each 3 months for
9 years. If the association pays interest at the rate of 5.5% compounded quarterly, find the sum
to his credit just after the last deposit.

Select one:c. P93, 630.00

An item is purchased for P100 000.00. Annual costs are P18 000.00. Using 8%, what is the
capitalized cost of perpetual service?

Select one:c. P325, 000

If the rate of interest is 12% compounded annually, find the equivalent rate of interest if it is
compounded quarterly.

Select one:b. 11.49%

Find the nominal rate, which if converted quarterly could be used instead of 12% compounded
semi -annually.
Select one:c. r=11.83%

Determine the exact interest on P1200 for the period from January 16 to November 26, 1992, if
the rate of interest is 24%. Note the year 1992 is a leap year.

Select one:c. P247.87

Compute the equivalent rate of 6% semi - annually to a rate compounded quarterly.

Select one:c. r=5.96%

How long will it take for the money to double itself if invested at 5% compounded annually?

Select one:

c. 14 years

econ5

A certain machine costs 2.5M while its salvage value is 150,000 at the end of 8 years. Determine
its book value at the end of 4 years using the Sum of the Digits method.

Select one:b. 802,778

An asset is purchased for P500, 000.00. The salvage value in 25 years is P100,000.00. What is the
total depreciation in the first three years using straight - line method?

Select one:a. P48, 000.00

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000
at the end of the period. Compute the depreciation charge on the tenth year using the sum of
year's digit method.

Select one:b. d=P11, 000

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000
at the end of the period. Compute the depreciation charge and its book value after 10 years
using straight - line method.
Select one:b. d=P14, 666.67

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000
at the end of the period. Compute the depreciation charge and its book value after 10 years
using straight - line method.

Select one:d. Cn=P103, 333.30

quiz 3

Find the present value in pesos of a perpetuity of P15,000 payable semi-annually if money is
worth 8% compounded quarterly.

Select one:d. P371,287.36

A man invest P10,000 now for the college education of his 2 year old son. If the fund earns 14%
effective, how much will the son get each year starting from his 18th to the 22th birthday?

Select one:d. P20, 791.64

A lathe for a machine shop cost P60,000 if paid in cash. On the installment plan, a purchaser
should pay P20,000 down payment and 10 quarterly installment, first due at the end of the first
year after compounded quarterly. Determine the quarterly installment.

Select one:a. P5,439.18

A farmer bought a tractor costing P25,000 payable in 10 semi annual payments, each installment
payable at the beginning of each period. If the rate of interest is 26% compounded semi-
annually, determine the amount of each installment.

Select one:b. P4,077.20

A one bagger concrete mixer can be purchase with a down payment of P8,000 and equal
installment of P600 each paid at the end of every month for the next 12 months. If money is
worth 12% compounded monthly, determine the equivalent cash price of the mixer.

Select one:d. P14,753.05

longquiz
How much must be invested in order to have 10, 000 at the end of 10 years if interestis paid at
6% per annum compounded semi-annually?

Select one:b. 5,536.76

Find the effective rate if interest is compounded quarterly at the nominal rate of 9.6% per
annum.

Select one:a. 9.95%

How many years will it take for an investment to doubleitself if invested at the rate of 4%
compounded annually?

Select one:a. 18 years

A compressor can be purchased with a down payment of 8, 000 and equal installments of 600
each paid at the end of every month for the next 12 months. If money is worth 12%
compounded monthly, determine the equivalent cash price of the compressor.

Select one:d. 14,753.05

Mr. Perez bought a second hand cellular phone and then sold it to Rudy at a profit of 40%. Rudy
then sold the phone to Noel at a profit of 20%. If Noel paid P2856.00 more than it cost Mr. Perez,
how much did Mr. Perezpay for the unit?

Select one:d. P4200.00

How many years will it take for an investment to triple itself if invested at the rate of 4%
compounded annually?

Select one:c. 28 years

Find the effective rate if interest is compounded monthly at the nominal rate of 12% per annum.

Select one:d. 12.68%

Find the amount at the end of 8 years if 1, 000 is invested at 6% per annum compounded
quarterly.

Select one:a. 1,620.32

How much must be invested in order to have 10, 000 at the end of 10 years if interest is paid at
6% per annum compounded annually?

