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COMPOUND INTEREST
1. If the interest rate on an account is 11.5% compounded yearly, approximately how many
years will it take to triple the amount?

2. Shoyo Hinata lends P6,000 at 6% simple interest for 4 years. At the end of this time, he
invests the entire amount (principal plus interest) at 5% compounded annually for 12 years. How
much will he have at the end of the 16 years period?

3. Fairytail firm borrows P200,000 for 6 years at 8%. At the end of 6 years, it renews the loan for
the amount due plus P2,000 more for 2 years at 8%. What is the lump sum due?

4. At a certain interest rate compounded semi-annually, P5,000 will amount to P20,000 after 10
years. What is the amount at the end of 15 years?

5. Compute the interest for an amount of P200.000 for a period of 8 years of was made at 10%
compounded every 2 months? I=F-P

6 Find the equivalent rate of 6% compounded semi-annually in a compounded quarterly.

7. Which has the least effective rate of interest:

a. 11% compounded monthly

b. 11.2% compounded quarterly

8. Find the annual effective rate of 16% compounded quarterly?

1. Grisha Yeager wishes his son to receive P200,000 ten years from now. What amount should
he invest if it will earn interest of 10% compounded annually during first five years and 12%
compounded quarterly during the next five years.

2. P500,000 was deposited 20.15 years ago at an interest of 7% compounded semi-annually.

How much is the sum now?

3. By the condition of a will, the sum of P25,000 is left to a girl to be held het guardian unt
amounts to P45,000. When will the girl receive the money if the fund is invested at 85%
compounded quarterly?

4. Find the nominal rate of 22% compounded every 3 months.

CONTINUOUS COMPOUNDING
1. An amount of P2,340.00 is deposited in a bank paying an annual terest rate of 31%
compounded continuously. Find the balance after 3 years.

2. P12,000 is placed in an account at 4% compounded annually for 2 years. It is then withdrawn

at the end of the two years and placed in another bank at the rate of 5% compounded annually
for 4 years. What is the balance in the second account after the 4 years?

3. What principal you have to deposit in a 4.5% saving account compounded continuously in
order to have a total of P10,000 after 8 years?

4. What interest rate, compounded continously, is needed for a principal of P4,000 to increase to
P13,000 in 10 years?

1. A person deposited P1,000 in a 2% account compounded continuously. In a second account,

he deposited P500 in a 8% account compounded continuously. When will the total amounts in
both accounts be equal? When will the total amount in the second accounts be 50% more than
the total amourt in the second account?

2. An amount of $1.500 is invested for 5 years at the rates of 2% for the first two years, 5% for
the third year and 6% for the fourth and fifth years all compounded continuously. What is the
total amount at the end of the 5 years?

DISCOUNT AND INFLATION

1. Eng Hanamichi promised to pay P36.000 at the end of 90 days He was offered a 10%
discount if he pays in 30 days. Find the rate of interest.

2. Kreis required to pay P57,000 in 15 days or P60,000 in 60 days. Find the annual ate of
interest.

3. Find the present worth of P1,000 today (2021) in the year 1990 if the inflation rate of 12%
coristant through the years.

4. if you invest P10,000 with a rate of interest of 12% compounded annually, compute the
interest of your investment after 10 years if the inflation rate is 10% annually.

5. A certain commodity has a present value of P15,000, find the future amount of the commodity
after 3 years if the economic experiencing an inflation rate of 10% annually.

1. Taki deposits P50,000 in a bank account at 6% compounded monthly for 5 years, if the
inflation rate per year continues for this period. Will this effectively protect the purchasing power
of the original principal?

2. Mrs. Shimizu borowed money from a bank. She received from the bank P1,342 and promised
to repay P1,500 the end of 10 months. Determine (a) simple interest rate (b) discount offered as
Banker's discount.
a. 14.13%
b. 10.53%

ORDINARY ANNUITY
1. A contractor bought a concrete mixer at P 120,000 if paid in cash. The mixer may also be
purchased by instaliment to be paid within 5 years. If money is worth 8% compounded annually,
what is the amount of each annual payments made at the end of each year if paid in installment
up to the end of 5 years?
2. How much money you must invest today in order to withdraw P 1,000 per year for 10 years, if
the interest rate is 12%?

3 A service car whose cash price was P540,000 was bought with a down payment of P162,000
and monthly of P10,874.29 for five years. What was the rate of interest compounded monthly?

1. Mitsuha inherited regular endowment of P 100,000 every end of 3 months for 10 years.
However she may choose to get a single lump sum if the end of 4 years. How much is this lump
sum if the cost of money is 14% compounded quarterly?

2. A corporation will make the following disbursarents:

a. P50,000 on December 31, 1991

b. P100,000 on December 31, 1992

c. P200,000 on December 31, 1993

Te accumulate these sums, an ordinary annuity is established by making equal year-end

deposits starting December 31, 1986 up to the end of 1993. If the fund eams 9% interest
compounded annually, what is the required amount of the annual decost?

