ENGINEERING ECONOMICS 1 (200 Items)

6. A loan of P5,000 is made for a period of 15 months, at

1. First Benchmark Publishing’s gross margin is 50% of a simple interest rate of 15%, what future amount is due
sales. The operating costs of the publishing are at the end of the loan period?
estimated at 15% of sales. If the company is within the A. 5,937.50
40% tax bracket, determine the percent of sales is their B. 5,873.20
profit after taxes? C. 5,712.40
A. 21 % D. 5,690.12
B. 20 % 7. Mr. Bacani borrowed money from the bank. He
C. 19 % received from the bank P1,842 and promised to repay
D. 18 % P2,000 at the end of 10 months. Determine the rate of
2. A farmer selling eggs at 50 pesos a dozen gains 20%. If simple interest.
he sells the eggs at the same price after the costs of the A. 12.19 %
eggs rises by 12.5%, how much will be his new gain in B. 12.03 %
percent? C. 11.54 %
A. 6.89 % D. 10.29 %
B. 6.65 % 8. A college freshman borrowed P2,000 from a bank for
C. 6.58 % his tuition fee and promised to pay the amount for one
D. 6.12 % year. He received only the amount of P1,920 after the
3. A feasibility study shows that a fixed capital bank collected the advance interest of P80.00. What
investment of P10,000,000 is required for a proposed was the rate of discount?
construction firm and an estimated working capital of A. 3.67 %
P2,000,000. Annual depreciation is estimated to be10% B. 4.00 %
of the fixed capital investment. Determine the rate of C. 4.15 %
return on the total investment if the annual profit is D. 4.25 %
P3,500,000. 9. It is the practice of almost all banks in the Philippines
A. 28.33 % that when they grant a loan, the interest for one year is
B. 29.17 % automatically deducted from the principal amount upon
C. 30.12 % release of money to a borrower. Let us therefore
D. 30.78 % assume that you applied for a loan with a bank and the
4. The monthly demand for ice cans being P80,000 was approved at an interest rate of 14% of
manufactured by Mr. Camus is 3200 pieces. With a which P11,200 was deducted and you were given a
manual operated guillotine, the unit cutting cost is check of P68,800. Since you have to pay the amount of
P25.00. An electrically operated hydraulic guillotine was P80,000 one year after, what then will be the effective
offered to Mr. Camus at a price of P275,000.00 and interest rate?
which cuts by 30% the unit cutting cost. Disregarding A. 16.02 %
the cost of money, how many months will Mr. Camus be B. 16.28 %
able to recover the cost of the machine if he decides to C. 16.32 %
buy now? D. 16.47 %
A. 10 months 10. A man invested P110,000 for 31 days. The net
B. 11 months interest after deducting 20% withholding tax is P890.36.
C. 12 months Find the rate of return annually.
D. 13 months A. 11.50 %
5. Engr. Trinidad loans from a loan firm an amount of B. 11.75 %
P100,000 with a rate of simple interest of 20% but the C. 11.95 %
interest was deducted from the loan at the time the D. 12.32 %
money was borrowed. If at the end of one year, she has 11. A investor wishes to earn 7% on his capital after
to pay the full amount of P100,000, what is the actual payment of taxes. If the income from an available
rate of interest? investment will be taxed at an average rate of 42%, what
A. 23.5 % minimum rate of return, before payment of taxes, must
B. 24.7 % the investment offer to be justified?
C. 25.0 % A. 12.07 %
D. 25.8 % B. 12.34 %
C. 12.67 % D. 8.24 %
D. 12.87 % 19. Which of these gives the lowest effective rate of
12. Mr. Jun Ramos was granted a loan of P20,000 by his interest?
employer Excel First Review and Training Center, Inc. A. 12.35 % compounded annually
with an interest of 6% for 180 days on the principal B. 11.90 % compounded annually
collected in advance. The corporation would accept a C. 12.20 % compounded annually
promissory note for P20,000 non-interest for 180 days. D. 11.60 % compounded annually
If discounted at once, find the proceeds of the note. 20. An amount of P1,000 becomes P1,608.44 after 4
A. P18,000 years compounded bimonthly. Find the nominal
B. P18,900 interest.
C. P19,000 A. 11.89 %
D. P19,100 B. 12.00 %
13. Miss Evilla borrowed money from a bank. She C. 12.08 %
receives from the bank P1,340.00 and promised to pay D. 12.32 %
P1,500.00 at the end of 9 months. Determine the 21. How long will it take money to double itself if
corresponding discount rate or often referred to as the invested at 5% compounded annually?
“banker’s discount”. A. 13.7 years
A. 13.15 % B. 14.7 years
B. 13.32 % C. 14.2 years
C. 13.46 % D. 15.3 years
D. 13.73 % 22. By the condition of a will, the sum of P20,000 is left
14. The exact simple interest of P5,000 invested from to a girl to be held in trust fund by her guardian until it
June 21, 1995 to December 25, 1995 is P100. What is amounts to P50,000. When will the girl receive the
the rate of interest? money if fund invested at 8% compounded quarterly?
A. 3.90 % A. 11.23 years
B. 3.92 % B. 11.46 years
C. 3.95 % C. 11.57 years
D. 3.98 % D. 11.87 years
15. What is the ordinary interest on P1,500.50 for 182 23. A sum of P1,000 is invested now and left for eight
days at 5.2%? years, at which time the principal is withdrawn. The
A. P39.01 interest has accrued is left for another eight years. If the
B. P39.82 effective annual interest rate is 5%, what will be the
C. P39.45 withdrawal amount at the end of the 16th year?
D. P39.99 A. P693.12
16. A loan for P50,000 is to be paid in 3 years at the B. P700.12
amount of P65,000. What is the effective rate of C. P702.15
money? D. P705.42
A. 9.01 % 24. Mandarin Bank advertises 9.5% account that yields
B. 9.14 % 9.84% annually. Find how often the interest is
C. 9.31 % compounded.
D. 9.41 % A. Monthly
17. What is the effective rate corresponding to 18% B. Bimonthly
compounded daily? Take 1 year is equal to 360 days. C. Quarterly
A. 19.61 % D. Annually
B. 19.44 % 25. A student plans to deposit P1,500 in the bank now
C. 19.31 % and another P3,000 for the next 2 years. If he plans to
D. 19.72 % withdraw P5,000 three years from after his last deposit
18. What rate of interest compounded annually is the for the purpose of buying shoes, what will be the
same as the rate of interest of 8% compounded amount of money left in the bank after one year of his
quarterly? withdrawal? Effective annual interest rate is 10%.
A. 8.07 % A. P1,549.64
B. 8.12 % B. P1,459.64
C. 8.16 % C. P1,345.98
D. P1,945.64 C. P 714.71
26. You borrow P3,500.00 for one year from a friend at D. P 731.17
an interest rate of 1.5% per month instead of taking a 32. What annuity is required over 12 years to equate
loan from a bank at a rate of 18% per year. How much with a future amount of P 20,000? Assume i= 6%
lesser you will pay by borrowing the money from the annually.
bank? A. P 1,290.34
A. P 62.44 B. P 1,185.54
B. P44.55 C. P 1,107.34
C. P54.66 D. P 1,205.74
D. P37.56 33. A factory operator bought a diesel generator set for
27. What is the present worth of two P 100 payments at P 10,000.00 and agreed to pay the dealer uniform sum
the end of the third year and fourth year? The annual at the end of each year for 5 years at 8% interest
interest rate is 8%. compounded annually, that the final payment will
A. P 150.56 cancel the debt for principal and interest. What is the
B. P 152.88 annual payment?
C. P 153.89 A. P 2,500.57
D. P 151.09 B. P 2,544.45
28. A firm borrows P2,000 for 6 years at 8%. At the end C. P 2,540.56
of 6 years, it renews the loan for the amount due plus D. P 2,504.57
P2,000 more for 2 years at 8%. What is the lump sum 34. What is the present worth of a year annuity paying P
due? 3,000.00 at the end of each year, with interest at 8%
A. P 3,260.34 compounded annually?
B. P 3,280.34 A. P 7,654.04
C. P 3,270.34 B. P 7,731.29
D. P 3,250.34 C. P 7,420.89
29. In year zero, you invest P 10,000.00 in a 15% security D. P 7,590.12
for 5 years. During that time, the average annual 35. A man loans P 187,400 from a bank with interest at
inflation is 6%. How much in terms of year zero pesos 5% compounded annually. He agrees to pay his
will be in the account at maturity? obligations by paying 8 equal annual payments, the first
A. P 15,030.03 being due at the end of 10 years. Find the annual
B. P 20,113.57 payments.
C. P 18,289.05 A. P 43,600.10
D. P 16,892.34 B. P 43,489.47
30. The institute of Electronics and Communications C. P 43,263.91
Engineers of the Philippines (IECEP) is planning to put up D. P 43,763.20
its own building. Two proposals being considered are: 36. A person buys a piece of lot for P 100,000
A. The construction of the building now to cost P downpayment and 10 deferred semi-annual payments
400,000 of P 8,000 each, starting three years from now. What is
B. The construction of a smaller building now to cost the present value of the investment if the rate of
P300,000 and at the end of 5 years, an extension to be interest is 12% compounded semi-annually?
added to cost P 200,000. A. P 142,999.08
By how much is proposal B more economical than B. P 143,104.89
proposal A if interest rate is 20% and depreciation to be C. P 142,189.67
neglected? D. P 143,999.08
A. P 19,122.15 37. A young engineer borrowed P 10,000 at 12% interest
B. P 19,423.69 and paid P 2,000 per annum for the last 4 years. What
C. P 19,518.03 does he have to pay at the end of the fifth year in order
D. P 19,624.49 to pay off his loan?
31. What is the present worth of a P500 annuity starting A. P 6,999.39
at the end of the third year and continuing to the end of B. P 6,292.93
the fourth year, if the annual interest rate is 10 %? C. P 6,222.39
A. P 727.17 D. P 6,922.93
B. P 717.17
38. Miss Calledo deposited P 1,000, P 1,500 and P 2,000 D. P 3,792.72
at the end of the 2nd year, 3rd year and 4th year, 45. Shell Philippines, a multinational company, has a
respectively in a savings account which earned 10% per total gross income for a particular year of P 50,000,000.
annum. How much is in the account at the end of the The taxable income after taking all deductions except
4th year? for depletion is P 18,500,000. What is the allowable
A. P 4,880.00 depletion allowance for that particular year? Take
B. P 4,820.00 percentage of gross income for oil as 22%.
C. P 4,860.00 A. P 9,358.41
D. P 4,840.00 B. P 9,228.45
39. A P 1,000,000 issue of 3%, 15-year bond was sold at C. P 9,250.00
95%. What is the rate of interest of this investment? D. P 9,308.45
A. 3.0% 46. The Saudi Arabian Oil Refinery developed an oil well
B. 3.4% which is estimated to contain 5,000,000 barrels of oil at
C. 3.7% an initial cost of $ 50,000,000. What is the depletion
D. 4.0% charge during the year where it produces half million
40. A P 1, 000, 6% bond pays dividend semiannually and barrels of oil? Use Unit or Factor method in computing
will be redeemed at 110% on June 21, 204. It is bought depletion.
