EZ40 FINALS

1. If you invest $7,000 at 12% compounded continuously, how much would it be worth
in three years?
$10,033

2. A sum of $5,000 is deposited now, $7,000 three years from now, and $2,000 per year
in years 4 through 10, the amount in year 10 at a compounding interest rate of 10% per
year will be closest to:
$45,600

3. A machine costing P720, 000 is estimated to have a book value of P40, 545.73 when
retied at the end of 10 years. Depreciation cost is computed using constant percentage
of declining balance Method. What is the depreciation in %?
25%

4. $1,791 10 years from now is equivalent to $900 now if the interest rate equals 8% per
year.
False

5. The present worth of machine Y having an initial cost of $66,000, annual cost of
$15,000, salvage value of $23,000, and useful life of 4 years is closest to:
$97,840

6. A market whereby there is only one buyer of an item for which there is no goods
substitute.
Monopoly

7. A wood products company has decided to purchase new logging equipment for
$100,000, with a trade-in of its old equipment. The old equipment has new equipment
will be kept for 10 years before being sold. Its estimated salvage value at the time is
expected to be $5,000. Using the straight line method, the depreciable life period is
$10,500
8. Research and Development expenses includes all except one:
Laboratory

9. What is the present worth of p500 annuity starting at the end of the third year and
continuing to the end of the forth year. If the annual interest rate is…
P717.17

10. A new engine was installed by a textile company at a cost of P300,000.00 and
projected to have a useful life of 15 years. At the end of its useful life, it is estimated to
have a salvage value of P30,000.00 Determine it capitalized cost if the interest is 20%
compounded annually.
P324,604.00

11 A new engine was installed by a textile company at a cost of P300,000.00 and

projected to have a useful life of 15 years. At the end of its useful life, it is estimated to
have a salvage value of P30,000.00 Determine it capitalized cost if the interest is 20%
compounded annually.
P324,604.00

12. A bank advertises mortgages at 12% compounded continuously. What is the

effective annual interest?
12.75%

13. (A/F, i%, N) = (A/P, i%, N) + i

False

14. An interest rate of 20% per year, compounded monthly is

A nominal monthly rate

15. Cash-flow diagrams are analogous to free-body diagrams for mechanics problems
False
16. A machine with a five-year life has a first cost of $20,000 and $2,000 salvage value.
Its annual operating cost is $8,000 per year. According to the classical straight line
method, the depreciation charge in year 2 is nearest to:
$3,600

17. A construction company invests $50,000 in a new bulldozer. If the income from
temporary leasing of the bulldozer is expected to be $10,000 per year, the length of time
required to recover the investment at an interest rate of 18.
14 years

18. The paper currency issued by the central bank which forms part of the country’s
money supply.
Bank Note

19. If you borrow $5,000 to buy a car at 12% compounded monthly, to be repaid over
the next four years, what is your monthly payment?
$131

20. An interest rate of 1.5% per month, compounded continuously, is closest to:
19.56% per year

21. $10,000 six years ago has accumulated to $20,000 now. The compound rate of
return earned on the investment is closest to:
12%

22. Determine the capitalized cost of a laboratory building which requires P5,000,000.00
for original construction; P100,000.00 at the end of every year for the first 6 years and
then P120,000 each year thereafter for operating expenses, and P500,000 every 5
years for replacement of equipment with interest 15% per annum.
P6,753,650.00
23. Sixty monthly deposits are made into an account paying 6% nominal interest
compounded monthly. If the objective of these deposits is to accumulate…..
$1,430

24. Which transformer is more economical using rate of return method? By how much?
Problem B. Manila Electric Company is going to purchase new transformers for Pasay
City area. Four different transformers are available. Cost and operating expenses are as
follows:

Transformer B, 17.47%

25. The present worth of an alternative that provides infinite service is called its:
Capitalized cost

26. The present worth of an amount of money x that will be received 6 years from now
is $2,000. At an interest rate of 10% compounded.
$5,190

27. What is the amount of P12,800 in 4 years at 5% compounded quarterly?

P15,614.59
28. In an asset with a first cost of $50,000 is to be depreciated by the straight line
method over a 5-year period. The asset will have annual operating cost… to the straight
line method, the book value at the end of year 3 will be closest to:
$26,000

29. is the simplest depreciation method. It assumes that a constant amount is

depreciated each year over the depreciable (useful) life of the asset.
Straight Line

30. Refer to a temporary grouping of independent firms, organization and government

brought together to pool their resources and skills in order to undertake a particular
project.
Consortium

31.
32. What is the monthly payment in a loan of $15,000 for five years at a nominal rate of
interest of 9% compounded monthly?
$312

33. Determine the capitalized cost of a laboratory building which requires P5,000,000.00
for original construction; P100,000.00 at the end of every year for the first 6 years and
then P120,000 each year thereafter for operating expenses, and P500,000 every 5
years for replacement of equipment with interest 15% per annum.
P6,753,650.00

34. An asset is purchased for P9,000. Its estimated economic life is 10 years after which
it will be sold for P1,000. Find the depreciation in the first three…
P2,400

35.
36. A manufacturing company spent $30,000 on a new conveyor belt. If the conveyor
belt resulted in cost savings of $420… the company to recover its investment at 8% per
year is closest to:
11 to 12 years

37. A small construction company is considering the purchase of a used bulldozer for
$61,000. If the company purchases the dozer now, the equivalent…dozer at 4% per
year interest is closest to:
$71,365.00

38. It is always true that the effective rate is greater than the nominal rate when m*2.
True

39. The cost of replacing part of an automobile brake pad production line in 6 years is
estimated to be $500,000. At an interest rate of 18% per year, comp…. deposited into a
sinking fund every 6 months is closest to:
$24,825

40. By the condition of a will, the sum of P20,000 is left to a girl to be held in a trust fund
by her guardian until it amounts to P50,000. When will the girl…quarterly?
11.57 years

41. Suppose that $10,000 is borrowed now at 15% interest per year. A partial
repayment $4,000 is made four years from now. The amount that will remain to be paid
then is most nearly which of the following?
$13,490

42. Interest is money paid for the use of equity capital

False
43. The operating cost for a certain machine is $1,000 per year for the 5 years and
$2,000 per year for the next 5 years. At an interest rate (compou… maintenance is
closes to:
$7,450

44. The annual maintenance cost of a machine shop is P69.994. If the cost of forging is
P56 per unit and the selling price is P135 per forged unit. Find….
886 units

45. A manufacturing company spent $30,000 on a new conveyor belt. If the conveyor
belt resulted in cost savings of $420… the company to recover its investment at 8% per
year is closest to:
11 to 12 years

46. Mr. Mar Roxas deposits $8,000 in year 1, $8,500 in year 2, and amounts increasing
by $500 per year through year 10. At a compounding interest rate
$157,200

47. The only kind of interest rate that can be used in the interest formulas is:
Either A or C

48. Transformer A, 122.533T

49. Represents the remaining, undepreciated capital investment on the books after the
total amound of depreciation charges to date has been subtracted from the basis.
Book value

50. What is the future equivalent of $1,000 invested at 8% simple interest per year for 2
years?
$1,200