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ENGINEERING ECONOMICS 01 Solauliom
PSE MODULE 10.1 (SOLUTION) =P

At an annual rate of retum of 8%, what is the future worth of P 100 at where:P F (1i) and P, - 1 - -
the end for four years?
A. P 136 C.P 126 Equating:
B. P 203 D. P 164

Sole-bien
1RIMKO1015) 0.15 -10.15)"
A = Php 3,919.54

F=P(1+i) =100(1+0.08 Ans. B

F-Php.136.05 7 A person pays interest on a loan semiannually at a nominal annual

Ans A interest rate of 16%. What is the effective annual interest rate?
A. 15.5% C. 15.65%
B. 15.7% D. 16.64%
2 If you borrow money from your friend with interest rate of 12%, find
the present worth of P 20,000, which is due at the end of nine months.
A. P180. 348.6 C. P18,348.6
Soka io
B. P 108, 348.6 D. P28. 568.6

Solel
ie 0.1664 = 16.64%

P
=F(1+ in) 20000 1+0.12 1
=

Ans.D
P = Php 18,348.6
8. The balance sheet of Allied Company is as follows:
Ans. C assets liabilities

Determine the interest on P 6000 for 9 months and 10 days if the rate Phpl7,00
cash Php10,000 payables
of interest is 12%.
A. P450.00 C. P 350.00
receivables 12.000 notes due 6.000
B. P 560.00 D. P 150.00

inventory 000 long term debt 3,000

SeleTa
capital equipment 20,000 owner s equity 23.0
1=Pin =(Php 6000)(0.12)340
l= Php 560 total Php49.000 total Php49,0000
Ans. B What is its acid test ratio?
4 How much money must you invest today in order to withdraw P 1000 A. 0.39 . 0.85
per year for 10 years if the interest rate is 12%? B. 0.59 D.1.1
A. P 5540 C. P 5640
B. P 5650 D. P 5730 Setalian

Seluien Assets 10k+12k

ATR 0.846
2Liabilities 17k+6k 3k
-0-"]=-0120
0.12L Ans. C
P= Php 5650.22 What is the annual rate of interest if P 265 is earmed in four months on
an investment of P 15,000?
Ans. B A. 4.52% C. 5.30%
B. 4.05% D. 5.55%
5. If Php500 is invested at the end of each year for six years, at an
effective annual interest rate of 7%, what is the total amount available
upon the deposit of the sixth payment?
Soka-thon
A. Php3000 C. Php3210
B. Php3580 D. Php4260 I= Pin

265 15,000(i)(4/12)
Selution i =0.053 5.3%
Ans. C

S00
0.07+0.07)°-| 10. A man borrowed P 100,000 at the interest rate of 12% per annum.
compounded quarterly. What is the effective rate?
F= Php 3576.65 Php 3580 A. 12.10% C. 12.33%
B. 12.55% D. 12.42%
Ans.B

b. In five years, Php 18,000 will be needed to pay lor a building

renovation. In order to generate this sum, a sinking fund consisting of
three annual payments is established now. For lax purposes, no further
payments will be made after three years. Whal payments are necessary
if money is worth I5% per annum?
A. Php2670 Php2870
B. Php3920 D. Php5100 Ans B
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II. By the condition of a will, the sum of P 20,000 is left to a girl to be 16. It is the amount which a willing buyer will pay to a willing seller for a
held in trust fund by her guardian until it amounts to P 50,000. When property where each has equal advantage and is under no compulsion
will the girl receive the money if the fund is invested at 8 % to buy or sell.

compounded quarterly? A. Fair value C. Book value

A. 7.98 years C. 10.34 years B. Market value D. Salvage value
B. 11.57 years D. 10.45 years
Seleion

equal advantage" Market Value

Solelion
Ans B
mn
FP(1Pl 17. What interest rate compounded monthly is equivalent to 10% effective
rate?
0.08)*
50,000 20,0001+ A. 9 47% C. 9.75%
4 B. 9.68% D. 9.57%
n = 11.57 yrs
Selutien
Ans.B
Im
12. At what rate of annual interest will an investment quadnuple itself in 12 - I 010-
years? m
A. 10.1% C. 11.2% i, =0.0957 9.57%
B. 12.2% D. 13.1%
Ans D
Seluion
18. If a credit pays 4.125% interest compounded quarterly, what is the
annual interest rate?
F=P(1+i) A. 4.189% C. 12.89%