Select one:c. 5,583.95

Find the amount at the end of 8 years if 1, 000 is invested at 6% per annum compounded
monthly.

Select one:a. 1,614.14

econ7

A community wishes to purchase an existing utility valued at P500, 000 by selling 5% bonds that
will mature In 30 years. The money to retire the bond will be raised by paying equal annual
amounts into a sinking fund that will earn 4%. What will be the total annual cost of the bonds
until they mature?

Select one:b. P33, 915.05

A man paid P110, 000 for a P100, 000 bonds that pays P4000 per year. In 20 years, the bond will
be redeemed for P105, 000. What net rate of interest will the man obtain on his investment?

Select one:d. 3.47%

A man wants to make 14% nominal interest compounded semi - annually on a bond investment.
How much should the man be willing to pay bow for a 12%, P10, 000 bonds that will mature in
10 years and pays interest semi - annually?

Select one:c. P8, 940.50

A P100, 000, 6% bond, pays dividend semi - annually and will be redeemed at 110% on July 1,
1996, to yield an investor 4%, compounded semi - annually.

Select one:a. P114, 481.14

quiz8

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000
at the end of the period. Compute the depreciation charge on the 10th year using declining
balance method.

Select one:b. d=P9, 235.93;Cn=P59, 987.34

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000
at the end of the period. Compute the book value after 10 years using declining balance method.

Select one:a. Cn=P59, 987.34

A certain machine costs 2.5M while its salvage value is 150,000 at the end of 8 years. Determine
its book value at the end of 4 years using the declining balance method if k =0.12.

Select one:b. 1,449,238

An asset is purchased for P500, 000.00. The salvage value in 25 years is P100, 000.00. What is
the total depreciation in the first three years using straight - line method?

Select oned. P48,000.00

A certain machine costs 2.5M while its salvage value is 150,000 at the end of 8 years. Determine
its book value at the end of 4 years using the Straight Line Method.

Select one:c. 1,835,000

quiz999

A P5000.00, 8% bond that pays interest semi-annually will mature in seven years. Determine the
price to realize a yield to maturity of 10%

Select one:

a. P4,561.10

A P50 000.00 bond with a rate of 8% payable quarterly may be purchased for P47 500.00. If it
may be redeemed after eight years, determine the current yield.

Select one:c. 8.42%

A P20 000.00 bond is sold now for P18 500.00. Determine the redemption price at the end of
seven years, if the yield is 12% semi-annually and the rate is 10% payable every six months.

Select one:a. P20,811.66

A P10,000.00 bond with a rate of 10% payable annually is to be redeemed at par value after five
years. Determine the selling price to yield 8%

Select one:

a. P10,798.54

A P50 000.00 bond with a rate of 8% payable quarterly may be purchased for P47 500.00. If it
may be redeemed after eight years, determine the bond's yield to maturity.

Select one:c. 9.18%

longquiz

What is the present worth of a 3 years annuity paying P3,000 at the end of each year, with
interest at 8% compounded annually?

Select one:

a. P7,731.29

An equipment costing P3, 015, 000 has an estimated life of 12 years with a salvage value of P200,
000 at the end of the period. Compute the book value at the end of 7 years using sinking fund
method assuming

Select one:b. C7=P 1,691,422.85

If money is worth 10% yearly, compounded quarterly, what monthly savings is required monthly
in order to have P200, 000 at the end of 10 years?

Select one:a. P981.28

The maintenance cost of an equipment is P15 000.00 per year and its capitalized cost at 6%
interest is P1.8M. If the equipment has a salvage value of P30 000.00 and has to be renewed at
cost after 10 years, find its original cost.

Select one:

a. P701 240.00

At 6%, find the capitalized cost of a bridge whose costs is P200M and life is 20 years, if the bridge
must be partially rebuilt at a cost of P100M at the end of each 20 years.
Select one:

c. P245, 310, 000

A bond with a par value of P2,000 and with a bond rate of 9% payable annually is to be
redeemed at P2,200 at the end of 6 years from now. If it is sold now, what should be the selling
price to yield 8%?

