1. Bryan is saving for his son Rhee's college education.

. Rhee just turned 10 and he will be entering university 8 years

from now. College tuition and expenses at the university are currently P145,000 a year, but they are expected to
increase at a rate of 3.5% a year. Rhee should graduate in 4 years if he takes longer or wants to go to graduate
school, he will be on her own. Tuition and other costs will be due at the beginning of each school year. So far, Bryan
has accumulated P150,000 in Rhees college savings account. His long-run financial plan is to add an additional
P50,000 in each of the next 4 years starting one year from today. After which, he plans to make 3 equal annual
contributions in each of the following years. The investment account is expected to earn 9%. How large must the 3
equal annual payments approximately be to cover Rhee's anticipated college costs?



2. Your parents have agreed to make 80 quarterly payments of P4,000 each into a trust account to fund your early
retirement. The first payment will be made 3 months from now. At the end of 20 years, you will be paid 10 equal
annual payments, with the first payment to be made at the beginning of Year 21. The funds will be invested at a
nominal rate of 8 percent, quarterly compounding, during both the accumulation and the distribution periods. How
large will each of your 10 receipts be?



3. You have some money on deposit in a bank account that pays a nominal rate of 8.0944%, but with interest
compounded daily (using a 365-day year). Your friend owns a security that calls for the payment of P10,000 after 27
months. The security is just as safe as your bank deposit, and your friend offers to sell it to you for P8,000. If you
buy the security, by how much will the effective annual rate of return on your investment change?



4. You borrowed P50,000 which you must repay in 10 years. You plan to make an initial deposit today, then make 9
more deposits at the beginning of each the next 9 years, but with the deposits increasing at the inflation rate. You
expect to earn 5% on your funds, and you expect a 3% inflation rate. To the nearest peso, how large must your
initial deposit be to enable you to reach your P50,000 target?



5. Today is Reys 40th birthday. He first started saving annually when he was 25 years old. On his 25th birthday, Rey
made the first contribution to his retirement account. He deposited P2,000 into an account that paid 9% interest,
compounded monthly. Each year on his birthday, Rey contributes another P2,000 to the account. The 15th (and
last) contribution was made last year on his 39th birthday. Rey wants to close the account today and move the
money to a stock fund that is expected to earn an effective return of 12% a year. Reys plan is to continue making
contributions to this new account each year on his birthday. His next contribution will come today and his final
planned contribution will be on his 65th birthday. If Rey wants to accumulate P3,000,000 in his account by age 65,
how much must he contribute each year until age 65 to achieve his goal?