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PROBLEMS
Find the value of P if F = $5,000 , n = 3 years, and i = 8% compounded
ANSWERS
P=$3,969.15
3.5%
this account.
What will be the future worth of money after 12 months, if the sum of P 25,000
P28,000
0.79383
annually.
A bank charges 12% simple interest on a P300.00 loan. How much will be
P408.00
repaid if the loan is paid back in one lump sum after three years?
If P5,000.00 shall accumulate for 10 years at 8% compounded quarterly, find
P6,040.20
marginal cost.
9
$ 7, 500
has 80 men on the job and estimated that they will finish the work in 130 days.
Of the 80 men; 50 are paid at $12 a day, 25 at $18 a day and 5 at $25 a day.
For each day beyond the original 100 days, the contractor has to pay $250
liquidated damages.
1
0
1
1
1
2
1
3
1
4
1
5
1
6
Real GDP
business cycle?
If P500 is invested at the end of each year for 6 years, at an effective annual
P3,577.00
interest rate of 7%. What is the total amount available upon the deposit of the
6th payment?
What is the ordinary interest earned on a $20,000 for a period of 29 days at
80.55
5% simple interest?
An asset is purchased for P9,000.00. Its estimated life is 10 years, after which
P7,545.00
it will be sold for P1,000.00. Find the book value during the first year if sum-of
the-year's digit (SOYD) depreciation is used.
What is the effective rate corresponding to 16% compounded daily? Take 1
0.1735
0.1268
P1,295.05
amortized by semi-annual payment over the next 5 years. The first due in 6
months. Determine the semi-annual payment?
1
7
1
8
returns
The increasing opportunity
1
9
A company must relocate one of its factories in three years. Equipment for the
cost of labor.
P5,625.28
loading duck is being considered for purchase. The original cost is P20,000,
the salvage value after three years is P8,000. The company's rate of return (i)
2
0
312
productivity is $25,000 and this equipment will have a salvage value of $5,000
at the end of its expected life of 5 years. Increased productivity attributed to
the equipment will amount to $8,000 per 5 year after extra operating costs
have been subtracted from the value of the additional production. If MARR
(Minimum Attractive Rate of Return) is 20%, compute the Annual Worth
2
1
2
2
2
3
2
4
2
5
Method (AW) using the six (6) methods for making Economy Studies.
The effective rate of 14% compounded semi-annually is
0.1449
0.0797
compounded bi-monthly.
Find the difference between the amount of $100 at simple interest and the
2.62
11.3
semi-annually?
A man inherited regular endowment of P100,000 every end of 3 months for 10
P3,702,939
years. However, he may choose to get a single lump sump payment at the end
of 4 years. How much is this lump sump if the cost of money is 4%
2
6
compounded quarterly?
The initial investment to buy an equipment of a proposed project to increase
934.29
productivity is $25,000 and this equipment will have a salvage value of $5,000
at the end of its expected life of 5 years. Increased productivity attributed to
the equipment will amount to $8,000 per 5 year after extra operating costs
have been subtracted from the value of the additional production. If MARR
(Minimum Attractive Rate of Return) is 20%, compute the Present Worth
2
7
2
8
2
9
3
0
3
Method (PW) using the six (6) methods for making Economy Studies.
A fixed capital investment of $10M and an estimated working capital of $2M is
$12M
FC + VC
10.379
annually
What is the corresponding effective rate of 18% compounded semi-annually?
0.1948
A piece of machinery can be bought for P10,000.00 cash for P2,000.00 down
0.0461
1
3
2
3
3
and payments of P750.00 per year for 15 years. What is the annual interest
rate for the time payments?
A man expect to receive P 25,000 in 8 years. How much is that money worth
P13,265.83
Z = $4,800
week season:
Charge per camper $60/week
Variable Cost per Camper $40/week
Fixed Costs $24,000/season
Capacity 150 campers
What is the profit for the 12-week season if the camp operates at 80 percent
3
4
3
5
3
6
3
7
3
8
3
9
capacity?
At 6%, find the capitalized cost of a bridge whose cost is P250M and life is 20
245.3
years, if the bridge must be partially rebuilt at a cost of P100M at the end of
each 20 years.
What rate of interest compounded annually is the same as the rate of interest
0.0824
of 8% compounded quarterly?
The amount of P12,800 in 4 years at 5% compounded quarterly is:
P15,614.59
P = $6,227.40
annually:
Which of the following conditions is a characteristic of a perfectly competitive
market?
A fixed capital investment of $10M and an estimated working capital of $2M is
4
0
4
1
4
2
4
3
4
4
4
5
4
6
4
Investment
Find the value of P if F = $5,000 , n = 3 years, and i = 8% compounded annually.