4P=P(1+i) B. 8.250%b D. 17.55%

i=0.1225 12.25%
Ans. B Salelien
13. How many months at an interest rate of I percent per month does
money have to be invested before it will double in value?
A. 34 months C. 55 months m
B. 43 months D. 70 months e 0.04189 4.189%
AnsA
Seluhon
19. A fim borrows $2000 for six years at 8%. At the end ot six years, it
renews the loan for the amount due plus $2000 more for two years at
F=P(1+i 8%. What is the lump sum due?
2P-P(1+i" S5280 C. $5754
B. $6035 D. S4532
2-(10.01)"
n 69.66 months = 70 months
Seleio
Altemative Solutio
12
72 rule= 72 70 months Lumpsum=(2k)(1+0.08)(2k)(1-0.08)
$6034.66
Ans. D B
14. A bank is advertising 9.5% accounts that yield 9.84% annually. How 20. An individual contributes P 200 per month to a retirement account.
often is the interest compounded? The account earns interest at a nominal annual rate of 8% with interest
A. Annually C. Bi-monthly being credited monthly. What is the value of the account after 35
D. Semi-monthly years?
B. Quarterly
A. P 368.000 C. P 447,000
B.P 414,000 D. P 459.000
Soleion:

Saletiom
0.0835
0.0984
10.095 - 1 n
m 200
12
m 3.88 4(Quarterly) 12
Ans. B F= Php 458,776.50

Ans. D
15. It is defined to be the capacity of a comnodity to satisty human want.
A. Discount C. Necessity 21. What is the exact simple interest of P 2000 if invested at 15% from
B. Luxury D. Uility January 23, 1995 to March 12. 1995?
A. P 32.45s C. P 39.45
Solutior BP35.74 D. P 38.27

Solution
"satisfy " luxury

B
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Pin
Check if 1995is a leap year: 1995 498

No.of days 12
At monthly: 0.06=
Jan 31- 23 =8 i , =0.058411
Feb 28 Then, monthly payments are .
Mar 12
Then, I= Pin 25,000 5.000 -
I= (2000)(0.15*28+12
365
I= Php 39.45 25,000 5,000+
Ans.C 12
A Php 385.18

22. A nominal rate of 12%-compounded semi-monthly will have an Ans.C

effective rate of how much?
A. 12.729% C. 12.64% 26. What is the exact simple interest of P 2000 if invested at 12% from
B. 12.57% D. 12.83% January 23, 1995 to March 12, 1995
A. P 32.45 C. P 31.56
B P35.74 D.P38.27
Sollien
Selulion
= Pin

Check if l995 is a eap yr.

i, =0.1272 12.72%
Ans. A UTEF
1995498
4
3
NOT aLeap year
No. of days
23. A young woman. 22 years old has just graduated from college.She
accepts a good job and desires to establish her ownretirement fund. At Jan 31-23 =8
the end of each year thereafter she plans to deposit P 2000 in a fund at Feb 28
15% anmual interest. How old will she be whén the fund has an Mar 12
accumulated value of P 1,000.0002 Then, I Pin
A. 50 years C.55 years
B. 53 years D. S1 years I (Php2000)(0.12}+
28+

l Php 31.56
Ans.C

F--- 1.00.000 0.15 0.15- 27. P 200,000 was deposited on January 1, 1988 at an interest rate of 24%
compounded semi-annually. How much would the sum on January 1.
31yrs 1993? 2
A. P 621,170 C. P 631.321
Age 22+31 53 y.o. B. P 642322 D. P 602.130
Ans. B
24. At a certain interest rate compounded serni-annually, P 5000 will Slution
amount to P 20.000 after 10 years. What is the amount atthe end of IS
years?
A. P 50,432.22 C. P 40,029.72
B. P45.321.52 D. P 48,543.42
F- (Php 200.00)1

