GORDON COLLEGE

OLONGAPO CITY
COLLEGE OF BUSINESS AND ACCOUNTANCY

MATHEMATICS OF INVESTMENT | MGT 103

SCORE
Name: ________________________________________
Year & Course: _________________________________ Class Schedule: _________________

I. Write the letter of your answer on the space provided before the number. Use capital letter.
_______ 1. The income received from the invested capital called principal.
a. Simple Interest b. Compound Interest c. Interest d. Answer not given
_______ 2. The process of finding the present value P of an amount A, due at the end of t years.
a. Discount b. Promissory Notes c. Interest d. Answer not given
_______ 3. We assume one year to have 360 days using this simple interest.
a. Interest b. Exact Interest c. Ordinary Interest d. Answer not given
_______ 4. A financial instrument that contains a written promise by one party to pay another party
a definite sum of money, either on demand or at a specified future date. 
a. Discount b. Promissory Notes c. Interest d. Answer not given
_______ 5. The rate at which interest is earned during conversion period
a. Interest Rate b. Rate per Conversion c. Conversion Period d. Answer not given
_______ 6. The time between successive conversions of interest into principal
a. Compound Amount b. Rate per Conversion c. Conversion Period d. Answer not given
_______ 7. At the end of the term, the total amount due, which consist of the original plus the
compound interest.
a. Compound Amount b. Compound Interest c. Conversion Period d. Answer not given
_______ 8. If, at stated intervals during the term of an investment, the interest due is added to the
principal and thereafter earns interest, the sum by which the original principal has increased by the
end of the term of the investment
a. Compound Amount b. Compound Interest c. Conversion Period d. Answer not given
_______ 9. The rate per year at which money earns interest during a conversion period.
a. Rate per Conversionb. Nominal Rate c. Effective Rate d. Answer not given
_______ 10. Under a given type of compound interest, the rate per year at which principal grows.
a. Rate per Conversionb. Nominal Rate c. Effective Rate d. Answer not given
_______ 11. Under a given type of compound interest, the rate per year at which principal grows.
a. Rate per Conversionb. Nominal Rate c. Effective Rate d. Answer not given
_______ 12. Is one whose payments extend over a fixed term of years.
a. Annuity b. Annuity Certain c. Contingent Annuity d. Answer not given
_______ 13. Is a sequence of periodic payments.
a. Annuity b. Annuity Certain c. Contingent Annuity d. Answer not given
_______ 14. The time between the beginning of the first payment interval and the end of the last.
a. Interest Period b. Annual Rent c. Payment Interval d. Answer not given
_______ 15. The sum of the payments of an annuity made in one year.
a. Interest Period b. Annual Rent c. Payment Interval d. Answer not given

II. Find the missing quantities in the table below. Round off to two-decimal place. (2 points each)

ORDINARY EXACT
PRINCIPAL TIME RATE
INTEREST INTEREST
P3, 957.50 170 days 6%
April 4, 2019 to
P 1,750.00 5%
October 13, 2019
P 13,468.60 41 days 3%
P 9,836.80 134 days 5%
August 11, 2019
P 8,500.00 6%
to March 13, 2019

P ACCUMULATE
PRINCIPAL (P) AMOUNT (A) FOR, OR A IS DUE RATE
AFTER
P 576.50 3 yrs & 6 mos. 6%, m=12
P 1,398.50 15 yrs. & 3 mos. 5%, m=4
P 8,300.00 14 yrs. & 6 mos. 55%, m=2
P 1,300.00 2 yrs. & 9 mos. 3%, m=4
P 4,000.00 10 yrs. & 3 mos. 7%, m=4

j m i
0.03 2
2 0.0275
4 0.025
0.05 1
1 0.06

PAYMENT
ANNUAL EACH INTEREST
INTERVA TERM P A
RENT PAYMENT RATE
L
P 1,000 6 mos. 15 yrs. 0.05, m=1
P 500 6 mos. 9 yrs. & 6 0.07, m=2
mos.
III. Analyze and answer the following problem statements. Show your solutions. (5 points each)
a. If P10,000 principal increases to P12,500 when invested at simple interest for 3 years, what is
the interest rate?
b. What principal invested at 5.5% simple interest will amount to P1,150 after 2 years and 6
months?
c. A merchant is offered a P50 discount for cash payment of a P1,200 bill due after 60 days. If
he pays cash, at what rate may he consider his money to be earning interest for the next 60
days?
d. X requests a loan of P9,000 for 3 months from a bank charging 5% discount. Find the
immediate proceeds of the loan.
e. Find the present value of P3,500, due at the end of 2 years and 10 months, if money is worth
(0.07, m=4).
f. Three years and 6 months after date after date, X promises to pay P1,000 together with all
accumulated interest at the rate 6% compounded semi-annually, to Y or order . Two years
before it is due, what does Y receive on discounting it with a banker Q to whom money is
worth (0.05, m=4)?
g. Three years and 9 months after date, X promises to pay P1,000 to Y or order. One year after
date of note, what is its value to a man W to whom money is worth (0.07, m=4)
h. Fifteen successive annual payments of P1,000, the first due after 1 year. Money is worth
(0.05, m=2). Computer for the values of P and A.
i. Payments of P100, made at the end of each 3 months for 15 years. Money is worth (0.05,
m=4).
“Ang pagsusulit ay parang pag-ibig, tama ka na, tumingin ka pa sa iba. ”

Best of luck would-be Managers!

JOHN RHIMON A. GELACIO, LPT, MRITax, MBAc

Instructor, Mathematics of Investment