on June 21, 2001 to yield 4% interest. Find the price of A. $ 5,000,000.00
the bond. B. $ 5,010,000.00
A. P 1,122.70 C. $ 5,025,000.00
B. P 1,144.81 D. $ 5,050,000.00
C. P 1,133.78 47. A manufacturer produces certain items at a labor
D. P 1,155.06 cost of P 115 each, material cost of P 76 each and
41. A VOM has a selling price of P 400. If its selling price variable cost of P 2.32 each. If the item has a unit price
is expected to decline at a rate of 10% per annum due to of P 600, how many units must be manufactured each
obsolescence, what will be its selling price after 5 years? month for the manufacturer to break even if the
A. P 222.67 monthly overhead is P428,000
B. P 212.90 A. 1,033
C. P 236.20 B. 1,037
D. P 231.56 C. 1,043
42. A machine costs of P 8,000 and an estimated life of D. 1,053
10 years with a salvage value of P 500. What is its book 48. A manufacturing firm maintains one product
value after 8 years using straight line method? assembly line to produce signal generators. Weekly
A. P 2,000.00 demand for the generators is 35 units. The line operates
B. P 2,100.00 for 7 hours per day, 5 days per week. What is the
C. P 2,200.00 maximum production time per unit in hours required of
D. P 2,300.00 the line to meet the demand?
43. ABC Corporation makes it a policy that for any new A. 1.0 hour per unit
equipment purchased, the annual depreciation cost B. 1.2 hours per unit
should not exceed 20% of the first cost at any time with C. 1.4 hours per unit
no salvage value. Determine the length of service life D. 1.6 hours per unit
necessary if the depreciation used is the SYD method. 49. A telephone switchboard 100 pair cable can be
A. 7 eyars made up with either enameled wire or tinned wire.
B. 8 years There will be 400 soldered connections. The cost of
C. 9 years soldering a connection on the enameled wire will be P
D. 10 years 1.65 on the tinned wire, it will be P 1.15. A 100- pair
44. An asset is purchased for P 9,000.00. Its estimated cable made up with enameled wire cost P 0.55 per
economic life is 10 years after which it will be sold for P linear foot and those made up of tinned wire cost P 0.75
1,000.00. Find the depreciation in the first three years per linear foot. Determine the length of cable run in feet
using sum-of-years digit method so that the cost of each installation would be the same.
A. P 3,279.27 A. 1,000 feet
B. P 3,927.27 B. 1,040 feet
C. P 3,729.27 C. 1,100 feet
D. 1,120 feet C.18.37%
50. A leading shoe manufacturer produces a pair of D. 10.32%
Lebron James signature shoes at a labor cost of P 900.00 55. Karen was granted a loan of P20,000 by her
a pair and a material cost of P 800.00 a pair. The fixed employer CPM Industrial Fabricator and Construction
charges on the business are P 5,000,000 a month and Corporation with an interest at 6% for 180days on the
the variable costs are P 400.00 a pair. Royalty to Lebron principal collected in advance. The corporation would
James is P 1,000 per pair of shoes sold. If the shoes sell accept a promissory note for P20,000 non-interest for
at P 5,000 a pair, how many pairs must be produced 180days. If discounted at once, find the proceeds in the
each month for the manufacturer to break-even? note.
A. 2.590 A. P18,800
B. 2,632 B. P18,000
C. 2,712 C. P19,000
D. 2,890 D. P18,400
56. P4000 is borrowed for 75 days at 16% per annum
51. A price tag of P1200 is specified if paid within 60 simple interest. How much will be due at the end of 75
days but offers a 3% discount for cash in 30 days. Find days?
the rate of interest. A. P4186.43
A. 37.11% B. P4133.33
B. 40.21% C. P5124.54
C. 38.51% D. P5625.43
D. 39.31% 57. Mr. Bautista made a money market placement of
52. It is the practice of almost all bank in the Philippines P1,000,000 for 30 days at 7.5% per year. If withholding
that when they grant a loan, the interest for 1 year is tax is 20%, what is the net interest that Mr. Bautista will
automatically deducted from the principal amount upon receive at the end of the month?
release of money to a borrower. Let us therefore A. P3,000
assume that you applied for a loan with the bank and B. P6,000
the P80000 was approved at an interest rate of 14% of C. P4,000
which P11200 was deducted and you were given ac D. P5,000
check of P68800. Since you have to pay the amount of 58. A bill for motorboat specifies the cost as P1,200 due
P80000 one year after, what then will be the effective at the end of 100days but offers a 4% discount for cash
interest rate? in 30days. What is the highest rate, simple interest at
A. 16.28% which the buyer can afford to borrow money in order to
B. 17.30% take advantage of the discount?
C. 38.51% A. 18.4%
D. 39.31% B. 20.9%
53. Mr. J. Dela Cruz borrowed money from the bank. He C. 19.6%
received from the bank P1,340.00 and promised to pay D. 21.4%
P1,500.00 at the end of 9 months. Determine the simple 59. In buying a computer disk, the buyer was offered the
interest rate and the corresponding discount rate or options of paying P250 cash at the end of 30days or
often referred to as the “Banker’s Discount”. P270 at the end of 120days. At what rate is the buyer
A. 15.92% ; 13.73% paying simple interest if he agree to pay at the end of
B. 12.95% ; 17.33% 120days?
C.18.28% ; 13.12% A. 32%
D. 19.25% ; 13.33% B. 28%
54. A man borrowed from the bank under a promissory C.40%
note that he signed in the amount of P25000.00 for a D. 25%
period of 1year. He received only the amount of 60. On March 1, 1996 Mr. Sarmiento obtains a loan of
P21,915.00 after the bank collected the advance P1500 from Mr. Avila and signs a note promising to pay
interest and an additional amount of P85.00 for notarial the principal and accumulated simple interest at the
and inspection fees. What was the rate of interest that rate of 5% at the end of 120days. On May 15, 1996, Mr.
the bank collected in advance? Avila discounts the note at the bank whose discount
A. 13.64% rate is 6%. What does he receive?
B. 16.43% A. P2,201.48
B. P1,513.56 promising to pay P500.00 per month at the end of 4th,
C. P1,123.29 6th, and 7th month respectively. Determine the amount
D. P938.20 of money that he received from the bank.
61. A deposit of P110,000 was made for 31days. The net A. P1403.68
interest after deducting 20% withholding tax is P890.36. B. P1102.37
Find the rate of return annually. C. P1340.38
A. 12.25 D. P1030.28
B. 12.75 69. A nominal interest of 3% compounded continuously
C. 11.75 is given on the account. What is the accumulated
D. 11.95 amount of P10,000 after 10 years?
62. If you borrowed money from your friend with simple A. P13,610.10
interest of 12%, find the present worth of P50,000 B. P13,498.60
which is due at the end of 7months. C. P13,500.10
A. P46,200 D. P13,439.16
B. P46,729 70. BY the condition of a will, the sum of P2000 is left to
C. P44,893 a girl to be held in trust fund by her guardian until it
D. P45,789 amount to P50000.00. When will the girl receive the
63. A man borrowed P2000 from a bank and promise to money of the fund is invested at 8% compounded
pay the amount for 1year. He received only the amount quarterly?
of P1,920 after the bank collected an advance interest of A. 7.98 years
P80. What was the rate of discount and the rate of B. 11.57 years
interest that the bank collected in advance? C. 10.34 years
A. 4% ; 4.17% D. 10.45 years
B. 4% ; 4.71% 71. A man expects to receive P25,000 in 8 years. How
C. 3% ; 3.17% much is that worth now considering interest at 8%
D. 3% ; 3.71% compounded quarterly?
64. An engineer promised to pay P36,000 at the end of A. P13,859.12
90days. He was offered a 10% discount if he pays in 30 B. P13,675.23
days. Find the rate of interest. C. P13,958.33
A. 64.6% D. P13,265.83
B. 66.6% 72. P500,000 was deposited at an interest of 6%
C. 65.6% compounded quarterly. Compute the compound
D. 67.6% interest after 4 years and 9 months.
65. A man is required to pay P200 at the end of 160 days A. P163,475.37
or P190 at the end of 40 days. Determine the rate of B. P158,270.37
interest. C. P178,362.37
A. 18.4% D. P183,327.37
B. 15.8% 73. If the nominal interest rate is 3%, how much is
C. 19.6% P5000 worth in 10 years in a continuously compounded
D. 16.4% account?
66. Compute the discount if P2000 is discounted for 6 A. P5750
months at 8% simple interest. B. P7500
A. P29.67 C. P6750
B. P76.92 D. P6350
C. P67.29 74. P200,000 was deposited for a period of 4 years and
D. P92.7667. The amount of P12800 in 4years at 5% 6 months and bears on interest of P85649.25. What is
compounded quarterly is _____. the rate of interest if it is compounded quarterly?
A. P14,785.34 A. 8%
B. P16,311.26 B. 7%
C. P15,614.59 C. 6%
D. P15,847.33 D. 5%
68. A man borrows money from a bank which uses a
simple discount rate of 14%. He signs a promissory note
75. How many years will P100,000 earn a compound D. 23.36 years
interest of P50,000 if the interest rate is 9% 83. A man wishes to have P40,000 in a certain fund at
compounded quarterly? the end of 8 years. How much should he invest in a fund
A. 3.25 years that will pay 6% compounded continuously?
B. 5.86 years A. P24,751.34
C. 4.55 years B. P28,864.36
D. 2.11 years C. P36,421.44
76. A certain amount was deposited 5 years and 9 D. P30,468.42
months ago at an interest of 8% compounded quarterly. 84. If the effective annual interest rate is 4%, compute
If the sum now is P315,379.85, how much was the the equivalent nominal annual interest compounded
amount deposited? continuously.
A. P200,000 A. 3.92%
B. P240,000 B. 3.80%
C. P180,000 C. 4.10%
D. P260,000 D. 4.09%
For Problems 277-279: 85. What is the nominal rate of interest compounded
When compounded Bi-monthly, P15000 becomes continuously for 10 years if the compound amount
P22,318.30 after 5years. factor is equal to 1.34986?