Select one:d. P2,218

certain barangay wishes to purchase a certain equipment which be used in its beautification
program valued at P500, 000 by selling bonds worth 5% that will mature in 30 years. The amount
to retire the bond will be raised by paying equal annual amount into a sinking fund that will earn
4%. What will be the total annual cost of the bond until they mature. Assume that the bonds can
be sold at par and redeemable at par.

Select one:c. Annual Cost of Bond=P33,915

A company issued 100 bonds of P1,000 face value each, redeemable at par at the end of 15
years to accumulate the funds required for redemption. The firm established a sinking fund
consisting of annual deposits, the interest rate of the fund being 4%. What was the principal in
the fund at the end of 12th year?

Select one:b. F=P75,041

You need a P40, 000 per year for four years to go college. Your father invested P50, 000 in a 7%
account for your education when you were born. If you withdraw the P40, 000 at the end of your
17th, 18th, 19th and 20th years, how much money will be left in the account at the end of your
21st year?

Select one:

a. P17, 000

In five years, P18, 000 will be needed to pay for a building renovation. In orderto generate this
sum, a sinking fund consisting of three annual payments is established now. For tax purposes, no
further payments will be made after three years. What payment is necessary if money is worth
15% per annum?

Select one:

a. P3, 919.53

quiz10

An investment of P2, 700, 000 can be made in a project that will produce a uniform annual
revenue of P1, 850, 400 for 5 years and then have a salvage value of 10% of the investment. Out-
of-pocket costs for operation and maintenance will be P810, 000 per year. Taxes and insurance
will be 4% of the first cost per year. The company expects capital to earn 25% interest before
income taxes. Is this a desirable investment? Use Future Worth method.

Select one:b. FW of the net cash flows: -P28,810 <0; the investment is not justified.

An investment of P2, 700, 000 can be made in a project that will produce a uniform annual
revenue of P1, 850, 400 for 5 years and then have a salvage value of 10% of the investment. Out-
of-pocket costs for operation and maintenance will be P810, 000 per year. Taxes and insurance
will be 4% of the first cost per year. The company expects capital to earn 25% interest before
income taxes. Is this a desirable investment? Use Rate of Return method.

Select one:

d. Rate of return: 23.70% < 25%,the investment is not justified.

An investment of P2, 700, 000 can be made in a project that will produce a uniform annual
revenue of P1, 850, 400 for 5 years and then have a salvage value of 10% of the investment. Out-
of-pocket costs for operation and maintenance will be P810, 000 per year. Taxes and insurance
will be 4% of the first cost per year. The company expects capital to earn 25% interest before
income taxes. Is this a desirable investment? Use Present Worth method.

Select one:c. PW of the net cash flows: -P10,510 <0; the investment is not justified.

An investment of P2, 700, 000 can be made in a project that will produce a uniform annual
revenue of P1, 850, 400 for 5 years and then have a salvage value of 10% of the investment. Out-
of-pocket costs for operation and maintenance will be P810, 000 per year. Taxes and insurance
will be 4% of the first cost per year. The company expects capital to earn 25% interest before
income taxes. Is this a desirable investment? Use the Annual Worth Method.
Select one:d. Excess =-P3,509. The investment is not justified.

ass10

An initial investment of P1, 000, 000 was put up for a new business that will produce an annual
revenue of P630, 000 for 5 years and will have a salvage value of P200, 000. Annual expenses for
its operation and maintenance will amount to P300, 000.Taxes and maintenance will cost 5% of
the initial cost. If money is worth 12%, show by computation if this business is profitable or not
using ROR.

Select one:

a. 14.9% > 12%;justified

An initial investment of P4, 000, 000 was put up for a new business that will produce an annual
revenue of P2, 500, 000 for 5 years and will have a salvage value of P400, 000. Annual expenses
for its operation and maintenance will amount to P600, 000.Taxes and maintenance will cost 4%
of the initial cost. If money is worth 12%, show by computation if this business is profitable or
not using ROR Method.

Select one:d. 24.58% > 20% justified

If an investment of 3,000,000 will have an annual revenue of 1,200,000 and an annual cost of
700,000 including depreciation for 8 years, determine if this is feasible if money is worth 12%
using ROR.

Select one:

b. 16.67% > 12%;justified

If an investment of 3,000,000 will have an annual revenue of 1,200,000 and an annual cost of
700,000 including depreciation for 8 years, determine if this is feasible if money is worth 12%
using PWM.