P = $3,969.15
0.1614
P28,000
P6,919.28
for the last four years. What does he have pay at the end of the fifth year in order
to pay his loan?
A service car whose cash price was P540,000 was brought with the down
0.24
payment of P162,000 and monthly of P10,874.29 for 5 years. What was the rate of
interest if compounded monthly?
Find the nominal rate which if converted quarterly could be used instead of 12%
0.1183
compounded semi-annually.
If a single perfectly competitive firm raises its price above the market price:
A contractor has a job which should be completed in 100 days. At present he has
$ 152,750
80 men on the job and estimated that they will finish the work in 130 days. Of the
80 men; 50 are paid at $12 a day, 25 at $18 a day and 5 at $25 a day. For each
day beyond the original 100 days, the contractor has to pay $250 liquidated
damages.
4
8
4
9
5
0
5
1
5
2
5
3
N = 11.63 years
If P500 is invested at the end of each year for 6 years, at an effective annual
P3,577.00
interest rate of 7%. What is the total amont available upon the deposit of the
6th payment?
Compared to a competitive market with the same cost and market-demand
circumstances, monopoly results in:
A fixed capital investment of $10M and an estimated working capital of $2M is
22 lots
order of $ 5, and annual inventory carrying cost of 30% of the average inventory;
What is the lot size?
A man borrowed P 20,000 from a local commercial bank which has a simple
0.19
interest of 16% but the interest is to be deducted from the loan at the time that the
money was borrowed and the loan is payable at the end of one year. How much is
5
4
3 MONTHS
season:
Charge per camper $60/week
Variable Cost per Camper $40/week
Fixed Costs $24,000/season
Capacity 150 campers
5
5
5
6
5
7
5
8
5
9
6
0
Cyclical unemployment
in the Untited States, and many Americans lose their jobs. Which of the following
types of unemployment would develop in the U.S economy?
By condition of a will, the of P2,000.00 to a small business for a period of six
11.57 years
years. With a given interest rate on amounts to P50,000. When will the girl receive
the money if the fund is invested at 8% compounded quarterly?
What nominal rate, compounded semi-annually, yields the same amount as 16%
0.0824
compounded quarterly?
Find the present worth of a future payment of P 100,000 to be made in 10 years
P30,355.68
Suppose a firm has an annual budget of $100,000 in wages and salaries, $50,000
in output
Loss of $70,000
$50,000 by woring elsewhere. The firm earns revenues of $210,000 per year.
6
1
0.2125
productivity is $25,000 and this equipment will have a salvage value of $5,000 at
the end of its expected life of 5 years. Increased productivity attributed to the
equipment will amount to $8,000 per 5 year after extra operating costs have been
subtracted from the value of the additional production. If MARR (Minimum
Attractive Rate of Return) is 20%, compute the Explicit Reinvestment Rate of
6
2
6
3
6
4
6
5
6
6
Return (ERRR) using the six (6) methods for making Economy Studies.
How many years will it take $10 to be four times its original value if invested at the
20.15 years
79.45
simple interest?
A deposit of P110,000 was made for 31 days. The net interest after deducting
0.1175
P71,781.47
annum. Determine the total amount at the end of 5 years, if the principal and
interest were not withdrawn during the period.
A steel mill estimates that one of its furnaces will require maintenance P20,000.00
P7,897.35
at the end of 2 years, P40,000.00 at the end of 4 years and P80,000.00 at the end
of 8 years. What uniform semi-annual amounts could it set aside over the next
eight years at the end of each period to meet these requirements of maintenance
6
7
6
8
6
9
7
0
cost if all funds would earn interest at the rate of 6% compounded semi-annually?
When there are positive externalities from the consumption of a good, the
Subsidize consumption
government should:
If you borrow money from your friend at 12% "simpe interest", determine the P.W
$ 18, 348.62
P4,133.33
$20/week
season:
Charge per camper $60/week
Variable Cost per Camper $40/week
Fixed Costs $24,000/season
Capacity 150 campers
7
1
2456.66
cash return would the investor demand annually from the operation of this
machine if he desires interest annually at the rate of 8% on his investment and
7
2
7
3
7
P6,265.87
P1500 be in 15 years?
A man borrowed P100,000 at the interest rate of 12% per annum, compounded
0.1255
4
7
5
7
6
order to accumulate P5,000 on the date of the last deposit, January 1, year 6?
A sum of P1,000 is invested now and left for eight years, at which time the
P706.00
principal is withdrawn. The interest was accrued is left for another eight years. If
the effective annual interest rate is 5%. What will be the withdrawal amount at the
7
7
7
8
7
9
P12,610.00
750