University of Perpetual Help System laguna – Isabela Campus

Minante 1, Cauayan City, Isabela

College of Business and Accountancy 5 copies

Mathematics of Investment
1st Semester, A.Y. 2018 – 2019

Preliminary Term Examination

Name: ________________________________________ Date: ___________

Course Year & Section: _____________________ Score: ____/100__

Instruction: Answer the following questions. Strictly NO ERASURES are allowed.

I. MULTIPLE CHOICE: Choose the best answer for each of the following questions. (2 points
each).

1. Mary goes to the bank and borrows P150,000 at 9 ½ % for 250 days. If the bank uses the ordinary
interest method, how much interest will Mary have to pay?

A. P9,896 C. P9,760
B. P9,986 D. P98,958

2. Ferlin goes to a credit union and borrows P230,000, at 8%, for 119 days. If the credit union computes
interest by the exact interest method, what is the amount of interest o the loan?

A. P5,999 C. P6,082
B. P5,998 D. P59,989

3. Judith obtained a loan on April 4 and had a due date of July 18. What is the number of days of the
loan?

A. 100 days C. 104 days

B. 105 days D. 106 days

4. What is the maturity value of P600,000 loan, for 10 days, at 12.2% interest, using the exact interest
method?

A. P602,033 C. P600,000
B. P602,005 D. P603,033

5. Noemi Industries borrowed money at 9% interest for 125 days. If the interest charge was P5,600,
what is the amount of principal of the loan if the company uses the ordinary interest method?

A. P172,900 C. P21,605
B. P181,700 D. P179,200

6. What is the time period of a loan for P150,000, at 9.5% ordinary interest, if the amount of interest is
P6,500?

A. 164 days C. 166 days

B. 165 days D. 163 days

7. How many years will it take P50,000 invested at 8% simple interest to double to P100,000?

A. 6.25 years C. 12.5 years

B. 25 years D. 37.5 years

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8. Mr. Hargraves borrows P5,000 from Mr. Jerico on October 1 of 2015 and promises to pay the
principal and simple interest at 9% to discharge the debt on June 28, 2016. Assuming 2016 is leap
year, what amount does Mr. Hargraves pay?

A. P5,000.00 C. P5,338.75
B. P5,337.50 D. P5,599.18

9. In buying a television set, I am offered the options of paying P250 cash or P270 at the end of 90 days.
At what rate am I paying simple interest if I agree to pay at the end of 90 days?

A. 32% C. 32.44%
B. 29.63% D. 30%

10. A bill for a motor boat specifies the cost as P1,200 due at the end of 100 days but offers a 4%
discount for cash in 30 days. What is the highest rate, simple interest, at which the buyer can afford to
borrow money in order to take advantage of the discount?

A. 20% C. 22%
B. 21% D. 24%

11. Crawford buys a bill of goods from a merchant who asks P1,250 at the end of 60 days (cash in 60
days). Crawford wishes to pay immediately and the merchant offers to compute the cash price on the
assumption that is money is worth 8% simple interest. Find the cash price today.

A. P1,234 C. P1,324
B. P1,250 D. P1,243

12. If P2,400 is the present value of P2,500 which is due at the end of 9 months, what is the simple
interest rate?

A. 5.33% C. 5.66%
B. 5.56% D. 5.65%

13. If P2,400 is the present value of P2,500 which is due at the end of 9 months, what is the discount
rate?

A. 5.33% C. 5.66%
B. 5.56% D. 5.65%

14. If P11,900 is the present value of P1,250 which is due at the end of 9months, what is the simple
interest rate?

A. 6.6% C. 6.7%
B. 6.4% D. 6.5%

15. If P11,900 is the present value of P1,250 which is due at the end of 9months, what is the discount
rate?

A. 6.6% C. 6.7%
B. 6.4% D. 6.5%

16. On July 15, 2015, Saunders draws a note promising to pay Tilden P2,000, together with interest from
date at 7%, 150 days later. A banker discounts this note for Tilden at 9% on August 14, 2015. Find the
maturity date.

A. December 10, 2015 C. December 11, 2015

B. December 13, 2015 D. December 12, 2015

17. On July 15, 2015, Saunders draws a note promising to pay Tilden P2,000, together with interest from
date at 7%, 150 days later. A banker discounts this note for Tilden at 9% on August 14, 2015. Find the
maturity value.

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 A. P2,000 C. P2,058
B. P2,085 D. P2,075

18. On July 15, 2015, Saunders draws a note promising to pay Tilden P2,000, together with interest from
date at 7%, 150 days later. A banker discounts this note for Tilden at 9% on August 14, 2015. Find the
proceeds received by Tilden on August 14.