77. What is the nominal rate of interest? A. 3%
A. 7% B. 5%
B. 9% C. 4%
C. 8% D. 6%
D. 10% 86. American Express Corp. charges 1.5% interest per
78. What is the equivalent rate if it is compounded month, compounded continuously on the unpaid
quarterly? balance purchases made on this credit card. Compute
A. 7.03% the effective rate of interest.
B. 9.03% A. 19.72%
C. 8.03% B. 21.20%
D. 10.03% C. 20.25%
79. What is the effective rate if it is compounded D. 19.90%
quarterly? 87. If the nominal interest is 12% compounded
A. 7.28% continuously, compute the effective annual rate if
B. 9.28% interest.
C. 8.28% A. 12.75%
D. 10.28% B. 12.40%
80. How will it take a money to double itself if invested C. 11.26%
at 5% compounded annually? D. 11.55%
A. 12.2 years 88. Compute the difference in the future amount of
B. 14.2 years P500 compounded annually at nominal rate of 5% and if
C. 13.2 years it is compounded continuously for 5 years at the same
D. 15.2years rate.
81. Compute the effective annual interest rate which is A. P3.87
equivalent to 5% nominal annual interest compounded B. P5.48
continuously. C. P4.21
A. 5.13% D. P6.25
B. 5.26% 89. If the effective rate is 24%, what nominal rate of
C. 4.94% interest is charged for a continuously compounded
D. 4.90% loan?
82. Find the time required for a sum of money to triple A. 21.51%
itself at 5% per annum compounded continuously. B. 23.25%
A. 21.97 years C. 22.35%
B. 18.23 years D. 21.90%
C. 25.34 years
90. What is the nominal rate of interest compounded A. P507.42
continuously for 8 years if the present worth factor is B. P750.42
equal to 0.6187835? C. P705.42
A. 4% D. P425.07
B. 6% For problems 98 – 100:
C. 5% Compute the interest for an amount of P200,000 for a
D. 7% period of 8 years.
91. What is the difference of the amount 3 years from 98. If it was made at a simple interest rate of 16% .
now for a 10% simple interest and 10% compound A. P274,000
interest per year? (P5000 accumulated) B. P256,000
A. P155 C. P265,000
B. same D. P247,000
C. P100 99. If it was made at 16% compounded bi-monthly.
D. P50 A. P507,267.28
92. Find the discount if P2,000 is discounted for 6 B. P407,283.01
months at 8% compounded quarterly. C. P507,365.96
A. P76.92 D. P459,923.44
B. P77.66 100. If it was made at 16% compounded continuously.
C. P80.00 A. P422,462.64
D. P78.42 B. P524,242.46
93. If a sum of money triples in a certain period of time C. P507,233.24
at a given rate interest, compute the value of the single D. P519,327.95
payment present worth factor.
A. 0.333 101. Find the value of x, (F/P, x, 6) if F/P compounded
B. 0.292 quarterly is equal to 1.612226.
C. 3.000 A. 7%
D. 1.962 B. 5%
94. If the single payment amount factor for a period of 5 C. 8%
years is 1.33822. What is the nearest value of the D. 6%
interest rate? 102. Find the value of y, (P/F, 6%, y) if P/F compounded
A. 8% bi-monthly is equal to 0.787566.
B. 5% A. 7 years
D. 7% B. 5 years
D. 6% C. 6 years
95. If the single payment present worth factor for a D. 4 years
period of 8 years is equal to 0.58201, compute the 103. Find the rate of interest if compound amount
nearest value of the rate of interest for that period. factor compounded bi-monthly for 5 years is equal
A. 6% to 1.487887.
B. 5% A. 7%
C. 7% B. 5%
D. 8% C. 8%
96. If money is worth 8% compounded quarterly, D. 6%
compute the single payment amount factor for a period 104. Compute the nominal rate for a period of 6 years
of 6 years. for an effective rate of 8.33% if it is compounded
A. 1.60844 continuously.
B. 1.70241 A. 7%
C. 0.62172 B. 5%
D. 0.53162 C. 8%
97. A sum of P1,000 is invested now and left for 8 years, D. 6%
at which time the principal is withdrawn. The interest
has an accrued left for another 8 years. If the effective 105. Compute the equivalent compound amount
annual interest is 5%, what will be the withdrawn factor if it is compounded continuously.
amount at the end of the 16th year? A. 1.61607
B. 1.24532 C. P17,492.94
C. 1.24282 D. P14,242.15
D. 0.24245 113. Compute for its compound interest if it is invested
106. Compute the equivalent present worth at 10% compounded annually.
factor if it is compounded continuously. A. P16,550.00
A. 1.249347 B. P15,000.00
B. 1.243248 C. P17,492.94
C. 1.214359 D. P14,242.15
D. 0.616783 114. Compute its interest if it is invested at 10%
107. A man loan P2000 from the bank. How long would compounded continuously.
it take in years for the amount of the loan and interest A. P16,550.00
to equal P3280 if it was made at 8% simple B. P15,000.00
interest. C. P17,492.94
A. 7 years D. P14,242.15
B. 5 years For Problems 115 – 117:
C. 8 years P200,000 was deposited for a period of 4 yrs. And 6
D. 6 years months and bears on interest of P85,659.25.
108. A man loan P2000 from the bank. How long would 115. What is the nominal rate of interest if it is
it take in years if it was made at 8% compounded compounded quarterly?
quarterly. A. 8.00%
A. 5.25 years B. 7.00%
B. 7.25 years C. 8.24%
C. 6.25 years D. 7.96%
D. 8.25 years 116. What is the actual rate of interest?
109. A man loan P2000 from the bank. How long would A. 8.00%
it take in years if it was made at 8% compounded B. 7.00%
continuously. C. 8.24%
A. 7.18 years D. 7.96%
B. 5.18 years 117. What is the equivalent nominal rate if it is
C. 8.18 years compounded semi-quarterly?
D. 6.18 years A. 8.00%
110. An amount of P1000 becomes P1608.44 after B. 7.00%
4 years compounded bi-monthly. Find the nominal C. 8.24%
rate of interest, the effective rate of interest, and the D. 7.96%
equivalent rate of interest if it is compounded quarterly. 118. What is the value of (F/P, 8%, 6) if it is compounded
A. 11% ; 12.623% ; 11.42% semi-quarterly.
B. 12% ; 11.06% ; 12.724% A. 0.524273541
C. 12% ; 12.616% ; 12.06% B. 1.487886717
D. 11% ; 11.664% ; 11.93% C. 0.787566127
111. How long would it take your money to double D. 1.612226000
itself if it is invested at 6% simple interest, 119. What is the value of (P/F, 6%, 4) if it is compounded
compounded semi-quarterly, and compounded bi-monthly.
continuously? A. 0.524273541
A. 12.67 yrs ; 11.2 yrs ; 15.05 yrs B. 1.487886717
B. 18.67 yrs ; 11.6 yrs ; 11.24 yrs C. 0.787566127
C. 16.67 yrs ; 11.6 yrs ; 11.55 yrs D. 1.612226000
D. 17.67 yrs ; 10.2 yrs ; 11.45 yrs 120. What is the single payment compound
For problems 312 – 314: amount factor for 8% compounded bi-monthly for
An amount of P50,000 was invested for 3 years. 5 years.
112. Compute its interest at the end of 3 years if it is A. 0.524273541
invested at 10% simple interest. B. 1.487886717
A. P16,550.00 C. 0.787566127
B. P15,000.00 D. 1.612226000
For Problems 321 – 323: 129. What is the equivalent rate if problem no. 327
If money is invested at a nominal rate of interest of 8% is compounded daily?
for a period of 4 years. A. 7.24%
121. What is the effective rate if it is compounded B. 7.92%
continuously? C. 8.24%
A. 8.33% D. 8.87%
B. 9.33% For Problems 130 – 132:
C. 8.93% A businessman loaned P500,000 from a local bank that
D. 9.93% charges an interest rate of 12%.
122. What is the value of the compound amount 130. How much is he going to pay at the end of 5 years
factor if it is compounded continuously? if it was made at 12% simple interest?
A. 1.377128 A. P800,000.00
B. 1.424231 B. P911,059.20
C. 0.214212 C. P823,243.09
D. 0.122416 D. P907,009.21
123. What is the value of the present worth 131. How much is he going to pay at the end of 5 years
factor if it is compounded continuously? if it was made at 12% compound semi-
A. 1. 272441 quarterly?
B. 0.272441 A. P800,000.00
C. 1.726419 B. P911,059.20
D. 0.726149 C. P823,243.09
124. If the single payment amount factor for a period of D. P907,009.21
5 years is 1.33822, what is the nominal rate of 132. How much is he going to pay at the end of 5 years
interest? if it was made at 12% compound continuously?
A. 6.00% A. P800,000.00
B. 7.00% B. P911,059.20
C. 6.92% C. P823,243.09
D. 7.92% D. P907,009.21
125. What is the effective rate of interest if it 133. P60,000 was deposited at 6% compounded
is compounded semi-annually of problem no. 324? quarterly, tax free for 9 years and 3 months. How
A. 5.00% much interest was earned at the end of the period?
B. 7.24% A. P43,214.24
C. 6.92% B. P44,086.60
D. 6.09% C. P43.242.24
126. What is the equivalent nominal rate if it is D. P44,215.60
compounded quarterly of problem no. 324? 134. P100,000 was placed in a time deposit which
A. 6.12% earned 9% compounded quarterly tax free.
B. 4.24% After how many years would it be able to earn a total
C. 5.43% interest of P50,000?
D. 5.87% A. 4.56 years
127. Money was invested at x% compounded quarterly. B. 3.45 years
If it takes money to quadruple in 17.5 years, find the C. 4.23 years
value of x. D. 3.64 years
A. 6.23% 135. P200,000 was placed in a time deposit at x
B. 8.00% % compounded quarterly and was free of taxes.
C. 5.92% After exactly 5 years, the total interest earned was
D. 9.78% P120,000. What is the value of x?
128. What is the actual interest rate of problem A. 9.5%
no. 327? B. 6.35%
A. 7.24% C. 8.21%
B. 7.92% D. 7.12%
C. 8.24% 136. Which of these gives the lowest effective rate of
D. 8.87% interest?
A. 12.35% compounded annually a 20% tax, what would the net value of the deposit be
B. 12.2% compounded quarterly after three quarters?
C. 11.9% compounded semi-annually A. P95,324.95
D. 11.6% compounded monthly B. P68743.24
137. It takes 20.15 years to quadruple your money if it C. P82938.28
is invested at x% compounded semi-annually. Find the D. P56244.75
value of x. 144. The effective rate of interest of 14% compounded
A. 8% semi-annually is:
B. 7% A. 14.49%
C. 6% B. 14.94%
D. 5% C. 14.36%
138. It takes 13.87 years to treble the money at the rate D. 14.88%
of x% compounded quarterly. Compute the 145. The amount of P50,000 was deposited in a bank
value of x. earning an interest of 7.5% per annum. Determine the
A. 5% total amount at the end of 5 years, if the principal
B. 7% and interest were not withdrawn during the
C. 6% period.
D. 8% A. P71,781.47
139. Money was invested at x% compounded B. P70,374.90
quarterly. If it takes the money into quadruple in C. P72,475.23
17.5 years, find the value of x. D. P78,536.34
A. 8% 146. What is the effective rate corresponding to
B. 7% 18% compounded daily? Take 1 year is equal to 360
C. 6% days.
D. 5% A. 18.35%
140. Fifteen years ago P1,000.00 was deposited in a B. 18.10%
bank account, and today it is worth P2.370.00. The bank C. 19.39%
pays interest semi-annually. What was the interest rate D. 19.72%
paid on this account? 147. If P1,000 becomes P1,126.49 after 4 years when
A. 4.9% invested at a certain nominal rate of
B. 5.0% interest compounded semi-annually,
C. 5.8% determine the nominal rate and the corresponding
D. 3.8% effective rate.
141. You borrow P3,500.00 for one year from a friend at A. 3.00% and 3.02%
an interest rate of 1.5% per month instead of taking a B. 2.30% and 2.76%
loan from a bank at a rate of 18% per year. Compare C. 4.29% and 4.32%
how much money you will save or lose on the D. 3.97% and 3.95%
transaction. 148. Convert 12% semi-annually to compounded
A. pay P155 more if you borrowed from the bank quarterly.
B. save P55 by borrowing from your friend A. 19.23%
C. pay P85 more if you borrowed from the bank B. 14.67%
D. save P95 by borrowing from your friend C. 23.56%
142. Find the present worth of a future payment of D. 11.83%
P1000,000 to be made in 10 years with an interest of 149. What is the corresponding effective interest
12% compounded quarterly. rate of 18% compounded semi-quarterly?