ANNUITY DUE
1. A farmer bought a tractor costing Php 25,000 payable in ten semi payments, each installment
payable at the beginning of each pened it the rate of interest is 28% compounded
semi-annually, mine the amount of each installment

2. A man bought an equipment costing P60,000 payable in 12 quarterly payments each

instalment payable at the beginning of each period. The rate of interest is 24% compounded
quarterly. What is the amount of each payment?

3. Find the difference between the sums of annuity due and ordinary annuity for the following
data

Perodic payment = P14,000

Term = 16 years

Interest Rate = 10% compounded quarterly

1. A young woman 22 years old has just graduated from college. She accepts a good job and
desire to establish her own retirement fund. At the beginning of each year thereafter she plans
to deposit P 2,000 in a fund at 15% anual interest. How old will she when the fund has an
accumulated value of P1,000,000?

DEFERRED ANNUITY
1. What lump sum of money must be deposited in a bank account at present time so that Php
500 monthly can be withdrawn for five with the first withdrawal scheduled six years from today?
Interest is 9% compounded quarterly.

2. Tatum invested Php 10,000 now for the college education of his three-year old son. If the fund
earns 14% effective, how much will the son get each year starting from 19th to 22nd birthday?

3. Mr. Nara borrows P600,000 at 12% compounded annually agreeing to repay the loan in 15
equal payments. How much of the original principal is still unpaid after he has made the 8th
payment?

4. The present value of an annuity of "P" pesos payable annually for 8 years, with the first
payment at the end of 10 years is P187,481.25. Find the value of "P" if money is worth 5%.

5. Find the present value of an annuity of P30,000 payable annually for 10 years with the first
payment at the end of the 10 year, if the money is worth 8% compounded annually.

1. Today you invest P100,000 into a fund that pays 25% interest compounded annually. Three
years later you borrow P50,000 from a bank at 20% annual interest and invest in the fund. Two
years later you withdraw enough money from the fund to repay the bank loan and all interest
due on it. Three years from this withdrawal you taking P20,000 per year out of the fund. After
five windrawals you withdrawn the balance in the fund. How much was withdrawn?

2. P10,000 is deposited each year for 9 years, how much annuity can a person get annually fom
the bank every year for 8 years starting one year after the 9th deposit is made. Cost of morev
14%.

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

2. Find the present worth of perpetuity of P10.000 payable quarterly if money is worth 10%
compounded monthly.

3. Find the present worth of perpetuity of P10,000 semi annually with an interest rate of 10%
quarterly, if the first payment will be given after 5 years.

1. What amount of money invested today at 15% interest can provide the following scholarships.
P30,000 at the end of each year for 6 years. P40,000 for the next 6 years and P50,000
thereafter.

CAPITALIZED AND ANNUAL COST

1. Determine the capitalized cost of a structure that requires an initial investment of Php
1,500,000 and an arinual maintenance of P 150,000 Interest is 15%.

2. A manufacturing plant installed a new boiler at a total cost of P150,000 and is estimated to
have a useful life of 10 years. It is estimated to the a tap value at the end of the useful life
P5,000. If interest is 12% compounded annualy dermice capitalized cost.
3. A new engine was installed by a textile plant at a cost of P300.000 and projected to have a
useful life of 15 years. At the end of its useful life, it is estimated to have a salvige value of
P30.000 Determine its capitalized cost if interest rate is 18% compounded annually.

4. A concrete pavement on a street would cost P10.000 and would last for 5 years with negigtie
repairs At the end of each years P1.000 would be spent to remove the old surface before
P10.000 is spent again to lay a new surface. Find the annual cost of the pavement at 5%

5. An asset was purchased for P100.000 and retired at the end of 15 years, with a salvage
value of P4.000 The annual operating cost was P18,000. Determine the annual cost of the asset
based on an interest rate of 8%

6. Determine the capitalized cost of a research laboratory which requires P5,000.000 for onginal
construction, P100.000 at the end of every year for the first 6 years and then P120.000 each
year thereafter for operating expenses and P500, 000 every 5 years for replacement of with
interest at 12% per annum.

1. Calcutirte the capitalized cost of a project that has an initial cost of P3, 000.000 and an
additional cost of P100. 000 at the end of every 10 yrs The annual operating costs will be P100,
000 at the end of every year for the first 4 years and P160, 000 thereafter. In addition, there is
expected to be recurring mayur rework cost of P300, 000 every 13 yrs Assume 15%

2. Calculate the annual cost of the project that has an initial cost of P2.5 Milon and an additional
investment cost of 1 Mison at the end of every ten years. The annual operating cost will be
P100 000 at the end of every year for the first four years and P150.000 thereafter in addition
there expected to the recurning major rework cost of P200,000 every 13 years. Assume i =
10%.