Select one:d. PWCI- PWCO = -516,180 < 0; justified

A contractor can purchase a dump truck for P850, 000. It is estimated that if sold at the end of 7
years it will have a value of P100, 000. Its estimated annual maintenance cost is P12, 000 and
daily operating expenses are estimated to be P320 including the wage of the driver. It is also
possible to hire a similar unit for P1200 a day, including fuel cost. If money is worth 10%, how
many days a year must the dump truck be used to justify the purchase of the truck.

Select one:
a. N = 200.06 days

quiz7

The cost of producing a small transistor radio set consists of P23.00 for labor and P37.00 for
materials. The fixed charges in operating the plant are P100, 000 per month. The variable cost is
P1.00 per set. The radio can be sold for P75.00 each. Determine how many sets must be
produced per month to break-even.

Select one:

a. To break even: X = 7,143 sets

The Asian Transmission Company makes and sells certain automotive parts. Present sales
volume is 500, 000 units a year at a selling price of fifty centavos (0.50) per unit. Fixed expenses
total P80, 000 a year.

What is the present break-even point in pesos and in units?

Select one:c. To break-even: x = 160,000 units

A company has a production capacity of 500 units per month and its fixed costs are P250,000 a
month. The variable costs per unit are P1, 150 and each unit can be sold for P2,000. Economy
measures are instituted to reduce the fixed costs by 10 per cent and the variable costs by 20 per
cent. Determine the new break-even point.

Select one:. To break-even (new): x = 208 units per month

A company has a production capacity of 500 units per month and its fixed costs are P250,000 a
month. The variable costs per unit are P1, 150 and each unit can be sold for P2,000. Economy
measures are instituted to reduce the fixed costs by 10 per cent and the variable costs by 20 per
cent. Determine the old break-even point.

Select one:b. To break-even (old):x = 294 units per month

longquiz3

The cost of producing a small gadget consists of P25.00 for labor and P40.00 for materials. The
fixed charges in operating the plant are P125, 000 per month. The variable cost is P1.50 per unit.
The gadget can be sold for P85.00 each. Determine how many gadgets must be produced per
month to break-even.

Select one:

a. To break-even: X = 6,757 sets

An initial investment of P20,000,000 was put up for a new business that will produce an annual
revenue of P12, 000,000 for 15 years and will have a salvage value of P2, 000,000. Annual
expenses for its operation and maintenance will amount to P6, 000, 000.If money is worth 12%,
show by computation if this business is profitable or not using ROR Method.

Select one:b. 24.11%

The Air Asian Company produces and sells computer parts. Present sales volume is 400, 000
units a year at a selling price of P1.00 per unit. Fixed expenses total P220, 000 a year. What is the
present break-even point in units?

Select one:d. To break-even∶x = 220,000 units

An initial investment of P20,000,000 was put up for a new business that will produce an
annual revenue of P12, 000,000 for 15 years and will have a salvage value of P2, 000,000.
Annual expenses for its operation and maintenance will amount to P6, 000, 000.If money is
worth 12%, show by computation if this business is profitable or not using PW Method.

Select one:b. Present Worth Income=P70,414,230

Present Worth Cost=P59,762,117

Conclusion:Project is Acceptable

The Air Asian Company produces and sells computer parts. Present sales
volume is 400, 000 units a year at a selling price of P1.00 per unit. Fixed
expenses total P220, 000 a year. What is the present break-even point in
peso?

Select one:d. To break-even in Pesos:y = P0.55 per unit

An initial investment of P2,000,000 was put up for a new business that will
produce an annual revenue of P1,250,000 for 5 years and will have a salvage
value of P200,000. Annual expenses for its operation and maintenance will
amount to P300, 000.If money is worth 12%, show by computation if this
business is profitable or not using ROR Method.

Select one:c. 33.33%

An initial investment of P20,000,000 was put up for a new business that will
produce an annual revenue of P12, 000,000 for 15 years and will have a
salvage value of P2, 000,000. Annual expenses for its operation and
maintenance will amount to P6, 000, 000.If money is worth 12%, show by
computation if this business is profitable or not using FW Method.

Select one:b. Future Worth Income=P572,964,930

Future Worth Cost=P486,288,026

Conclusion:Project is Acceptable