A. P1,997 C. P2,075
B. P2,000 D. P2,058

19. Azura Publishing received a P70,000 promissory note at 12% ordinary interest for 60 days from one
of its customers. After 20 days, Azura discounted the note at the Bank of Commerce at a discount of
14.5%. The note was made on March 21. What is the maturity date of the note?

A. May 19 C. May 21
B. May 20 D. May 18

20. Using the same information in no. 19, what is the maturity value of the note?

A. P70,000 C. P71,400
B. P71,694 D. P71,379

21. Using the same information in no. 19, what is the discount date of the note?

A. April 9 C. April 11
B. April 10 D. April 12

22. Using the same information in no. 19, what proceeds will Azura receive after discounting the note?

A. P70,250 C. P71,400
B. P70,000 D. P71,379

23. Avena Manufacturing received a P400,000 promissory note at 12% simple interest for 95 days from
one note of its customers. After 70 days Avena discounted the note at the Far East Bank at a discount
rate of 15%. The note was made on September 12. What is the maturity value of the note?

A. P400,000 C. P412,680
B. P415,840 D. P409,320

24. Using the same information in no. 23, what is the discount date of the note?

A. November 20 C. November 21
B. November 22 D. November 23

25. Using the same information in no. 23, what proceeds will Avena receive after discounting the note?

A. P408,381 C. P412,680
B. P415,840 D. P400,000

26. The one who invest the money.

A. Lender C. investor
B. Creditor D. all of the above

27. The one who owes the money

A. Borrower C. a and c
B. Debtor D. a only

28. The length of time for which the money is borrowed or lent.

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 A. Rate C. principal
B. Period D. interest

29. The date when the loan was obtained.

A. Loan date C. interval

B. Maturity date D. due date

30. The amount of deposit made by a depositor or its face amount lent to the borrower on loan date.

A. Interest C. Principal
B. Maturity Value D. Rate

31. The interest deducted in advance is called ____________?

A. Simple interest C. Rate

B. Bank discount D. Proceeds

32. The time is determined by counting every day excluding the loan date until the maturity date.

A. Approximate time C. Exact interest

B. Actual time D. Ordinary Interest

33. The amount the borrower is to receive after deducting the interest in advance.

A. Maturity Value C. Interest

B. Proceeds D. bank discount

34. The amount applied for by the borrower on loan date in bank discount.

A. Proceeds C. Interest
B. Maturity Value D. Bank discount

35. It is unconditional promise in writing, made by one person to another, signed by the maker, engaging
to pay on demand, or at a fixed or determinable future time, a sum certain money to order or to
bearer.

A. Promissory note C. Documentary note

B. Simple Note D. Discount note

36. The one who makes the promise and who signs the instrument is called____________?

A. Maker C. creditor
B. Payee D. lender

37. The one to whom the promise and to whom the instrument is payable is called ___________?

A. Maker C. Payee
B. Payor D. debtor

38. The time used to compute the proceeds is from the date the note is discounted to the maturity date is
known as?

A. Maturity period C. Loan period

B. Discount period D. interval

39. It is the process of converting a note into cash at any time before maturity.

A. Discounting C. planning
B. Factoring D. conversion

40. The date when the loan becomes due.

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 A. Loan date C. principal
B. Maturity date D. interest

41. The income earned from investing the money.

A. Principal C. discount
B. Maturity value D. interest

42. It is a method wherein time is stated as a certain number of days which uses 360 days as the time
denominator.

A. Ordinary interest method C. Actual time

B. Exact interest method D. Approximate time

43. It is a method wherein time is stated as a certain number of days which uses 365 days as the time
denominator.

A. Ordinary interest method C. Actual time

B. Exact interest method D. Approximate time

44. What is the formula in computing Simple Interest?

A. Interest = Principal x rate x time C. Interest = Proceeds x rate x time

B. Interest = Maturity Value x rate x time D. Interest = Discount x rate x time

45. It is expressed as a percentage and converted to a decimal for computation purposes.

A. Principal C. rate
B. Time D. interest

46. The number of days is determined by assuming that each month has 30 days.

A. Actual time C. exact interest

B. Approximate time D. ordinary interest

47. Interest is computed more than once during the time period of the loan.

A. Simple interest C. Compound Interest

B. Bank discount D. Proceeds

48. It is expressed in years or fractional part of a year or a period between the loan and maturity date.

A. Rate C. interest
B. Principal D. time

49. The ratio of the interest earned in one time unit to the principal is so called ____________?

A. Interest C. Principal
B. Rate D. Time

50. It is a method wherein interest is computed by using ordinary interest for actual number of days.

A. Double Rule C. Investing Rule

B. Accounting Rule D. Banker’s Rule

Prepared by: Approved by:

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Acct. SAMUEL UY ITCHON, JR. Acct. JONATHAN B. DE VEYRA, MBA
Instructor Dean – CBA

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