A. P30,444.44 A. 19.25%
B. P30,655.68 B. 18.46%
C. P33,000.00 C. 19.48%
D. P30,546.01 D. 18.95%
143. An initial savings deposit of P80,000 in a certain 150. If P5000 shall accumulate for 10 years at 8%
bank earns 6% interest per annum compounded compounded quarterly, find the compounded
monthly. If the earnings from the deposit are subject to interest at the end of 10 years.
A. P6,005.30
B. P6,040.20 the company accumulate for 5 years if inflation
C. P6,000.00 annually is 10%. Release value will also appreciate at
D. P6,010.20 10% yearly.
A. P120,289.51
B. P110,297.27
C. P129,382.38
151. A couple borrowed P4,000 from a lending company D. P122,265.69
for 6 years at 12%. At the end of 6 years, it renews the 158. In year zero, you invest P10,000.00 in a 15%
loan for the amount due plus P4,000 more for 3 years at security for 5 years. During that time, the average
12%. What is thelump sum due? annual inflation is 6%. How much, in terms of year zero
A. P14,842.40 will be in the account atmaturity?
B. P12,316.40 A. P15,386.00
C. P16,712.03 B. P13,382.00
D. P15,382.60 C. P15,030.00
152. How long (in years) will it take the money to D. P16,653.00
quadruple if it earns 7% compounded semi-annually? 159. A machine has been purchased and installed at a
A. 26.30 years total cost of P18,000.00. The machine will be retired at
B. 33.15 years the end of 5 years, at which time it is expected to have a
C. 40.30 years scrap value of P2,000.00 based on current prices. The
D. 20.15 years machine will then be replaced with an exact duplicate.
153. P200,000 was deposited on Jan. 1,1988 at an The company plans to establish a reserve fund to
interest rate of 24% compounded semi-annually. How accumulate the capital needed to replace the machine.
much would the sum be on Jan. 1, 1993? If an average annual rate of inflation of 3% is
A. P421,170 anticipated, how much capital must be accumulated?
B. P401,170 A. P15,030.00
C. P521,170 B. P12,382.00
D. P621,170 C. P18,548.39
154. If P500,000 is deposited at a rate of 11.25% D. P15,386.00
compounded monthly, determine the compounded 160. If the inflation rate is 6%, cost of money is 10%,
interest after 7 years and 9 months. what interest rate will take care of inflation and the cost
A. P690,849 of money?
B. P680,686 A. 16.6%
C. P670,258 B. 17.7%
D. P660,592 C. 15.5%
155. P200,000 was deposited at an interest rate of D. 14.4%
24% compounded semi-annually. After how many years 161. A man bought a government bond which cost
will the sum be P621,170? P1000 and will pay P50 interest each year for 20 years.
A. 4 years The bond will mature at the end of 20 years and he will
B. 5 years receive the original P1000. If there is 2% annual
C. 3 years inflation during this period, what rate of return will the
D. 6 years investor receive after considering the effect of inflation?
156. A bank is advertising 9.5% accounts that A. 2.94%
yields 9.84% annually. How often is the interest B. 4.25%
compounded? C. 3.16%
A. monthly D. 5.16%
B. quarterly 162. The inflated present worth of P2000 in two years is
C. bi-monthly equal to P1471.07. What is the rate of inflation if the
D. daily interest rate is equal to 10%?
157. A marketing company established a program to A. 6%
replace the cars of its sales representatives at the end of B. 7%
every 5 years. If the present price of the approved type C. 5%
of car is P520,000.00 with a resale value at the end of 5 D. 4%
years of 60% its present value, how much money must
163. 12% rate of interest can take care of the cost of C. 4 years
money and inflation. If the nominal rate of interest is D. 3 years
6%, what is the rate of inflation? 169. The cost of the printing equipment is P500,000 and
A. 6.62% the cost of handling and installation is P30,000. If the
B. 7.67% book value of the equipment at the end of the 3rd year
C. 5.66% is P242,000 and the life of the equipment is assumed to
D. 4.64% be 5 years, determine the salvage value of this
164. An engineer bought an equipment for P500,000. equipment at the end of 5 years.
Other expenses including installations amounted to A. P50,000
P30,000. At the end of its estimated useful life of 10 B. P53,000
years, the salvage value will be 10% of the first cost. C. P60,000
Using straight line method of depreciation, what is the D. P64,000
book value after 5 years? 170. An engineer bought an equipment for P500,000.
A. P291,500 He spent an additional amount of P30,000 for
B. P242,241 installation and other expenses. The salvage value is
C. P282,242 10% of the first cost. If the book value at the end of 5
D. P214,242 years will be P291,500 using straight line method of
165. A small machine costing P80,000 has a salvage depreciation, compute the useful life of the equipment
value of x at the end of its life of 5 years. The book value in years.
at the end of the 4th year is P22,400. What is the value A. 10 years
of x using the straight line method depreciation? B. 6 years
A. P6000 C. 8 years
B. P8000 D. 15 years
C. P7000 171. The cost of equipment is P500,000 and the cost of
D. P9000 installation is P30,000. If the salvage value is 10% of the
166. A machine has a salvage value of P12,000 at the cost of equipment at the end of 5 years, determine
end of its useful life of 6 years. The book value at the the book value at the end of the fourth year. Use
end of 5 years is P30,833.33. Using a straight line straight line method.
method of depreciation, what is the first cost of the A. P155,000
machine? B. P146,000
A. P125,500 C. P140,000
B. P125,000 D. P132,600
C. P135,500 For Problems 172-174:
D. P135,000 The first cost of a machine is P1,800,000 with a salvage
167. A manufacturing plant was built at a cost of P5M value of P300,000 at the end of its life of 5 years.
and is estimated to have a life of 20 years with a salvage Determine the total depreciation after 3 years.
value of P1M. A certain equipment worth P570,000 was 172. Using Straight Line Method
installed at a cost of P80,000 is expected to operate A. P800,000
economically for 15 years with a salvage value of B. P900,000
P50,000. Determine the book value of the plant and C. P600,000
equipment after 10 years, use straight line depreciation D. P700,000
method. 173. Using Sum of Years Digit Method
A. P3,250,000 A. P1,150,000
B. P4,250,000 B. P1,300,000
C. P3,750,000 C. P1,200,000
D. P4,500,000 D. P1,350,600
168. A printing equipment costs P73,500 has a life 174. Using Constant Percentage Method
expectancy of 8 years and has a salvage value of P3,500 A. P1,355,024.24
at the end of its life. The book value at the end of x B. P1,246,422.53
years is equal to P38,500. Using straight line method of C. P1,185,769.76
depreciation, solve for the value of x. D. P1,432,624.84
A. 5 years 175. An asset is purchased for P9,000.00. Its estimated
B. 6 years economic life is 10 years after which it will be sold for
P1,000.00. Find the depreciation in the first three charges amounted to 3% of the purchased price. If the
years using straight line method. equipment shall be depreciated over a period of 8 years
A. P2,500 with a salvage value of 5%, determine the depreciation
B. P3,000 charge during the 5th year using the Sum of Year Digit
C. P2,400 Method.
D. P2,000 A. P756,632.78
176. The purchase of a motor for P6000 and a generator B. P652,333.33
for P4000 will allow the company to produce its own C. P957,902.56
energy. The configuration can be assembled for P500. D. P845, 935.76
The service will operate for 1600 hours per year for 10 182. A consortium of international communications
years. The maintenance cost is P300 per year, and cost companies contracted for the purchase and installation
to operate is P0.85 per hour for fuel and related cost. of a fiber optic cable linking two major Asian cities at a
Using straight line depreciation, what is the annual cost total cost of P960M. This amount includes freight and
for the operation? There is a P400 salvage value for the installation charges at 10% of the above total contract
system at the end of 10 year. price. If the cable depreciated over a period of 15 years
A. P2,710 with zero salvage value, what is thedepreciation
B. P2,630 charge during the 8th year using the sum of year digits
C. P2,480 method?
D. P2,670 A. P64 M
177. A machine has an initial cost of P50,00.00 and a B. P80 M
salvage value of P10,000.00 after 10 years. What is C. P23 M
the straight line method depreciation rate as a D. P76 M
percentage of the initial cost? 183. A machine cost P7,350 has a life of 8 years and has
A. 10% a salvage value of P350 at the end of 8 years. Determine
B. 12% its book value at the end of 4 years using sum years
C. 8% digit method.
D. 9% A. P3,476.90
178. A machine has an initial cost of P50,00.00 and a B. P6,543.21
salvage value of P10,000.00 after 10 years. What is C. P2,294.44
the book value after 5 years using straight line method D. P5,455.01
depreciation rate? 184. A certain equipment costs P7,000 has an economic
A. P35,000 life of n years and a salvage value P350 at the end of n
B. P15,500 years. If the book value at the end of 4 years is equal to
C. P25,000 P2197.22, compute for the economic life of the
D. P30,000 equipment using the sum of years digit method.
179. A machine has a first of P80,000 and a salvage of A. 10 years
P2,000 at the end of its life of 10 years. Find the book B. 8 years
value at the end of the 6th year using straight line C. 16 years
method of depreciation. D. 11 years
A. P33,200 185. A company purchased an asset for P10000 and
B. P34,300 plans to keep it for 20 years. If the salvage value is zero
C. P35,400 at the end of the 20th year, what is the depreciation in
D. P32,900 the third year? Use sum of years digit method.
180. An asset is purchased for P90,000.00. Its estimated A. P1000
life is 10 years after which it will be sold for P1,000.00. B. P938
Find the book value during the first year if Sum of the C. P857
Years Digits(SYD) depreciation is used. D. P747
A. P7,545.45 186. An equipment costs P7000 and has a life of 8 years
B. P5,245.92 and salvage value of x after 8 years. If the book value of
C. P2,980.24 the equipment at the 4th year is equal to P2197.22,
D. P6,259.98 compute the salvage value x using the sum of years
181. A telephone company purchased a microwave digit method.
radio equipment for P6M. Freight and installation A. P594
B. P350 A. Straight Line
C. P430 B. Declining Balance
D. P290 C. Sinking Fund
187. ABC Corporation makes it policy that for every new D. Sum of Years Digit
equipment purchased, the annual depreciation should 193. An equipment costs P8,000 has an economic life of
not exceed 20% of the first cost at any time without 8 years and salvage value of P400 at the end of 8 years.
salvage value. Determine the length of service if the The first year depreciation amounts to P1,688.89. What
depreciation used is the SYD Method. method is used in the calculation of the depreciation?
