Brian Chuahiock Charmaine Gozon Kath Parungao Seoyeon Choi Juliann Sabater BUSMATH K76 Self-Check Exercise 1.

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1. What is the maturity value if 10 000 is invested for 3 years at the rate of 12% per annum?

Given: P= 10 000; t=3 years; r=12% Required: F Solution: F = P(1+rt) F = 10 000[1+(0.12)(3)] F = 13 600 Answer: 13 600 is the maturity value if 10 000 is invested for 3 years at the rate of 12% per annum. 2. At what simple interest rate will a sum of money triple in 10 years time?

Given: t=10 years, f= 3x, P= x Required: r Solution: R = (F-P) / Pt = (3x x) / x (10) = 2x / 10x = 2/10 = 0.2 (100) = 20% Answer: 20% simple interest will triple a sum of money in 10 years time. 3. How long will it take for 7 000 to have a maturity value of 12 000 if the rate at which it is invested is 15% simple interest?

Given: P= 7 000; F=12 000; r=15% Required: t Solution: t = I/Pr t = 12 000-7 000/(7 000)(0.15) t = 5000/1050 t = 4.76 years Answer: It will take 4.76 years for 7 000 to have a maturity value of 12 000 if the rate at which it is invested is 15% simple interest? 4. Determine the simple interest and maturity value if 15 500 is borrowed at 12.5% simple interest rate for 5 years.

Given: P= 10 000; r=12.5%; t=5 years Required: I and F Solution: I = Prt I = (10 000)(0.125)(5) I = 9 687.5

F = P+I F = 9 687.5+10 000 F = 25 187.5

Answer: 9 687.5 is the simple interest and 25 187.5 is the maturity value if 15 500 is borrowed at 12.5% simple interest rate for 5 years. Mr. Abiertas expects to have 1 615 000 in his fund at the end of 12 years. If he invested 850 000 at the start of the term, what interest rate is applied? Given: F= 1 615 000; t= 12 years; P= 850 000 Required: r Solution: r = I/Pt r = 1 615 000-850 000/(850 000)(12) r = 765 000/10 200 000 r = 0.075 * 100 r = 7.5 % Answer: 7.5% interest is applied. 5. Self-Check Exercise 1.2 1. Determine the exact interest earned if 4 500 is borrowed at 12% interest rate for 125 days.

Given: P= 4 500; r=12%; t=125 days Required: Ie Solution: Ie = Prt Ie = (4 500)(0.12)(125/365) Ie = 184.93 Answer: 184.93 is the exact interest earned if 4 500 is borrowed at 12% interest rate for 125 days. 2. What is the future value of 12 500 if it is invested at 15% simple interest rate for 250 days using ordinary interest?

Given: P=12 500; r=15%; t=250 days Required: F Solution: F = P(1+rt) F = 12 500[1+(0.15)(250/360)] F = 13 802.08 Answer: 13 802.08 is the future value of 12 500 if it is invested at 15% simple interest rate for 250 days using ordinary interest? 3. Find the exact and ordinary interests earned if 16 250 is invested at 13% simple interest rate for 275 days.

Given: P= 16 250; r=13%; t=275 days Required: Ie and Io Solution: Ie = Prt Io = Prt Ie = (16 250)(0.13)(275/365) Io = (16 250)(0.13)(275/360) Ie = 1 591.61 Io = 1 613.72 Answer: 1 591.61 is the exact interest and 1 613.72 is the ordinary interest earned if 16 250 is invested at 13% simple interest rate for 275 days. 4. Determine the interest and maturity value of 22 500 if it is invested at 15% simple interest rate for 145 days using both exact and ordinary interests.

Given: P= 22 500; r=15%; t=145 years Required: I and F Solution: Ie = Prt

Io = Prt

Ie = (22 500)(0.15)(145/365) Io = (22 500)(0.15)(145/360) Ie = 1 340.75 Io = 1 359.37 F = P+I F = P+I F = 22 500+1 340.75 F = 22 500+1 359.37 F = 23 840.75 F = 23 859.37 Answer: 1 340.75 and 1 359.37 is the interest, and 23 840.75 and 23 859.37 is the maturity value if 22 500 if it is invested at 15% simple interest rate for 145 days using both exact and ordinary interests, respectively. 5. Determine the type of interest applied to 87 500 invested at 8% to amount to 98 175 in 549 days.

