Math 1143: Mathematics of Investment

Long Exam 1

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Name: ___________________________________

Score:

Course, Yr. & Section: ____________________

Date: _______________

Instructions: Work INDEPENDENTLY and HONESTLY. Use only black or blueinked pen. CHEATING will be subject to Section 17.2.15 of the PUP Student Handbook
(2007)
I. Fill in the blanks. Write the correct word or phrase that will make the statement
true. Misspelled words are incorrect. (2 points each)
1) The invested capital is also known as ________________________________.
2) ________________________ is the income received from an invested capital.
30 A discount is a deduction from the ___________________________ of an obligation made
when the obligation is sold before its date of maturity.
4) __________________________________________ is known as the Bankers Rule.
5) The exact time from May 30, 2014 to December 30, 2014 is _________________________.
6) When two equal sums of money (P) invested at two different rates for the same length
of time yield the same final amount (A) then these two rates are ______________________.
7) ____________________________________ is a type of promissory note which includes the
interest in the face value.
8) The exact time from February 28, 2016 to October 31, 2016 is ______________________.
9) _______________________________ is equal to the interest divided by the product of the
principal and time.
10) To discount the final amount means to find its ________________________________.
II. Word Problems. Show all necessary solutions and enclose you Final Answer.
1) How much was borrowed if the interest at 8% after 3 months is Php200? (2 points)
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2) Ravlam Nalor borrowed Php5,000 for 2 years at 10% interest rate. How much must he
repay at the end of 2 years? (2 points)

3) At what rate is Php1,055 the present value of Php1,425 due in 45 days? (2 points)

4) When is the maturity date of the loan (use approximate time) if it was borrowed
March 8, 2014 payable for 254 days? (2 points)

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5) Find the exact time between April 6, 2014 and October 23, 2014? (2 points)

6) Find the approximate time between April 6, 2014 and October 23, 2014? (2 points)

7) Using the results of #5 compute the exact interest for the exact number of days if the
amount borrowed is Php10,000 at 12%? (2 points)

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8) Using the results of #6 compute the ordinary interest for the approximate number of
days if amount borrowed is Php10,000 at 12%? (2 points)

9) At 8.5% simple discount, find the present value of Php4,560 which is due at the end of
2 years and 3 months? (2 points)

10) What interest rate is equivalent to a 10% discount rate for 10 months? (2 points)

11) A note made by John Leigh dated January 28, 2011 reads: Ninety-five days after
date, I promise to pay Anne Margaret the sum of Php11,300 at 12% interest rate.
a) When is the maturity date of the note? (2 points)

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b) Determine the maturity value. (2 points)

c) If the note is sold to a bank on April 15, 2011 at

10

1
2

discount rate, determine the

term of discount and compute the proceeds of the note. (3 points)

12) A 9-month,

14

1
2

interest-bearing note dated June 25, 2011 was discounted on

December 14, 2011 at 11% discount rate. Suppose the proceeds of the note is
Php20,093.77.
a) When is the maturity date of the note? (2 points)
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b) Determine the term of discount and maturity value of the note. (3 points)

c) How much is the face of the note? (3 points)

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Whatever you ask for in prayer, believe that you have received it,
and it will be yours. Mark 11:24

Answer key:
I.
1. Principal
2. Interest
3. Maturity value or Final Amount
4. Ordinary Interest at exact time
5. seven (7) months
6. Equivalent
7. Non-interest-bearing note
8. 246 days
9. Interest rate
10. Present value or Principal
II.

1.
2.
3.

P=

I
P h p 200
=
=P h p 10,000
rt
3
( 0.08 ) ( )
12

S=P ( 1+rt )=P h p 5,000 [ 1+ ( 0.1 ) ( 2 ) ]=P h p 6,000

I =SP=P h p 1,425P h p 1,055=P h p370 r=

I
=
Pt

P h p 370
45
( P h p 1,055 ) (
)
360

4. November 22, 2012

5. 200 days
6. 197 days
7.

I EE=( P h p 10,000 )( 0.12 )

=P h p 657.53
( 200
365 )

8.

I OA =( P h p 10,000 ) ( 0.12 )

=P h p 656.67
( 197
360 )

9.

P=S ( 1dt )= ( P h p 4,560 ) [1 ( 0.085 )( 2.25 ) ]=P h p 3,687.90

10.

r=

d
=
1dt

0.1
[1( 0.1 ) (

10
)]
12

=10.91

11. a) May 3, 2011

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=2.81

b)

S=P ( 1+rt )
S=P h p 11,657.83

c) Term of discount is 18 days (1 point)

P=P h p11,596.63

(2 points)

12. Maturity Date: March 25, 2011 (1 point)

Term of discount is 101 days (Dec. 14, 2014 March 25, 2015) (1 point)

S=

P=

P
P h p 20,093.77
=
=P h p20,733.63
1dt
101
1 ( 0.11 )
360

(3 points)

S
P h p 20,733.63
=
=Ph p 18,700
1+rt
9
(3 points)
[1+ ( 0.145 )
]
12

( )

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