A. 9 years A. Straight Line
B. 12 years B. Declining Balance
C. 10 years C. Sinking Fund
D. 19 years D. Sum of Years Digit
188. A machine having a certain first cost has a life of 10 194. The original cost of a certain machine is P150,000
years and a salvage value of 6.633% of the first cost at and has an economic life of 8 years with a salvage value
the end of 10 years. If it has a book value of P58,914 at of P9,000 at that time. If the depreciation of the first
the end of the 6thyear, how much is the first cost of the year is equal to P44,475, what method is used in the
machine if the constant percentage of declining value is calculation of the depreciation?
used in the computation for its depreciation. A. Straight Line
(Matheson’s Method) B. Declining Balance
A. P600,000 C. Sinking Fund
B. P100,000 D. Sum of Years Digit
C. P300,000 195. A machine has a first cost of P140,000 and a life of
D. P900,000 8 years with a salvage value of P10,000 at the end of its
189. A machine costing P720,000 is estimated to have a useful life. If the depreciation at the first year amounts
life of 10 years. If the annual rate of depreciation is 25%, to P35,000, what method is used in the calculation of
determine the total depreciation using a constant depreciation?
percentage of the declining balance method. A. Double Declining Balance
A. P679,454.27 B. Straight Line
B. P532,825.73 C. Declining Balance
C. P432,725.45 D. Sum of Years Digit
D. P764,243.33 196. A hydraulic machine cost P180,000 and has a
190. An earth moving equipment that cost P90,000 will salvage value of P15,000 at the end of its useful life
have an estimated salvage value of P18,000 at the end which is 12 years. If the depreciation at the first year is
of 8 years. Using double-declining balance method, P9,780.71, what method is used in computing the
compute the book value and the total depreciation at depreciation. Assume money is worth 6% annually.
the end of the 5th year. A. Straight Line
A. P21,357.42 ; P68,642.58 B. Declining Balance
B. P24,362.48 ; P65,637.52 C. Sinking Fund
C. P15,830.34 ; P74,169.66 D. Sum of Years Digit
D. P19,442.78 ; P70,557.22 197. An equipment costs P480,000 and has a salvage
191. A certain office equipment has a first cost of value of 10% of its cost at the end of its economic life of
P20,000 and has a salvage value of P1,000 at the end of 35,000 operating hours. In the first year, it was used for
10 years. Determine the depreciation at the end of the 4,000 hours. Determine its book value at the end of the
6th year using Sinking fund method at 3% interest. first year.
A. P10,720 A. P430,629.00
B. P11,680 B. P418,360.00
C. P12,420 C. P380,420.00
D. P9,840 D. P376,420.00
192. An equipment which cost P200,000 has a useful life 198. An equipment costs P480,000 and has a salvage
of 8 years with a salvage value of P25,000 at the end of value of 10% of its cost at the end of its economic life of
its useful life. If the depreciation at the first year is 36,000 operating hours in a period of 5 years. In the first
P21,875, what method is used in the calculation year of service, it was used for 12,000 hours. If at the
of depreciation?
end of the 2nd year it was used for 15,000 hours, find
the depreciation at the second year.
A. P180,000
B. P190,000
C. P160,000
D. P150,000
199. A certain machine cost P40,000 and has a life of 4
years and a salvage value of P5000. The production
output of this machine in units per year is 1000 units for
the first year, 2000 units for the second year, 3000 units
for the third year, and 4000 units for the fourth year. If
the units produced are in uniform quality, what is
the depreciation charge at the end of the fourth year.
A. P14,000
B. P15,000
C. P13,000
D. P16,000
200. A lathe machine costs P300,000 brand new with a
salvage value of x pesos. The machine is expected to last
for 28500 hours in a period of 5 years. In the first year of
service it was used for 8000 hours. If the book value at
the end of the first year is P220,000, compute for
the salvage value x in pesos.
A. P15,000
B. P12,000
C. P18,000
D. P20,000
 46. $ 5,000,000.00
47. 1,053
48. 1.0 hour per unit
49. 1,000 feet
50. 2,632

ANSWER KEY:

1. 21 % 51. 37.11%
2. 6.65 % 52. 16.28%
3. 29.17 % 53. 15.92% ; 13.73%
4. 12 months 54. 13.64%
5. 25.0 % 55. P18,800
6. 5,937.50 56. P4133.33
7. 10.29 % 57. P5,000
8. 4.00 % 58. 21.4%
9. 16.28 % 59. 32%
10. 11.75 % 60. P1,513.56
11. 12.07 % 61. 11.75
12. P18,000 62. P46,729
13. 13.73 % 63. 4% ; 4.17%
14. 3.90 % 64. 66.6%
15. P39.45 65. 15.8%
16. 9.14 % 66. P76.92
17. 19.72 % 67. P15,614.59
18. 8.24 % 68. P1403.68
19. 11.60 % compounded annually 69. P13,498.60
20. 12.00 % 70. 11.57 years
21. 14.2 years 71. P13,265.83
22. 11.57 years 72. P163,475.37
23. P705.42 73. P6750
24. Quarterly 74. 8%
25. P1,549.64 75. 4.55 years
26. P54.66 76. P200,000
27. P 152.88 77. 8%
28. P 3,260.34 78. 8.03%
29. P 15,030.03 79. 8.28%
30. P 19,624.49 80. 14.2 years
31. P 717.17 81. 5.13%
32. P 1,185.54 82. 21.97 years
33. P 2,504.57 83. P24,751.34
34. P 7,731.29 84. 3.92%
35. P 43,763.20 85. 3%
36. P 143,999.08 86. 19.72%
37. P 6,922.93 87. 12.75%
38. P 4,860.00 88. P3.87
39. 3.0% 89. 21.51%
40. P 1,144.81 90. 6%
41. P 236.20 91. P155
42. P 2,000.00 92. P77.66
43. 9 years 93. 0.333
44. P 3,927.27 94. 6%
45. P 9,250.00 95. 7%
96. 1.60844 146. 19.72%
97. P705.42 147. 3.00% and 3.02%
98. P256,000 148. 11.83%
99. P507,365.96 149. 19.48%
100. P519,327.95 150. P6,040.20

ANSWER KEY:

101. 8% 151. P16,712.03

102. 4 years 152. 20.15 years
103. 8% 153. P621,170
104. 8% 154. P690,849
105. 1.61607 155. 5 years
106. 0.616783 156. quarterly
107. 8 years 157. P120,289.51
108. 6.25 years 158. P15,030.00
109. 6.18 years 159. P18,548.39
110. 12% ; 12.616% ; 12.06% 160. 16.6%
111. 16.67 yrs ; 11.6 yrs ; 11.55 yrs 161. 2.94%
112. P15,000.00 132. 6%
113. P16,550.00 163. 5.66%
114. P17,492.94 164. P291,500
115. 8.00% 165. P8000
116. 8.24% 166. P125,000
117. 7.96% 167. P3,250,000
118. 1.612226000 168. 4 years
119. 0.787566127 169. P50,000
120. 1.487886717 170. 10 years
121. 8.33% 171. P146,000
122. 1.377128 172. P900,000
123. 0.726149 173. P1,200,000
124. 6.00% 174. P1,185,769.76
125. 6.09% 175. P2,400
126. 5.87% 176. P2,670
127. 8.00% 177. 8%
128. 8.24% 178. P30,000
129. 7.92% 179. P33,200
130. P800,000.00 180. P7,545.45
131. P907,009.21 181. P652,333.33
132. P911,059.20 182. P64 M
133. P44,086.60 183. P2,294.44
134. 4.56 years 184. 8 years
135. 9.5% 185. P857
136. 11.6% compounded monthly 186. P350
137. 7% 187. 19 years
138. 8% 188. P300,000
139. 8% 189. P679,454.27
140. 5.8% 190. P21,357.42 ; P68,642.58
141. save P55 by borrowing from your friend 191. P12,420
142. P30,655.68 192. Straight Line
143. P82938.28 193. Sum of Years Digit
144. 14.49% 194. Declining Balance
145. P71,781.47 195. Double Declining Balance
196. Sinking Fund B. P4.00
197. P430,629.00 C. P4.10
198. P180,000 D. P4.20
199. P14,000 206. By selling balut at P5 per dozen, a vendor gains
200. P15,000 20%. The cost of the eggs rises by 12.5%. If he sells at
the same price as before, find his new gain in %.
ENGINEERING ECONOMICS 2 (200 Items) A. 6.89%
B. 6.67%
201. A bookstore purchased a best-selling book at C. 6.58%
P200.00 per copy. At what price should this book be D. 6.12%
sold so that by giving a 20% discount, the profit is 30%. 207. An equipment installation job in the completion
A. P200.00 stage can be completed in 50 days of 8 hour/day work,
B. P300.00 with 50 men working. With the contract expiring in 40
C. P400.00 days, the mechanical engineer contractor decided to
D. P500.00 add 15 men on the job, overtime not being permitted.
202. A businessman wishes to earn 7% on his capital If the liquidated damages is P5,000 per day of delay, and
after payment of taxes. If the income from an available the men are paid P150 per day, how much money would
investment will be taxed at an average of 42%, what he save with the additional workers?
minimum rate of return, before payment of taxes, must A. P43,450
the investment offer to be justified? B. P43,750
A. 13.02% C. P44,250
B. 12.07% D. P44,750
C. 10.89% 208. In a certain department store, the monthly salary
D. 11.08% of a saleslady is partly constant and partly varies as the
203. A manufacturing firm maintains one product value of her sales for the month. When the value of her
assembly line to produce signal generators. Weekly sales for the month is P10,000.00, her salary for the
demand for the generators is 35 units. The line operates month is P900.00. When her monthly sales go up to
for 7 hours per day, 5 days per week. What is the P12,000.00, her monthly salary goes up to P1,000.00.
maximum production time per unit in hours required of What must be the value of her sales so that her salary
the line to meet the demand? for the month will be P2,000.00?
A. 1 hour A. P30,000
B. 1 hour and 10 minutes B. P31,000
C. 1 hour and 15 minutes C. P32,000
D. 1 hour and 30 minutes D. P33,000
204. Froyd Corporation’s gross margin is 45% of sales. 209. Jojo bought a second-hand Betamax VCR and then
Operating expenses such as sales and administration are sold it to Rudy at a profit of 40%. Rudy then sold the
15% of sales. Froyd Corporation is in 40% tax bracket. VCR to Noel at a profit of 20%. If Noel paid P2,856 more
What percent of sales is their profit after taxes? than it costs Jojo, how much did Jojo pay for the unit?