Souien F-Php 621.170

Ans. A
F=P(1+i,/m) 20,000 5000 1
28. The president ofa growing engincering form wishes to give each of 50
i 0.14355
employees a hoiday bonus. How much is needed to invest monthly for
Then15 yrs year at 12% nominalinterest rate, compounded monthly so that each
employee will receive a P 1000 bonus?
0.14355s
F 5000 12 = Php 40,029.72 Php 40,000.00 A. P 2070
B. P 3940D
C. P 3840
D. P 4170

Ans.C
25. The purchase price of a car is P 25,000. Mr Smith makes a down
payment of P 5000 and borrows the balance from a bank at 6% interest
for five years.
Calculate thenearest
payments to pay-off the loan.
value of the required monthly
A. P 350 C.P 400
D. P 500
B. P 450
so(1o0) 012
12
Seleion A=Php 3,942.44

Ans. B
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29. A man borrowed P 2000 from a bank and promise to pay the amount Converting the mode of compounding
for one year. He received only the amount of P 1920.00 ufter the bank m
collected an advanced interest of P 80.00. What was the rate of
discount and the rate of interest the bank collected in advance? m,,
A. 3.47 %,4 % C. 5.67, 3 %
B. 4.17%, 3% D. 4.17,4 %

Soltien
0.0503125
d 00-1920
F 2000
d 0.04 4%

i-F-P2000-1920
P 1920 O.050312l|1+503125)(21-4(2)
i = 0.04167 4.167% 1.000,0000 0.0503125
Ans D 2

A=Php 18,952.20
30. A man borrowed from a bank under a promissory note
that
he signed Ans.D
in the amount of P 25.000 for a period of one year. He received only
the amount P 21,915 after the bank collected the advance interest and
an additional amount of P 85.00 for the inspection fee. What was the
rate of discount, the rate inierest that the 34. A piece of machinery can be bought for P 10.000 cash or for P 2000
in
bank collected advance? down and payments of P 750 per year for 15 years. What is the annual
A. 12%. 13.64% C. 10.5%. 1643%
B. 11.4%, 18.37% D. 12%, 10.32% interest rate for the time payments?
A. 1.51% C. 7.716
Seluion : B. 4.61% D. 12.0%

F-P 25k-(21915+85) = 13.64% Selution

i P

d-F-P 25k-(21915+85)
21915+85
S T
UTEFOS
I

Price= DP+ Annual Payments

25k
Ans. A 10,000 2000 (1i"
31. How long must a P 4000 note bearing 4% siinple interest run to
i=0.046a 4.6%
amount P 4135? Ans.B
A. 302 days C. 304 days
B. 310 days D. 308 days
35. What is the present worth of a perpetuity of P 5000 at 5% compounded
semi-annually?
A.P 100,000 C. P 200.000
B.P 300,000 D. P 400.000

Seltien
F=P(l+in 4135=4001+004
d 303.75 days P-APhp5000
Ans.C 2
P Php 200000
32. Money borrowed today is to be paid in 6 equal payments at the end of
6 quarters. Ifthe interest is 12 % compounded quarierly. How much Ans.C
was initialy borrowed if quarterly payment is P 2000.00?
A. P 10,834.38 C.P 10,382.90 36. What is the present worth of P 500 deposited at the end of every three
B. P 10,586.99 D. P10,200.56 months for 6 years if the interest rae is 12% compounded semi-
annually?
A. P7,543 C. P 8,453
Soluien B. P 7,843 D. P 8.504

Sotien
Converting ,
P= Php 10,834.38

Ans. A
i0.11825
33. A man planned to endow P I million to his son on his san's 21
birthday. How much is his semi-annual deposit in a special account
that earns 5% compounded quarterly if the first deposit was nmade -]
when the son was 4 4 years old?
500 -10118254
A. P 17,533.33 C.P 15,434.24
B. P 16,640.20 D. P 18,952.29
0.11825 4