Given: P= 87 500; r=8%; F=98 175; t=549 days Required: type of interest Solution: Ie = Prt Io = Prt Ie = (87 500)(0.08)(549/365) Io = (87 500)(0.08)(549/360) Ie = 10 528.77 Io = 10 675 F = P+I F = P+I F = 87 500+10 528.77 F = 87 500+10 675 F = 98 028.77 F = 98 175 Answer: Ordinary interest is the type of interest applied. Self-Check Exercise 1.3 1. Determine the exact number of days between April 14, 2008 and January 11, 2009.

Given: Origin date: April 14, 2008 Maturity date: January 11, 2009 Required: Actual time Solution: Month Apr May Jun Jul Aug Sep Number 30-14 31 30 31 31 30 of days =16

Oct 31

Nov 30

Dec 31

Jan 11

Total 272

Answer: 272 days is the exact number of days between April 14, 2008 and January 11, 2009. 2. Determine the approximate number of days from September 21, 2007 to April 14, 2008. Maturity date: April 14, 2008

Given: Origin date: September 21, 2007 Required: Approximate time Solution: Month Sep Oct Nov Number 30-21 30 30 of days =9

Dec 30

Jan 30

Feb 30

Mar 30

Apr 14

Total 203

Answer: 203days is the approximate number of days from September 21, 2007 to April 14, 2008. 3. What are the exact and approximate number of days from May 2, 2008 to Jan 1, 2011.

Given: Origin date: May 2, 2008 Maturity date: Jan 1, 2011 Required: Actual and Approximate time

Solution: Month
May 2, 2008 to May 2, 2010

May 2010 29 28

Jun 2010 30 30

Jul 2010 31 30

Aug 2010 31 30

Sep 2010 30 30

Oct 2010 31 30

Nov 2010 30 30

Dec 2010 31 30

Exact Number of days Approximate

730 720

Jan 1, 2011 1 1

Total

974 958

Answer: the exact days number of days is 974 while the approximate number of days is 958. 4. Find the four combinations of simple interest on 15 000 at 9% from March 3, 2008 to October 21 of the same year.

Given: P=15 000; r=9%; Origin date: March 3, 2008 Maturity date: October 21, 2008 Required: I Solution: I=Prt Month Mar Apr May Jun Jul Aug Sep 31-3 30 =28 Approximate 30-3 30 =27 a. I = (15 000)(0.09)(232/360) = 870 b. I = (15 000)(0.09)(232/365) = 858.08 c. I = (15 000)(0.09)(228/360) = 855 d. I = (15 000)(0.09)(228/365) = 843.29 Number of days Exact 31 30 30 30 31 30 31 30 30 30

Oct 21 30

Total 232 228

Answer: 870, 858.08, 855 and 843.29 are the four combinations of simple interest on 15 000 at 9% from March 3, 2008 to October 21 of the same year 5. Determine the future value if 5 500 is invested from January 2 October 7, 2008 at 8% simple interest rate using the four different time combinations.

Given: P=5 500; r=8%; Origin date: January 2, 2008 Maturity date: October 7, 2008 Required: I Solution: I=Prt Month Exact Number of days Approximate Jan 31-2 =29 30-2 =28 Feb 29 30 Mar 31 30 Apr 30 30 May 31 30 Jun 30 30 Jul 31 30 Aug 31 30 Sep 30 30 Oct 7 7 Total 279 275

a. I = (5 500)(0.08)(279/360) = 5 840 b. I = (5 500)(0.08)(279/365) = 5 836.33 c. I = (5 500)(0.08)(275/360) = 5 836.11 d. I = (5 500)(0.08)(275/365) = 5 831.51 Answer: 5 840, 5 836.33, 5 836.11 and 5 831.51 is the future value if 5 500 is invested from January 2 October 7, 2008 at 8% simple interest rate using the four different time combinations.

Self-Check Exercise 1.4 1. How much interest will be deducted in advance if 12 500 is due at the end of 3 years with 12% discount rate?

Given: F= 12 500; d=12%; t=3 days Required: Id Solution: Id = Pdt Id = (12 500)(0.12)(3) Id = 4 500 Answer: 4 500 will be deducted in advance if 12 500 is due at the end of 3 years with 12% discount rate. 2. Determine the proceeds of 125 000 at the end of 4 years if the discount interest is 9%.

Given: F=125 000; d=9%; t=4 years Required: Pr Solution: Pr = F(1-dt) Pr = 125 000[1-(0.09)(4)] Pr = 80 000 Answer: 80 000 is the proceeds of 125 000 at the end of 4 years if the discount interest is 9%. 3. Find the amount due at the end of the 5 years, if the proceeds is 12 000 and the discount rate is 7.5%.