A. 21% A. P4,100
B. 20% B. P3,900
C. 19% C. P4,000
D. 18% D. P4,200
205. In determining the cost involved in fabricating sub- 210. The selling price of a TV set is double that of its net
assembly B within a company, the following data have cost. If the TV set is sold to a customer at a profit of 25%
been gathered: of the net cost, how much discount was given to the
Direct material – P0.30 per unit customer?
Direct labor – P0.50 per unit A. 37.5%
Testing set-up – P300.00 per set-up B. 37.9%
It is decided to subcontract the manufacturing of C. 38.2%
assembly B to an outside company. For an order of 100 D. 38.5%
units, what is the cost per unit that is acceptable to the 211. A Mechanical Engineer who was awarded a
company? P450,000 contract to install the machineries of an oil
A. P3.80 mill failed to finish the work on time. As provided for in
the contract, he has to pay a daily penalty equivalent to is necessary, over which the 10 inch concrete pavement
one fourth of one per cent per day for the first 10 days will be placed?
and 0.5% per day for the next 10 days and one per cent Assume the following data:
per day for everyday thereafter. If the total penalty was A. Sand fill, including rolling and watering = P100 per
P60,750.00, how many days was the completion of the cubic meter
contract delayed? B. Concrete pavement, 10 in thick (labor and materials)
A. 26 days including curing = P220 per sq. Meter
B. 27 days C. Curbs and gutters = P12 per linear meter
C. 28 days How much will the project cost allowing 15% for
D. 29 days contingency?
212. The quarrying cost of marble and granite blocks A. P1,207,000
plus delivery cost to the processing plant each is B. P1,207,500
P2,400.00 per cubic meter. Processing cost of marble C. P1,208,000
into tile is P200.00 per square meter and that of the D. P1,208,500
granite into tiles also is P600.00 per square meter. 216. An electric utility purchases 2,300,000 kw-hr per
If marble has a net yield of 40 square meters of tile per month of electric energy from National Power
cubic meter of block and sells P400 per square meter, Corporation at P2.00 per kw-hr and sells all this to
and granite gives a net yield of 50 square meters of tiles consumers after deducting distribution losses of 20%. At
per cubic meter of block and sells at P1000 per square what average rate per kw-hr should this energy be sold
meter. Considering all other costs to be the same, the to break even if the following are other monthly
granite is more profitable than the marble by how expenses in its operation:
much?
A. P12,000 per cubic meter Taxes 2.5% of Gross Revenue
B. P13,000 per cubic meter Salaries P750,000
C. P14,000 per cubic meter Depreciation P2,250,000
D. P15,000 per cubic meter Interest P700,000
213. A man would like to invest P50,000 in government Maintenance P300,000
bonds and stocks that will give an overall annual return Miscellaneous P200,000
of about 5%. The money to be invested in government A. P4.90
bonds will give an annual return of 4.5% and the stocks B. P5.20
of about 6%. The investments are in units of P100.00 C. P5.90
each. If he desires to keep his stock investment to D. P6.30
minimum in order to reduce his risk, determine how 217. An engineer bidding on the asphalting of 7 km
many stocks should be purchased. stretch of road is confronted with a problem of choosing
A. 165 between two possible sites on which to set-up the
B. 166 asphalt-mixing machine.
C. 167
D. 168
214. A 220 V 2 hp motor has an efficiency of 80%. If Site A Site B
power costs P3.00 per kw-hr for the first 50 kw-hr, 2.90 Average hauling distance 2.5 km 2.75 km
per kw-hr for the second 50 kw-hr, P2.80 for the third Monthly rental P35,000 P6,500
kw-hr and so on until a minimum of P2.50 per kw-hr is Installing and dismantling P20,000 P10,000
reached. How much does it cost to run this motor of machine
continuously for 7 days? At Site A, it would be necessary to hire 2 flagmen at
A. P800 P150 per working day. The job can be completed in 32
B. P820 weeks working 6 days a week. The project requires
C. P840 16,670 cubic meter of asphalt mix per kilometre of road.
D. P860 If the asphalt mix is to be hauled by a contractor at P42
215. An 8-meter concrete road pavement 500 meters per cubic meter per km of haul. How much is site
long is desired to be constructed over a well-compacted B more expensive than site A?
gravel road, together with the necessary concrete curbs A. P949,645
and gutters on both sides. In order to put the subgrade B. P962,101
on an even level grade, a 500 cubic meters of sand filling C. P956,807
D. P974,090
218. A fixed capital investment of P10,000,000 is
required for a proposed manufacturing plant and an
estimated working capital of P2,000,000. Annual
depreciation is estimated to be 10% of the fixed capital
investment. Determine the rate of return on the total
investment if the annual profit is P2,500,000.
A. 28.33%
B. 29.34%
C. 30.12%
D. 30.78%
219. A call to bid was advertised in the Philippine Daily
Inquirer for the construction of a transmission line from
a mini-hydroelectric power plant to the substation
which is 5.035 kilometers away. The tanalized timber
electrical posts must be placed at an interval of 50 m.
The electrical posts must be 30 feet long, 8 inches in
diameter at the tip and 12 inches in diameter at the
butt. The power house is 15 m from the first electric
post and the substation is 20 m from the last electric
post. Compute the estimated cost for the project using
the following data:
Cost of one tanalized timber post 30 feet long is P5,000
including delivery to the site. Labourer at P180 per day
and 5 laborers can dig and erect 3 posts per day.
Electrician at P250 per day and 4 electricians can strung
wires complete 150 meters per day. Electric wire cost
P4.00 per meter. Use only 5 laborers and 4 electricians
for the project and is supervised by a foreman which is
paid at P400 per day. Contingency is 10% and profit is
25%.
A. P745,890.23
B. P817,692.00
C. P789,120.80
D. P829,592.50
220. Upon the retirement after 44 years in government
service, Mrs. Salud Araoarao was able to get a
retirement lump sum of P2,300,000. As a hedge against
inflation, she decided to use a part of it invested in real
state at Pagadian City and the remainder were invested
as follows:
A. 30% in T-bills earning 12% interest
B. 35% in money market placement earning 14%
C. 35% in blue chip stock earning 13%
If her annual earnings from the T-bills, money market
and stock is P50,000, How much did she invests in real
estate?
A. P2,091,639.12
B. P1,916,858.24
C. P1,856,120.53
D. P1,790,274.78
221. The monthly demand for ice cans being
manufactured by Mr. Alarde is 3200 pieces. With a
manual operated guillotine, the unit cuffing cost is
P25.00. An electrically operated hydraulic guillotine was
offered to Mr. Alarde at a price of P275,000.00 and
which cuts by 30% the unit cuffing cost. Disregarding the
cost of money, how many months will Mr. Alarde be
able to recover the cost of the machine if he decides to
buy now?
A. 10 months
B. 11 months
C. 12 months
D. 13 months
222. In a new gold mining area in Southern Leyte the
ore contains on the average of ten ounces of gold per
ton. Different methods of processing are tabulated as
follows:
Processing Cost per ton % Recovery
Method
A P5,500 90
B P2,500 80
C P400 70
If gold can be sold at P4,000 per ounce, which method
of processing yield the biggest return?
A. Processing method A
B. Processing method B
C. Processing method C
D. Either of the processing methods B or C
223. JRT Motors Inc. has been shipping its Suzuki
engines in containers to avoid the necessary crating of
the engines. JRT Motors Inc. will pay freight on
container load of 40 tons, regardless of whether or not
the container is completely filled with engines. Record
shows that due to engine size, JRT Motors Inc. has
shipped only 30 tons per container. Freight of container
cost P3.00 per kilograms.
If the engines are crated so that they can be shipped at
the rate of P3.50 per hundred kilograms with the freight
bill computed only on the actual weight shipped. The
cost of crating would be P50 per engine and would
increase the shipping weight from 1500 kg to 1520 kg
per engine. How much more economical shipping the
engine in crates than in containers?
A. P670 per engine
B. P630 per engine
C. P650 per engine
D. P610 per engine
 A. 12.19%
B. 12.03%
224. A paint manufacturing company uses a sand mill C. 11.54%
for fine grinding of paint with an output of 100 liters per D. 10.29%
hour using glass beads as grinding media. Media load in 230. If you borrowed P10,000 from a bank with 18%
the mill is 25 kg costing P200.00 per kg and is fully interest per annum, what is the total amount to be
replenished in 2 months time at 8 hours per day repaid at the end of one year?
operation, 25 days a month. A ceramic grinding media is A. P10,900
offered to this paint company, costing P400 per kg and B. P11,200
needs 30 kg load in the sand mill, but guarantees an C. P11,800
output of 120 liters per hour and full replenishment of D. P12,000
media in 3 months. If profit on paint reduction is P15 231. A price tag of P1,200 is payable in 60 days but if
per liter how much is a difference in profit between the paid within 30 days it will have a 3% discount. Find the
two media? rate of interest.
A. P436,900 A. 35.45%
B. P462,000 B. 35.89%
C. P473,000 C. 36.18%
D. P498,200 D. 37.11%
225. If P1000 accumulates to P1500 when invested at a 232. A man borrowed P2,000 from a bank and promised
simple interest for three years, what is the rate of to pay the amount for one year. He received only the
interest? amount of P1,920 after the bank collected an advance
A. 14.12% interest of P80.00. What was the rate of discount?
B. 15.89% A. 3.67%
C. 16.67% B. 4.00%
D. 16.97% C. 4.15%
226. You loan from a loan firm an amount of P100,000 D. 4.25%
with a rate of simple interest of 20% but the interest 233. A man borrowed P2,000 from a bank and promised
was deducted from the loan at the time the money was to pay the amount for one year. He received only the
borrowed. If at the end of one year, you have to pay the amount of P1,920 after the bank collected an advance
full amount of P100,000, what is the actual rate of interest of P80.00. What was the rate of interest that
interest? the bank collected in advance?
A. 23.5% A. 4.00%
B. 24.7% B. 4.07%
C. 25.0% C. 4.17%
D. 25.8% D. 4.25%
227. A loan of P5,000 is made for a period of 15 months, 234. What will be the future worth of money after 12
at a simple interest rate of 15%, what future amount is months if the sum of P25,000 is invested today at simple
due at the end of the loan period? interest rate of 1% per year?
A. P5,937.50 A. P25,168
B. P5,873.20 B. P25,175
C. P5,712.40 C. P25,189
D. P5,690.12 D. P25,250
228. If you borrowed money from your friend with 235. What will be the future worth of money after 12
simple interest at 12%, find the present worth of months if the sum of P25,000 is invested today at simple
P50,000, which is due at the end of 7 months. interest rate of 1% per month?