Selulien: P=Php8507.77
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37. A machine estimated to have a life of 20 years is purchased. There is 40. How much must you invest today in order to withdraw P 2.000
no maintenance required for the first 10 years but will require P 2000 annually for 10 years if the interest rate is 9%?
per year for the second 10 years. How much must be invested annually A. P 12,853.32 C. P 12.881.37
at 3.5% interest during the life of the machine to pay off the B. P 12,385.32 D. P 12.835.32
maintenance costs?
seka-lios
A. P 820 C. P 825
B.P830 D. P 835

PA-]
-20001-(1+009
Selelion P Php 12,835.32
Ans.D
R=P:(Present Worth are equal)
where: 41. A graduating high school student decides to take a year off and work
P 2000. to save monmey for college. The student plans to invest all money
0.035-(+0,035) * (1+0035)"=1.791.60o earned in a savings account earning 6% interest, compounded
and quarterly. The student hopes to have P 5000 by the time school starts
in 12 months. How much money will the student have to save cach
00-(003)0
0.035
month?
A. P 396 C.P 407
Equating B. P 405 D. P 411

1.791.60A1-(1+0.03s)-20
0.035
Seion

A = Php830

Ans.B 5000E A 0.0600

0.0600
38. A man acquires a loan of P 500,000. He will amortize his loan m,
by 10 g
annual
payments bui will commence 5 years after the loan was:
acquired. If money is worth 10% compounded annually. what was his
annual amortization?
FOR Iqtr
A =1,222.22/qt 3months
A Php 40741
Ans. C
A. P119,137.77 C.P 120,234.44
B. P117.434.53 D. P 118,654.23
42. What rale of interest compounded annually is the same as the rate of
nterest of 8% compounded quarterly?
Seltien A. 7.90% C. 8.24%
B. 6.88% D. 8.42%

en
P--0)i)
s00,000 -+01+01)
A Php119,137.77
08 0.0824 8.24%
Ans.A -
39. Detemine the exact simple intereston P 5000 for the period from Jan Ans.C
15 to Nov 28, 1992, if the rate of interest is 22%
A. P955.74 C.P942.32 43. Findtheanual payment to extinguish a debt of P 10,000 payable for 6
B. P 894.23 D. P 825.43 years at 12% interest annually
Selulon

Checking for leap yr.

CEBU B.P2482.53 A. P 2,432.26

Seltienr
C.P 2423.23
D. P2,636.78

1992 498(teap yr)

4
Dates
Jan 31 15 16
P-]
Feb 29 10,00 0.12 -+0.12)
Mar 31 A= Php2.432.26
Apr 30
Ans. A
May 3
June 30 44. 1fP 1600 earns P 48 in 9 months, what is the annual rate of interest?
July 31 A 2% C. 5%
Aug 31 B. 3% D. 4%

Sept 30 Solkon
Oct 31 I= Pin
28
Nov
n 318 48- 1600(6
I= Pin =(500o)(0.22) 5 i 0.04 4%

I= 955.74 Php Ans. D

Ans. A
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45. A college suudent borrows P 10,000) today at 10% interest compounded S1. P S00M) is put into an empty savings account with a nominal interest
annually. Four years later. the student makes the first repayment of P rate of 5%. No other contributions are mace in the account. With
3000. Approvimately how much money will the student still owe n meonthly compounding. how much interest will have heen eamed after
the loan after the first pay1ment? five years?
A. P 7700 C. P 8300 A. P 1250 C. P 1410
B.P11000 D. P 1170 3,000 B. P 1380 D. P1420
Sol-en Solutia

10.000(10.1)" -3,000 = IF-P re: F-p

= Php11,641
25
Ans. D - P 500o1.005 - 5000
10,000 12

I= Php1,416.79
46. A peron invests P 450 to be collected in eight years. Given that the
interest rate on the investment is 14.5% per year, compounded Ans.D
sum in pesos will eight years hence?
annually.what
A.P 1242
be collected
C.P 1540 52. A company invests $10,000 today to be repaid in five years in one
B.P 1352 D.P 1329 lump sum at 12% compounded annually. If the rate of inflation is 3%
compounded annually. how much profit, in pre sent day dollars, is
Sellon
realized over the five years?
F=P(1+i) =Php450(1+0.145) A. $3202 C. S5202
F= Php 1329.40 B. $5626 D. S5623