GRADIENT
1. The cash flow associated with a strip mining operation is expected to be P2.000.000 in year
1, P1,800,000 in year 2 and amounts decreasing by P200,000 per year through 8. At an interest
rate of 12% per year the equivalent annual cash flow is nearest to:

2. The present worth of of P40,000 in the first year and amounts of ncreasing by P3000 per year
through five years at an interest rate of 13% per year is?

1. The present worth of of P40,000 in the first year and amounts of decreasing by P3.000 per
year through five years at an interest rate of 13% per year is?

SLD & SFD

1. An engineer bought equipment for P500,000. Other expenses mouding installation amounted
to P30,000. At the end of its estimated useful life of 10 years, the salvage value will be 10% of
the first cost using straight line method of depreciation, what is the value after 5 years?

2. A plant erected to manufacture socks has a first cost of 10,000,000 with an estimated salvage
of P100,000 at the end of 25 years. Find its appraised value to the nearest P100 by the sing
fund method assuming at an interest rate of 6% at the end of a. 10 years, b. 20 years
3. A dump truck bought for P900 000 six years ago It will have a salvage value of 100000 years
from now What is the book value at the end of 6th year. Use Straight-line Method

4. A company owns earth moving equipment that cost P100,000 After 8 years it wil have st
salvage value of P20,000 Compute the annual depreciation cost and the book value at the ins 5
years (a) using SLD (b) Using sinking fund

5. An equipment costs P10,000 with a salvage value of P500 at the end of 10 years Calculate
the arinual depreciation cost by sinking-fund method at 4% interest.

6. A machine was purchased on 1st January 2004 at a cost of P58,000 and the cost of
installation Rs 8,000 his expected that its total working life will be 100,000 hours. The scrap
value may be P3,000. During the year 2004, the machine worked for 1200 hours and in 2005 for
1,350 hours. Calculate the book value after 2005.

1. A commercial building has a salvage value of Php 1 million after 50 years Annual
cepreciation is Php 2 M. Using the Straight Line Method, how many years after should you sell
the building for Php 30 M?

2. A machine costs Php 300 000 with a salvage value of Php 50,000 at the end of its life of 10
years. If money is worth 6% annually, use Sinking Fund Method and determine the cepreciation
at the 6th year.

3. A machine costs Php 400,000 with a salvage value of Php 200,000 Life of it is six years. In
the first year, 4000 hours. In the second year, 6000 hours and 8000 hours on the third year The
expected flow of the machine is 38000 hours in six years. What is the depreciation at the end of
the second year?

SOYD
1. A company purchases an asset for the P10.000 and plans to keep it for 20 years. If the
salvage value is zero at the end of 20th year, what is the book value in the third year? Use
SOYD method.

2 A machine purchased for P150.000 its estimated life is 15 years, after which it will be sold for
P40,000 find the book value during the 8th year if the sum of the year digit depreciation is used.

3. A certain office equipment has a first cost of P20.000 and a salvage value of P1.000 at the
end of 10 years. Determine the book value at the end of 6 years using double declining balance
method

4 A machine having a first cost of P60,000 will be retired at the end of 8 years. Depreciation
cost is computed using constant percentage of the declining book value. What is the total cost
of depreciation, in pesos, up to time the machine is retired if the annual rate of depreciation is
28.72%?

5. A machine has a first cost of P200.000 with a salvage value of P25,000 at the end of
economic life of 10 years. Find its book value after 8 years using the Double Declining Balance
Method.
1. A machine is bought at P420,000 with an econornic life of 6 years and a salvage value of
P50,000. The cost of money is 12% per year. If the first-year depreciation is P105.714. what
method of deprecation was used?

2. A machine is bought at P420 000 with an economic life of 5 years and a salvage value of
P50.000. The cost of money is 12% per year. If the first-year depreciation is P105.714, what
method of deprecation was used?

3. A certain machine has a initial cost of 50.000 and a book a value of 15,811 39 after five years
Find the salvage value of the machined has an economic life of 10 years.

MATHEMATICAL EXPRESSION FOR BREAK-EVEN

1. Determine the break-even point in terms of number of units produced per month using the
following data:

Selling price P600 per unit

Total overhead expenses = P428.000 per month

Labor cost P115 per unit

Cost of materials P76 per unit

Other vanable cost = P2 32 per unit

2. Compute for the number of blocks that an ice plant must be able to sell per month to
break-even based on the following data:

Cost of electricity paid per block = P20

Tax to be paid per block = P2

Real state tax P3:500 per month

Salaries and wages P25,000 per month

Others P12,000 per month

Selling price 55 per block

1. A local company assembling stereo radio cassette produces 300 units per month at a cost of
P800 pe unit Each stereo radio cassette sells for P1.200. if the firm makes a profit of 10% on its
10,000 shares with a par value of P200 per share, and fixed cost are P20.000 per month

a. What is the break-even point?

b. How much is the loss or profit if only 100 units are produced in a month?