A. P46,728.97 A. P28,000
B. P47,098.12 B. P28,165
C. P47,890.12 C. P28,289
D. P48,090.21 D. P28,250
229. Mr. J. Reyes borrowed money from the bank. He 236. 480 It is the practice of almost all banks in the
received from the bank P1,842 and promised to repay Philippines that when they grant a loan, the interest for
P2,000 at the end of 10 months. Determine the rate of one year is automatically deducted from the principal
simple interest. amount upon release of money to a borrower. Let us
therefore assume that you applied for a loan with a corporation would accept a promissory note for P20,000
bank and the P80,000 was approved at an interest rate non-interest for 180 days. If discounted at once, find the
of 14% of which P11,200 was deducted and you were proceeds of the note.
given a check of P68,800. Since you have to pay the A. P18,800
amount of P80,000 one year after, what then will be the B. P18,900
effective interest rate? C. P19,000
A. 16.02% D. P19,100
B. 16.28% 243. If you borrow money from your friend with simple
C. 16.32% interest of 12%, find the present worth of P20,000
D. 16.47% which is due at the end of nine months.
237. A deposit of P110,000 was made for 31 days. The A. P18,992.08
net interest after deducting 20% withholding tax is B. P18,782.18
P890.36. Find the rate of return annually. C. P18,348.62
A. 11.50% D. P18,120.45
B. 11.75% 244. A man borrowed from a bank under a promissory
C. 11.95% note that he signed in the amount of P25,000.00 for a
D. 12.32% period of one year. He receives only the amount of
238. P5,000 is borrowed for 75 days at 16% per annum P21,915.00 after the bank collected the advance
simple interest. How much will be due at the end of 75 interest and an additional of P85.00 for notarial and
days? inspection fees. What was the rate of interest that the
A. P5,066.67 bank collected in advance?
B. P5,133.33 A. 13.05%
C. P5,050.00 B. 13.22%
D. P5,166.67 C. 13.46%
239. A businessman wishes to earn 7% on his capital D. 13.64%
after payment of taxes. If the income from an available 245. Mr. Danilo Conde borrowed money from a bank.
investment will be taxed at an average rate of 42%, what He received from the bank P1,340.00 and promised to
minimum rate of return, before payment of taxes, must pay P1,500.00 at the end of 9 months. Determine rate
the investment offer to be justified? of simple interest.
A. 12.07% A. 15.92%
B. 12.34% B. 15.75%
C. 12.67% C. 15.45%
D. 12.87% D. 15.08%
240. A man borrowed P20,000 from a local commercial 246. Mr. J. Dela Cruz borrowed money from a bank. He
bank which has a simple interest of 16% but the interest receives from the bank P1,340.00 and promised to pay
is to be deducted from the loan at the time that the P1,500.00 at the end of 9 months. Determine the
money was borrowed and the loan is payable at the end corresponding discount rate or often referred to as the
of one year. How much is the actual rate of interest? “banker’s discount.”
A. 19.05% A. 13.15%
B. 19.34% B. 13.32%
C. 19.67% C. 13.46%
D. 19.87% D. 13.73%
241. P4,000 is borrowed for 75 days at 16% per annum 247. Annie buys a television set from a merchant who
simple interest. How much will be due at the end of 75 ask P1,250.00 at the end of 60 days. Annie wishes to pay
days? immediately and the merchant offers to compute the
A. P4,033.33 cash price on the assumption that money is worth 8%
B. P4,333.33 simple interest. What is the cash price?
C. P4,133.33 A. P1,124.67
D. P4,666.67 B. P1,233.55
242. Agnes Abanilla was granted a loan of P20,000 by C. P1,289.08
her employer CPM Industrial Fabricator and D. P1,302.67
Construction Corporation with an interest rate of 6% for
180 days on the principal collected in advance. The
248. A man borrowed money from a loan shark. He C. P31,079.73
receives from the loan shark and amount of P1,342.00 D. P31,179.37
and promised to repay P1,500.00 at the end of 3 255. A loan for P50,000 is to be paid in 3 years at the
quarters. What is the simple interest rate? amount of P65,000. What is the effective rate of
A. 15.47% money?
B. 15.69% A. 9.01%
C. 15.80% B. 9.14%
D. 15.96% C. 9.31%
249. Determine the exact simple interest on P5,000 D. 9.41%
invested for the period from January 15,1996 to 256. The amount of P50,000 was deposited in the bank
October 12,1996, if the rate interest is 18%. earning an interest of 7.5% per annum. Determine the
A. P664.23 total amount at the end of 5 years, if the principal and
B. P664.89 interest were not withdrawn during the period.
C. P665.21 A. P71,781.47
D. P666.39 B. P71,187.47
250. The exact simple interest of P5,000 invested from C. P71,817.47
June 21,1995 to December 25,1995 is P100. What is the D. P71,718.47
rate of interest? 257. Find the present worth of a future payment of
A. 3.90% P80,000 to be made in six years with an interest of 12%
B. 3.92% compounded annually.
C. 3.95% A. P40,540.49
D. 3.98% B. P40,450.49
C. P40,350.49
251. On her recent birthday, April 22, 2001, Nicole was D. P40,530.49
given by her mother a certain sum of money as birthday 258. What is the effective rate corresponding to 18%
present. She decided to invest the said amount on 20% compounded daily? Take 1 year is equal to 360 days.
exact simple interest. If the account will mature on A. 19.61%
Christmas day at an amount of P10,000.00, how much B. 19.44%
did Nicole receive from her mother on her birthday? C. 19.31%
A. P8,807.92 D. 19.72%
B. P8,827.56 259. What nominal rate, compounded semi-annually,
C. P8,832.17 yields the same amount as 16% compounded quarterly?
D. P8,845.78 A. 16.09%
252. What is the ordinary interest on P1,500.50 for 182 B. 16.32%
days at 5.2%? C. 16.45%
A. P39.01 D. 16.78%
B. P39.45 260. What rate of interest compounded annually is the
C. P39.82 same as the rate of interest of 8% compounded
D. P39.99 quarterly?
253. Nicole has P20,400 in cash. She invested it at 7% A. 8.07%
from March 1, 2006 to November 1, 2006 at 7% B. 8.12%
interest. How much is the interest using the Banker’s C. 8.16%
Rule? D. 8.24%
A. P972.12 261. Find the nominal rate, which if converted quarterly
B. P970.78 could be used instead of 12% compounded semi-
C. P973.12 annually.
D. P971.83 A. 11.83%
254. The amount of P20,000 was deposited in a bank B. 11.09%
earning an interest of 6.5% per annum. Determine the C. 11.65%
total amount at the end of 7 years if the principal and D. 11.25%
interest were not withdrawn during this period? 262. Which of these gives the lowest effective rate of
A. P30,890.22 interest?
B. P30,980.22 A. 12.35% compounded annually
B. 11.90% compounded semi-annually A. 13.7 years
C. 12.20% compounded quarterly B. 14.2 years
D. 11.60% compounded monthly C. 14.7 years
263. Find the compound amount if P2,500 is invested at D. 15.3 years
8% compounded quarterly for 5 years and 6 months. 271. What is the corresponding effective interest rate of
A. P3,864.95 18% compounded semi-monthly?
B. P3,846.59 A. 19.35%
C. P3,889.95 B. 19.84%
D. P3,844.95 C. 19.48%
264. An amount of P1,000 becomes P1,608.44 after 4 D. 19.64%
years compounded bimonthly. Find the nominal 272. What is the effective rate of 14% compounded
interest. semi-annually?
A. 11.89% A. 14.49%
B. 12.00% B. 14.59%
C. 12.08% C. 14.69%
D. 12.32% D. 14.79%
265. If P5,000 shall accumulate for 10 years at 8% 273. At an interest rate of 10% compounded annually,
compounded quarterly, then what is the compound how much will a deposit of P1,500 be in 15 years?
interest at the end of 10 years? A. P6,265.87
A. P6,080.40 B. P6,256.78
B. P6,020.40 C. P6,526.87
C. P6,040.20 D. P6,652.78
D. P6,060.20 274. A man expects to receive P25,000 in 8 years. How
266. What is the corresponding effective rate of 18% much is that money worth now considering interest at
compounded semi-quarterly? 8% compounded quarterly?
A. 19.24% A. P13,256.83
B. 19.48% B. P13,655.28
C. 19.84% C. P13,625.83
D. 19.92% D. P13,265.83
267. Find the present worth of a future payment of 275. About how many years will P100,000 earn a
P100,000 to be made in 10 years with an interest of 12% compound interest of P50,000 if the interest rate is 9%
compounded quarterly. compounded quarterly?
A. P30,555.68 A. 4 years
B. P30,656.86 B. 5 years
C. P30,556.86 C. 6 years
D. P30,655.68 D. 7 years
268. In how many years is required for P2,000 to 276. Compute the equivalent rate of 6% compounded
increase by P3,000 if interest at 12% compounded semi- semi-annually to a rate compounded quarterly.
annually? A. 5.12%
A. 7.86 years B. 5.96%
B. 7.65 years C. 5.78%
C. 7.23 years D. 6.12%
D. 8.12 years 277. What is the amount of P12,800 in 4 years at 5%
269. The amount of P150,000 was deposited in the bank compounded quarterly?
earning an interest of 7.5% per annum. Determine the A. P15,461.59
total amount at the end of 5 years, if the principal and B. P15,146.95
interest were not withdrawn during the period. C. P15,641.59
A. P215,344.40 D. P15,614.59
B. P213,544.40 278. By the condition of a will, the sum of P20,000 is left
C. P234,153.40 to a girl to be held in trust fund by her guardian until it
D. P255.443.10 amounts to P50,000. When will the girl receive the
270. How long will it take money to double itself if money if the fund is invested at 8% compounded
invested at 5% compounded annually? quarterly?