Ans.D Solution
47. A firm borrows P 2000 for six years at 8%. At the end of six years, it Profit F P= P -P

renews the loan for the amount due plus P 2000 more for two years at
8%. What is the lump sum due? 1+0.12 -10,000
A. P 6035
B. P 5840
C. P 6780
D. P 6120
10.000+0.03)
Profil $5,202.11
Selu : Ans.C
Lump sum =2000(1+0.08)+2000(1+0.08 53. What is the effective annuaB interest rate on a koan if the nominal
=Php 6034.66 interest rate is 12% per year compounded quarterly?
A. 11.75% C. 12%
Ans.A B. 12.25% D. 12.55%

48. What annuity is required over 12 years to equate with a future amount
ofP 20,000? Assume i= 6% annually.
Soltie
AP1,185.54 C.P1422.65
B. P 1.165.71 D. P1,205.32
Selutien . =0.1255 1255%
Ans D
20.0 .0 +006)1 54. You need S4000 per year for four years to go to college. Your father
A= Php1185.54 invested $5000in a 7% account for your education when you were
bom. If you withdraw the $4000 at the end of your 17t, 18th. 19th and
Ans. A 20 years, how much money will be left in the account at the end of
your 21 year?
49. Wha is the effective rate corresponding to 16% compounded daily? A. $1700 C. $2500 AA4 A
Take I year = 360 days. B. $34000
A. 16.75% C. 17.12%
D.S4000
B. 17.35% D. 16.459% 1 9 20 21
Sodulian
Selulien 4k k 4k
360 At 21 yr,
-

m 360 =5000(1+0.07 (+0.07)-1(1+007

ie = 17.35%
0.07
x=S1,700
Ans B Ans. A
50. P 1500 was deposited in a bank account, 20 years ago. Today it is
worth P 3000. Interest is paid semi-annually. Determine the interest
rate paid on this account. 55. In year zero, you invest $10,000 in a 15% security for five years
A. 3.5% C. 4.0 % During that time, the average annual intlation is 6%. How much, in
B. 3.1% D. 3.8% terms of year zero dollars, will be in the account at matunty?
A. $6,653 C. S13,382
Solien B. $15,030 D. $20,113

Sokation :

0.03496

Ans.A F-P1.0ni006
F=S15,030.03
AB
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56. A person pays interest on u loun semiannually at a nominal annual 60. A manufacturing firm maintains one product assembly line to produce
interest rate of 16%. What is the effective annual interest rate? signal generators. Weekly demand for the generators is 35 units, and
A 15.5% C. 15.65% the line operates for seven hours per day, five days per week. What is
B. 16% D. 16.64% the muximum production time per unit, in hours. required of the line in
Selule order to meet demand?
A. 0.75 hour C. 1 hour
B. 2.25 hours D. 5 hours

Sele-t
i, = 0.1664 » 16.64%
(5daysIwgek | ns Ihr/unit
Ans D wgek 35 units) daY)
57. A finm is considering renting a trailer at $300 per month. The unit is Ans. C
needed for five years. The leasing company offers a lump sum
payment of $24,000 at the end of five years as an altemative payment
plan, but is willing to discount this figure. The fim places a value of 61 Tops Corporation's gross margin is 45% of sales. Operating expenses
10% (effective annual rate) on invested capital. How large should the such as sales and administration are 15% of sales. Tops is in a 40% tax
discount be in order to be acceptable as an equivalent? bracket. What percent of sales is their profit after taxes?
A. 0% . 5%
A. $750 C. $820
B. $980 D. $1030 B. 18% D. 24%

Selutiem
Percent sales= (1-04)(45-15)% = 18%

Ans.E
Converting annual into monthly interest

i,=1-1 01- - 62. A bank pays one percent interest on savings accounts four times a
year. The elfective annual interest rate is
i, = 0.0957 9.57%
T EFO A. 1.00%
B.
1.04%
C. 3.96%
D. 4.06%
Solutnn

