1.

The purchase amount of an equipment P100,000 has been made available through a loan
which earns 12% per annum. It has been agreed that the loan be payable in 10 equal payments.
How much then is the yearly due?

a. P10,587.90 b. P17,698.42 c. P27,908.65 d. P18,765.98

2. How many yearly withdrawals of P100,000 can be made from 1 million peso investment at
10%?

a. 10 b. 20 c. 30 d. none of these

3. A new company developed a program in which the employees will be allowed to purchase
shares of stock of the company at the end of fifth year of operation when the company is
thought to have stability already at par value of P100.00 per share. Believing in the good
potential of the company, an employee decided to save in a bank the amount of P8,000 at the
end of every year which will earn for him 9% interest. How many shares of stock will he be able
to purchase at the end of fifth year of his yearly deposits?

a. 478 b. 479 c. 480 d. 490

4. An engine costing P40,000 may be purchased on installment basis by paying P10,000 down
payment, P5,000 at the end of the first year and five equal payments beginning at the end of the
second year. Determine the amount of these equal payments. Money is worth 12% per year.

a. P8,933.20 b. P9,339.92 c. P6,733.92 d. P7,933.92

5. The president of a growing engineering firm wishes to give each of 50 employees a holiday
bonus. How much is needed to invest monthly for a year at 12% nominal interest rate,
compounded monthly, so that each employee will receive a P1,000.00 bonus?

a. P2,750.00 b. P3,942.44 c. P4,311.44 d. P3,892.00

6. Mr. Ramirez borrowed P15,000.00 two years ago. The term of the loan is at 10% interest for
10 years with uniform payments. He just made his second annual payment. How much principal
does he still owe?

a. P12,000.00 b. P13,024.00 c. P10,117.00 d. P11,700.00

7. A sinking fund consists of 15 annual deposits of P1,000 each, with interest earned at the rate
of 4% compounded annually. What is the principal in the fund at its terminal date?

a. P28,105 b. P29,546.23 c. P25,115 d. P20,023.59

8. A cash flow diagram represents an investment of P6,000 and equal revenue of x pesos at the
end of years one, two, and three. At an interest rate of 15% compounded annually, what must x
be for this cash flow to have a net present worth of approximately zero?
 a. P2,628 b. P3,910 c. P3,945 d. P3,920

9. A P10,000 loan is to be paid off in 10 equal annual payments. The annual interest rate is 15%.
How much interest will be paid in the first 2 years?

a. P2,926.1 b. P3,005.1 c. P2,970.2 d. P2,940.2

10. A piece of machinery can be bought for P10,000 cash, or for P2,000 down and payments of
P750 per year for 15 years, what is the annual interest rate for the time payments?

a. 4.60% b. 3.81% c. 5.71% d. 11.0%

11. What is the present worth of a 3 year annuity paying P3,000 at the end of each year, with
interest at 8% compounded annually?

a. P7,731.29 b. P9,731.29 c. P7,371.29 d. P9,371.29

12. A fund is to provide an annual scholarship at P4000 for the first 5 years; P6,000 for the next 5
years and P9,000 thereafter. The fund will be established 1 year before the first scholarship is
awarded. If the fund earns 12% interest, what sum must be deposited?

a. P50,840 b. P60,921 c. P45,076 d. P12,632

13. Engr. Juoaquin borrows P60,000 at 12% compounded annually, agreeing to repay the loan in
15 equal annual payments. How much of the original principal still unpaid after he has made the
8th payment?

a. P35,976 b. P40,204 c. P42,098 d. P60,364

14. What is the future worth of P600 deposited at the end of every month for 4 years if the
interest rate is 12% compounded quarterly?

a. P24,980 b. P16,900 c. P36,641 d. P59,476

15. The officers of PSME desire to award a P3600 scholarship annually to deserving mechanical
engineering students for as long as scholarship fund shall last. The fund was started July 1,1987
by a donor in the amount of P18,000. The PSME invested this sum at that time at 8% per annum
and plans on adding P600 each year to the fund from its dues starting July 1, 1988 for as long as
the awards are made. For how many years starting July 1,1988 can scholarship be awarded and
what will be the balance in the fund after the last award is made?

a. 8 yrs, P1,406 b. 9 yrs, P1,207 c. 8 yrs, P2,033 d. 9 yrs, P1,200

16. In anticipation of a much bigger volume of business after 10 years, a fabrication company
purchased on adjacent lot for its expansion program where it hopes to put up a building
projected to cost P4,000,000.00 when it will be constructed 10 years after. To provide for the
required capital expenses, it plans to put up a sinking fund for the purpose. How much must the
company deposit each year if interest to be earned is computed at 15%?

a. P198,009.30 b. P197,007.45 c. P197,008.25 d. P199,008.23

17. If P10,000 is deposited each for 9 years, how much annuity can a person get annually from
the bank for 8 years starting one year after the 9th deposit is made? Cost of money is 14%.

a. P16,489.00 b. P34,675.15 c. P23,782.33 d. P12,009.12

18. A car dealer advertise the sale of a car model for a cash price of P280,000. If purchased on
installment, the required down payment is 15% and the balance payable in 18 equal monthly
installments at an interest of 1.5% per month. How much will be the required monthly payment?

a. P15,186.70 b. P15,200.87 c. P15,185.78 d. P16,187.75

19. For having been loyal, trustworthy and efficient, the company has offered a supervisor a
yearly gratuity pay of P20,000 for 10 years with the first payment to be made one year after his
retirement. The same supervisor, instead, request that he be paid a lump sum on the date of his
retirement less interest that the company would have earned if the gratuity is to be paid on
yearly basis. If interest is 15%, what is the equivalent lump sum that he could get?

a. P101,374.30 b. P110,376.45 c. P100,375.37 d. P103,395.36

20. Nadine borrowed P50,000 from SSS in the form of calamity loan, with interest at 8%
compounded quarterly payable in equal quarterly installments for 10 years. Find the quarterly
payment.

a. P1,830.70 b. P1,827.79 c. P1,927.67 d. P1,828.75

21. If P500 is invested at the end of each year for 6 years at an annual interest rate of 7%, what is
the total peso amount available upon deposit of the sixth payment?

a. P3,210 b. P3,577 c. P3,000 d. P4,260

22. How much money must you invest today in order to withdraw P1,000 per year for 10 years if
the interest rate is 12%?

a. P12,000 b. P5,650 c. P10,000 d. P4,800

23. In five years, P18,000 will be needed to pay for a building renovation. In order to generate
this sum, a sinking fund consisting of three annual payments is established now. For tax
purposes, no further payments will be made after 3 years. What payments are necessary if
money is worth 15% per annum?

a. P2,870 b. P3,919 c. P5,100 d. P2,670

24. Ayala borrows P100,000 at 10% effective annual interest. He must pay back the loan over 30
years with uniform monthly payments due on the first day of each month. What does Mr. Ayala
pay each month?

a. P870.3 b. P856.3 c. P865.7 d. P839.2

25. What is the present worth of P1,000 monthly deposit at 2% per month for one year if the
payments are made at the beginning of each month?

a. P10,786.85 b. P9,786.85 c. P11,786.85 d. P8,786.85