Given: Pr = 12 000; d=7.5%; t=5 years Required: F Solution: F = Pr/1-dt F = 12 000/[1-(0.075)(5)] F = 19 200 Answer: 19 200 is the amount due at the end of the 5 years, if the proceeds is 12 000 and the discount rate is 7.5%. 4. Find the term of loan whose maturity value and proceeds are 22 500 and 20 000 respectively. The discount rate is 11%.

Given: F= 22 500; Pr=20 000; d=11% Required: t Solution: t = Id/Fd t = 22 500-20 000/(22 500)(0.11) t = 2 500/2475 t = 1 year Answer: 1 year is the term of loan whose maturity value and proceeds are 22 500 and 20 000 respectively with 11% discount rate. 5. If 10 968.75 is the proceeds obtained after 13 500 is discounted for 9 months, what is the discount rate?

Given: Pr = 10 968.75;F=13 500; t=9 months Required: d Solution: d = Id/Ft

d = 10 968.75-13 500/(10 968.75)(9) d = 2 531.25/10 125 d = 0.25 * 100 d= 25% Answer: 25% is the discount rate if 10 968.75 is the proceeds obtained after 13 500 is discounted for 9 months. Self-Check Exercise 1.5 1. Consider the promissory note below, and then determine the required variables. February 20, 2007 I, the undersigned promise to pay forty five days (45 days) after date the amount of forty-eight thousand pesos (48 000.00) plus 9% simple interest to Mr. Ronald Cheng as full payment for the motor bike. Rendell L. Ignacio a) b) c) d) e) f) g) 2. drawer: drawee: type of note: term of loan: interest rate: maturity date: face value: Rendell L. Ignacio Ronald Cheng simple interest note 45 days 9% April 6, 2007 48 000.00

Determine the required variables below using the given note. February 27, 2007 Ninety (90) days after date, the undersigned promise to pay Page Garments Corporation the amount of twenty-nine thousand pesos ((29 000.00) at 11% discount rate as payment for the cash advance. Marcell D. Ravelo

a) b) c) d) e) f) g) 3.

drawer: drawee: type of note: term of loan: interest rate: maturity date: face value:

Marcell D. Ravelo Page Garments Corporation bank discount note 90 days 11% May 28, 2007 29 000.00

Find the face value of a 120-day simple interest note if the maturity value is 7 250 and the simple interest rate is 15%.

Given: t=120 days; F=7 250; r=15% Required: P

Solution: P = F/1+Rt P = 7 250/1+(0.15)(120/360) p = 6 904.76 Answer: 6 904.76 is the face value of a 120-day simple interest note if the maturity value is 7 250 and the simple interest rate is 15%. 4. What is the discount interest rate charged on a 20 000 8-month discount note, given the proceeds of 19 500?

Given: F = 20 000, t = 8 months, Pr = 19500 Required: d Solution: d = (Pr-F)/(Ft) d = (19500 20000) / [20000 (8/12)] d= 0.0375 * 100 d = 3.75% Answer: The discount interest rate is 3.75% Self-Check Exercise 1.6 1. Wilson holds a 32 400 simple interest note at 12.5% from Carlo which is payable at the end of the year. If Wilson decides to sell the note 5 months after the origin date, how much will he receive if the discount rate is 13.5%?

Given: P=32 400; r=12.5%; t=1 year, 5 months after the origin date; d=13.5% Required: Pr Solution: step 1: F = P(1+rt) F = 32 400 [1+(0.125)(1)] F = 36 450 step 2: step 3: Pr = F(1+dt) Pr = 36 450[1+(0.135)(7/12)] Pr = 33 579.56 Answer: If Wilson decides to sell the note 5 months after the origin date, he will receive 33 579.56 if the discount rate is 13.5%. 2. Find the proceeds of a 5 500 discount note which is payable at the end of 6 months, but discounted after 5 months at 15% discount interest rate.

Given: F = 5500 , t= 6 months; bought after 5 months; d = 15% Required: Pr Solution: Step 1: 6 months 5 months = time 1 month = time Step 2: Ir = Fdt Pr = F-Ir = 5500 (0.15) (1/12) Pr = 5500-68.75 =68.75 Pr = 5431.25 Answer: The proceeds of the 5500 discount note is 5431.25.