F=S 22,968.37 i14 -1(1+001 -1=0.0406 4.06%

d 24.0000 22.968.37 S 1.031.63
Ans. D Auns.D
58. Consider a deposit of S1000. to be paid back in one year by $975. 63 In five years,S18,000 will be needed to pay for a building renovation.
What are the conditions on the In order to generate this sum, a sinking fund consisting of three annual
rate ofinterest. i%per year
compounded annualy, such that the net present worth ofthe payments is established now. Fortax purposes, no further payments
investment is positive? Assume Assumei 0 will be made after three years. What payments are necessary if money
A 0si<50% is worth l5% per annum?
A. $2670 C. $2870
B. 0 Si 90%
B. $3919 D. S5100D
C. 0sis 167%
D There are no condhtions on i that will make it possible Saluten
Saluher Pwhbere:P, =F (i) and P 1 - 0 i )

P> F, so not possible Equating

Also, F P(1+i)
$ 975=$ 10o(1+i)i= 0.025 C EBU I80o(10.15)" 0.15
-(0.15)
A =Php 3.919.54
Ans. D Ans. B
59. Consider a deposit of P 6000, to be paid back in one year by P 7000
What are the conditions on the rate ofinterest. i%per year 64. If $200 is deposited in a savings account at the beginning of each of 15
compounded annually, such that the net present worth of the years and the account draws interest at 7% per year, compounded
annually, the value of the account at the end of 15 years will be most
investment is positive? Assume 20
nearly
A. 12.5 is 14,3% A. $5000 C. $6000
B. 0 si< 100% B. $5400 D. S6900
C.0sis 16.7%
D. 16.7% sis100%
Sodlia

F=P(1+i) - 7000= 6000(1+i) F A loi-4

i=0.1667 F 200(+0.07)" O.07
00)*-100.07)
thus: 0sis 16.67%
F $5,377.6l
Ans.C
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65. A man owes P500, due in 3 years and P800 due in 7 years He is must be reduced from the top (fifth) level to the second level. which
allowed to settle these obligations by a single payment on the 6 year means a reduction of P3000 00 per month. What is the employee's
Find how much he has to pay on the 6h year if moneyis worth 14% present salary per month?
compounded semi-annually. A. P22,032.50 C. P23.022.50
A. P1449.12 C. P 1,559.12 B. P22,320.50 D. P22.302.50
B. P1.339.12 D. Pl.669.12

Selukon
At sixth year: Salary Salary Level
Y500.
.14 0.14))
F-s001. 8001 800 1.05x
F Php 1,449.12
1.05)
(1.05)x
Ans. A (1.05 5

66. A
(1.05)-3000 (1.05)x
borrowed P2.000.00 froma bank and agreed to pay the loanat
man
the end of one year. The bank discounted the loan and gave him P1950
x18126.20
in cash. Determine the rate of discount P (1.05)' (18126.20) Php 22032.51
A. 3.75 % C. 3.12 %
B. 2.5 % D. 1.2%
Ans.A
Selaion
71. A man obtained a loan of P50.000.00 at the rate of 6% compounded
annually in orderto repair his mistress' house. Mow much must a man
d P 2000-1950 = 0.025 2.5% pay monthily to amortizetheloan within aperiod of ten years?
F 2000
Ans. B A. P650.20 C. P550.90
B. P505.90 D. P750.90
67. Ifa machi
P80.000.00
is purchased oninstallment and the buyer makes an
down paymet and owes abalance of PI50.000in2yeurs
O
Detemine the
machine cash value if money is woth 149%
compoundedquarterly.
A. P199,312.00 C.P183,912.0 Converting yearly interest into mnonthly:
B. P193.912.00 D. PI39.912.00
Selulien
-1
P=80,000+ 150,000 1414
0.0584
P=Php 193,911.73
0.0584410|
Ans.B 50,000
68. A machine was purchased underthese ers: P30000 down and 12
P5.000 each month for 5 years. If money is worth 12% compounded A Php 551.12
monthly, what is the cash priceof the machine? Ans.C
A. P144,775.19 C P245,.775.19
B. P542,775.91 D. P254,775.19
72. What isthe present value of PS,000.00 due in 8 years if money is
Seluuen Worth 12% compounded semi-annually?
A. P1,896.23 C. P1,869.23
P 30.000 5000
0.12
0.123
EBU B. Pl,698.23 D. PL968.23
12
P=Php 254,775.192 Solen
Ans.D
128
69. Determine the amouni that must be deposited every 3 months in a fund
paying 12% compounded quarterly in order to haveP25.000 in 8
P so
P Php,968.23
years
A. P146.71 C. P476.17 Ans. D
B. P674.71 D. P700.0
73 The difference betwcen what a negotiable paper is worth in the fuure
and its present worth is known as
Solnti A. Book value C. Salvage value
B. Sunk value D. Discount

|25,000 =0.12
4
A = Php 476,17
Diflerence Discount
Ans.C
LAnsD

70. The salary of an employce's job has five levels,

each one 5greater
than the one below it. Due to circumstances, the salary
of the employee
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Those cost that arise at the result of a change in operations or policy or 79. A bank charges 1 h per month on the unpaid balance for purchases
74 it is the ratio of a small increment cost and a small increment of output made with its credit card. This is equivalent to what efective annual
A. Increment cost C. Differential cost nterest rate?
B. Marginal cost D. Promotion cost A. I5% C. 18%
B. 12% D. 19.5%6
Soluion

Change"> Differential Cost i(1+i-1 = (1+0.015) -1

Ans. C ie =0.1956 19.56%

75. What is the accumulated amount after three years of P 6500 invested at
Ans.D
the rate of 12 % per ycar compounded semi-annually?
A.P 9.550.37 C. P8,750.37 80. For some interest rate i and some number of interest periods n. the
B. P 9.220.37 D. P6,250.37 uniform series capital recovery factor is 0.0854 and the sinking fund
Selulien:
factor is 0.0404. The interest rate i must be
A. 3 h% C. 6%
mn
B. 4 % D. 8%
F-P1 m -(6500 Setetion:
F=Php 9.220.37
i = USCRF-SFF
Ans.B
i=0.0854-0.0404
76. Mr Johnson borrows $100,000 at 10% effective annual interest. He i=4.5%
must pay back the loan
over 30 years with uniform monthly payments
due on the first day of each month. What does Mr. Johnson pay each
Ans.B
month?
81. What present sum would need to be put in a savings account now to
A. $839 $846 provide a Si000 annual withdrawal for the next 50 years. if interest is
B. $870 D. S878 6%? The present sum is closest to:
TITU
A. $1,000 C. $25,000
Selutien B. $10,000 D. $37.500
Converting the mode of compounding

010-1 P-1-0 S0(1+0.06)"1

i, 0.09569 0.06
P S15,761.86
Ans B

82. On March 1, 2014 a man obtains a loan of P 1500 from his friend and
100,000 A0.09569 signs a note promising to pay the principal and accumulated simple
2 interest at the rate of S% at the end of 120 days. On May 15, 2014. his
A S839.20 friend discounts the note at the bank whose discount rate is 6%. How
much does he received
Ans A A. P 1513.36 C. P 1432.54
B.P 1522.45 D. P 1349.65
77 What interest rate,compounded quarterly, is equivalent to a 9.31%
effective interest rate?
A. 2.25% C. 4.66%
Seluliot
B. 2.33% D. 9.00%

Seltien t
CE F=P(1+ in) =1500 10.05 120 =Php1,524.66
365)
Then
R F(1-dt)=1524.66 1-0 20-(30+ 30+15))
365
0.09 9% = Php1,513.38
Ans. D Ans. A
83 If the loan was for 15 months at 16.8% interest a year and the
78. How many months at an interest rale of I percent per month does repayment on a loan was P12,100.00, how much was the principal?
money have to be invested before it will double in value? A. P8,500.00 C. P9,500.00
A. 59 months C. 70 months B. P10,000.00 D. P10,500.00
B. 62 monihs D. 76 moths
Soltion

Solution : 15
P=F(1+in) =121001+0.168
12
P Php10,000
F=P(1+i 2P P(1+i
2 (1+0.01) As.B
n 69.66 months = 70) months
Alternative Solujion:
72
72 rule: =72 70 months

Ans,C
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84. Detemine the accumulated value of P2,000.000 in 5 years it is invested 90. Grand total of the assets and operational capahility of a corporation.
al 11% connpounded quarterly. A. Authorized capital C. Subscribed capital
A. P3,440.00 C. P3,404.00 B. Investment D. Money market
B. P3.044.00 D. P4,304.00
Sole
Solelon
grand total" Authorized capital
F 2000f1. 0.11) Ans. A
F= 20001 Php 3440.86
91. The worth of the property equals to the original cost less depreciation.
Ans A A. Scrap value C. Market value
85. The sum of PI5.000.00. deposited in an acount earning 4% per B. Face value D. Book value
annum compounded quarterly, will become P18,302.85. Determine the
Seleitien
effective rate of interest per year.
A. 3.06 % C. 4.06 %
" Worth o f t h e property " > Book Value
B. 5.06 % D. 6.06 9%

Sotation :
Ans. D
92. Liquid assets such as cash and other assets that can be converted

quickly into cash. such as accounts receivable and merchandise are

called
ie 0.0406» 4.06% A. total assets C. current assets
B. fixed assets D. none of the above
AnsC
Soledion
86. Find the number of years when P2.500.00 is compounded to P5,800.00 Liguid assets "Current assets
if invested at 12% compounded quarterly.
A. P6.12 years C.7.12 years TUTE Ans. C
B. P8.12 years D. 5.12 years
93. The provision in the contract that indicates the possible adjustment of

Solution i material cost and labor cost.

A Secondary clause C. Contingency clause
B. Escalatory clause D. Main clause

F-P 5800= 25oof10.12

selo
n7.12yrS
provision Escalatory clause
AnsC
87. What is the effective rate equivalent of 12% compounded quarterly?
Ans B
A. 12.55% C. 11.55% 94. Decrease in the value of a physical property due to the passage of
B.12.98 % D. 13
time
A. Inflation C. Recession
B. Depletion D. Depreciation

-1-.a Decreasein,value of a pbysical prop. Depreciation

ie =0.125 1255%
Ans D
Ans.A
95. An association of two or more individuals for the purpose of operating
88. What rate compounded-quarterly is equivalent to 14% compounded a business as co-owners for profit
semi-annually? A. Sole proprietorship C. Partnership
A. 10.76 % C. 11.76 % B. Company D. Corporation
B. 12.76 % D. 13.76%
Selulian
Sedetiem

Two or more Company

Ans. B

96. We may classify an interest rate, which specifies the actual rate of
interest on the principal for one year as
A. nominal rate C. exact interest rate
'n0.1376 13.76% B. rate of return D. etfecive rate

Ans. D Sdtia

nterest rale Eflective Rate

89. A condition where only few individuals produce a certain product and
that any action of one will lead to almost the same action of the others. Ans D
A. Oligopoly C. Monopoly
B. Semi-monopoly D. Perfect competition
Selulies

Fewindividuals"> Oligopoly
"

Ans. A
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97. What is the present worth of P 6000 every six months for 16 years
with interest at 7% compounded semi-annually?
A. P114,413.19 C.P115.702.23
B. P 105,454.54 D. P 120,346.72

Selution
-mn

P Php1 14.413.19

Ans.A
98. These are products or services that are desired by human and will be
purchased it money is available after the required necessities have been
obtained.
A. Utilities C. Luzuries
B. Necessities D. Product goods and Services

Seleion
" desired ">Luxuries

Ans.C
is the
99.
present worth of aP 100 annuity
What
the interest rate is 8%?
A. P 671 C.P 623
NINST7
period, if
over a ten-year

OTE FOR MEC

ECHAN
B. P 642 D. P 705

Seluion

P-0]-(00s)
P Php 671
Ans. A
100. A 40-year old consulting engineer wants to set up a retirement fund to
be used starting al age 65. P 20,000 is invested now at 6%
compounded annually. Approximately how much money will be in the
fund at retirement?
A. P 84000
B. P 86000
C. P 880000
D.P9200
ONI83
Seletian

F=P(1+i
OHd CEBU
F 20,000(1+0.06
F Php 85,83741

Ans.B
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