A. 11.23 years 285. When will an amount be tripled with an interest of
B. 11.46 years 11.56%?
C. 11.57 years A. 9 years
D. 11.87 years B. 10 years
279. If P50,000 shall accumulate for 10 years at 4% C. 11 years
compounded quarterly, find the compounded interest at D. 12 years
the end of 10 years. 286. A student plans to deposit P1,500.00 in the bank
A. P2,333.32 now and another P3,000.00 for the next 2 years. If he
B. P2,444.32 plans to withdraw P5,000.00 three years from after his
C. P2,555.32 last deposit for the purpose of buying shoes, what will
D. P2,666.32 be the amount of money left in the bank after one year
280. A sum of P1,000 is invested now and left for eight of his withdrawal? Effective annual interest rate is 10%.
years, at which time the principal is withdrawn. The A. P1,549.64
interest has accrued is left for another eight years. If the B. P1,459.64
effective annual interest rate is 5%, what will be the C. P1,345.98
withdrawal amount at the end of the 16th year. D. P1,945.64
A. P693.12 287. How much must be invested on January 1, 1998 in
B. P700.12 order to accumulate P2,000 on January 1, 2003? Money
C. P702.15 is worth 6%.
D. P705.42 A. P1,509.34
281. P1,500.00 was deposited in a bank account, 20 B. P1,249.64
years ago. Today, it is worth P3,000.00. Interest is paid C. P1,378.98
semi-annually. Determine the interest rate paid on this D. P1,494.52
account. 288. A nominal interest of 3% compounded
A. 2.9% continuously is given on the account. What is the
B. 3.0% accumulated amount of P10,000 after 10 years?
C. 3.2% A. P13,498.59
D. 3.5% B. P13,489.59
282. A merchant puts in his P2,000.00 to a small C. P13,789.98
business for a period of six years. With a given interest D. P13,494.52
rate on the investment of 15% per year, compounded 289. A mechanical engineer wishes to accumulate a
annually, how much will he collect at the end of the total of P10,000 in a savings account at the end of 10
sixth year? years. If the bank pays only 4% compounded quarterly,
A. P4,626.12 what should be the initial deposit?
B. P4,262.12 A. P6,176.35
C. P4,383.12 B. P6,761.35
D. P4,444.12 C. P6,716.53
283. A man borrowed P100,000 at the interest rate of D. P6,167.35
12% per annum, compounded quarterly. What is the 290. Funds are deposited in a savings account at an
effective rate? interest of 8% per annum. What is the initial amount
A. 12.75% that must be deposited to yield a total of P10,000 in 10
B. 12.55% years?
C. 12.45% A. P4,196.30
D. 12.35% B. P4,721.39
284. Mandarin Bank advertises 9.5% account that yields C. P4,796.03
9.84% annually. Find how often the interest is D. P4,631.93
compounded. 291. If P500,000 is deposited at a rate of 11.25%
A. Monthly compounded monthly, determine the compounded
B. Bimonthly interest after 7 years and 9 months.
C. Quarterly A. P690,848.73
D. Annually B. P670,651.23
C. P680,649.56
D. P685,781.25
292. An interest rate is quoted as being 7.5% 299. A firm borrows P2,000 for 6 years at 8 %. At the
compounded quarterly. What is the effective annual end of 6 years, it renews the loan for the amount due
interest rate? plus P2,000 more for 2 years at 8%. What is the lump
A. 7.91% sum due?
B. 7.51% A. P3,260.34
C. 7.71% B. P3,280.34
D. 7.31% C. P3,270.34
293. You borrow P3,500.00 for one year from a friend at D. P3,250.34
an interest rate of 1.5% per month instead of taking a 300. A machine has been purchased and installed at a
loan from a bank at a rate of 18% per year. How much total cost of P18,000.00. The machine will retire at the
lesser you will pay by borrowing the money from the end of 5 years, at which time it is expected to have a
bank? scrap value of P2,000.00 based on current prices. The
A. P53.89 machine will then be replaced with an exact duplicate.
B. P54.66 The company plans to establish a reserve funds to
C. P53.78 accumulate the capital needed to replace the machine.
D. P54.98 If an average annual rate of inflation of 3% is
294. A deposit of P1,000 is made in a bank account that anticipated, how much capital must be accumulated?
pays 8% interest compounded annually. Approximately A. P18,854.38
how much money will be in the account after 10 years? B. P18,548.38
A. P2,187.39 C. P18,458.38
B. P2,145.78 D. P18,845,38
C. P2,176.45
D. P2,158.92 301. What is the effective rate corresponding to 16%
295. Fifteen years ago P1,000.00 was deposited in a compounding daily? Take 1 year = 360 days.
bank account, and today it is worth P2,370.00. The bank A. 17.35%
pays interest semi-annually. What was the interest rate B. 17.45%
paid in this account? C. 17.55%
A. 5.72% D. 17.65%
B. 5.78% 302. By the condition of a will, the sum of P25,000 is left
C. 5.84% to a girl to be held in a trust fund by her guardian until it
D. 5.90% amounts to P45,000. When will the girl receive the
296. P200,000 was deposited on January 1, 1988 at an money if the fund is invested at 8% compounded
interest rate of 24% compounded semi-annually. How quarterly?
much would the sum be on January 1, 1993? A. 7.42 years
A. P631,627.78 B. 7.67 years
B. P612,890.76 C. 7.85 years
C. P621,169.64 D. 7.98 years
D. P611,672.18 303. P200,000 was deposited at an interest rate of 24%
297. What is the present worth of two P100 payments compounded semi-annually. After how many years will
at the end of the third year and fourth year? The annual the sum be P621,170?
interest rate is 8%. A. 4 years
A. P150.56 B. 5 years
B. P152.88 C. 6 years
C. P153.89 D. 7 years
D. P151.09 304. In year zero, you invest P10,000.00 in a 15%
298. Consider a deposit of P600.00 to be paid back in security for 5 years. During that time, the average
one year by P700.00. What is the rate of interest, i% per annual inflation is 6%. How much, in terms of year zero
year compounded annually such that the net present pesos will be in the account at maturity?
worth of the investment is positive? Assume i ≥ 0. A. P15,030.03
A. 16.50% B. P20,113.57
B. 16.75% C. P18,289.05
C. 16.33% D. P16,892.34
D. 16.67%
305. A company invests P10,000 today to be repaid in 5 B. P1,530
years in one lump sum at 12% compounded annually. C. P1,550
How much profit in present day pesos is realized? D. P1,570
A. P7,563.29 313. If money is worth 5% compounded quarterly, find
B. P7,498.20 the equated time for paying a loan of P150,000 due in 1
C. P7,340.12 year and P280,000 due in 2 years.
D. P7,623.42 A. 1.52 years
306. How long (in nearest years) will it take money to B. 1.64 years
quadruple if it earns 7% compounded semi-annually? C. 1.69 years
A. 20 years D. 1.72 years
B. 18 years 314. For a loan acquired six years ago, a man paid out
C. 21 years the amount of P75,000.00. The interest was computed
D. 19 years at 18% compounded annually. How much was the
307. How much should you put into a 10% savings borrowed amount?
account in order to have P10,000.00 in five years? A. P27,367.28
A. P6,216.21 B. P27,278.36
B. P6,212.12 C. P27,782.36
C. P6,218.21 D. P27,872.63
D. P6,209.21 315. A couple decided that for every child that will be
308. A man expects to receive P20,000 in 10 years. How born to them they will place a deposit in the bank so
much is that money worth now considering interest at that on the child’s 18th birthday, the child will receive
6% compounded quarterly? the amount of P300,000.00. If the bank will pay an
A. P11,042.89 interest of 18% compounded yearly, how much deposit
B. P11,035.12 will the couple have to make on the birth of a child to
C. P11,025.25 them?
D. P11,012.52 A. P15,367.18
309. P500,000 was deposited 20.15 years ago at an B. P15,249.13
interest rate of 7% compounded semi-annually. How C. P15,722.16
much is the sum now? D. P15,482.64
A. P2,000,033.33 316. On his 6th birthday a boy is left an inheritance. The
B. P2,000,166.28 inheritance will be paid in a lump sum of P10,000 on his
C. P2,001,450.23 21st birthday. What is the present value of the
D. P2,002,820.12 inheritance as of the boy’s 6th birthday, if the interest is
310. A bank pays one percent interest on savings compounded annually? Assume i = 4%.
accounts four times a year. What is the effective annual A. P5,552.64
interest rate? B. P5,549.10
A. 4.06% C. P5,522.12
B. 4.12% D. P5,582.63
C. 4.16% 317. A man who won P300,000 in a lottery decided to
D. 4.28% place 50% of his winning in a trust fund for the college
311. Alexander Michael owes P25,000.00 due in 1 year education of his son. If the money will earn 14% per
and P75,000 due in 4 years. He agrees to pay year compounded quarterly, how much will the man
P50,000.00 today and the balance in 2 years. How much have at the end of 10 years when his son will be starting
must he pay at the end of two years if money is worth his college education?
5% compounded semi-annually? A. P593,120.12
A. P39,015.23 B. P593,452.12
B. P39,026.25 C. P592,739.96
C. P39,056.21 D. P593,888.96
D. P39,089/78 318. If the sum of P15,000 is deposited in an account
312. Find the difference between simple interest and earning 4% per annum compounded quarterly, what will
compound interest on a savings deposit of P50,000 at be the deposited amount at the end of 5 years?
10% per annum for 3 years. A. P18,302.85
A. P1,510 B. P18,450.89
C. P18,512.83 B. P11,530.98
D. P18,638.29 C. P11,621.67
319. The Philippine Society of Mechanical Engineers is D. P11,717.85
planning to put up its own building. Two proposals 325. How long will it take money to triple itself if
being considered are: invested at 8% compounded annually?
a. The construction of the building now to cost A. 14.27 years
P400,000. B. 14.56 years
b. The construction of a smaller building now to cost C. 14.78 years
P300,000 and at the end of 5 years, an extension to be D. 14.98 years
added to cost P200,000. 326. Two hundred years ago, your great, great, great
By how much is proposal B more economical grandfather deposited P1 in a savings account. Today,
than proposal A if interest rate is 20% and depreciation the bank notified you that you are the sole heir to this
is to be neglected? account. How much is the account today if it earns 8%
A. P19,122.15 per annum?
B. P19,423.69 A. P4,002,450.78
C. P19,518.03 B. P4,102,405.90
D. P19,624.49 C. P4,838,949.58
320. A credit plan charges interest rate of 36% D. P4,909,289.45
compounded monthly. Find its effective rate. 327. What is the present worth of a future payment of
A. 42.21% P200,000 to be made in 10 years with an interest of 10%
B. 42.30% compounded annually?
C. 42.41% A. P76,901.21
D. 42.57% B. P77,108.66
321. A master card compounds monthly and charges an C. P78,109.32
interest of 1.5% per month. What is the effective D. P79,667.32
interest rate per year? 328. A deposit of P1,000.00 is made in a bank account
A. 19.23% that pays 8% interest compounded annually. How much
B. 19.45% money will be in the account after 10 years?
C. 19.56% A. P2,374.21
D. 19.65% B. P2,158.92
322. A man expects to receive P20,000 in 10 years. If C. P2,734.12
interest is computed at 6% compounded quarterly, how D. P2,400.12
much is it worth today? 329. What nominal rate compounded annually would
A. P11,025.25 quadruple the principal in 4 years?
B. P11,035.25 A. 41.42%
C. P11,045.25 B. 40.81%
D. P11,055.25 C. 41.79%
323. Microsoft CEO, billionaire Bill Gates willed that a D. 40.45%
sum of $25 million be given to a child but will be held in 330. Five years ago, you paid P34,000 for a residential
trust by the child’s mother until it amounts to $45 lot. Today you sell it at P50,000. What is your annual
million. If the amount is invested and earns 8% rate of appreciation?
compounded quarterly, when will the child receive the A. 8.12%
money? B. 8.00%
A. 8.11 years C. 7.92%
B. 7.90 years D. 8.32%
C. 7.42 years 331. Suppose that P100,000 is invested at a certain rate
D. 7.24 years of interest compounded annually for 2 years. If the
324. Find the present value of installment payments of accumulated interest at the end of 2 years is P21,000.
P1,000 now, P2,000 at the end of the first year, P3,000 Find the rate of interest.
at the end of the second year, P4,000 at the end of the A. 10.12%
third year and P5,000 at the end of the fourth year, if B. 10.00%
money is worth 10% compounded annually. C. 10.92%
A. P11,411.10 D. 10.32%
332. An investment of P20,000 will be required at the P60,000 at the end of 2000
end of the year. The project would terminate at the end P80,000 at the end of 2001
of the 5th year and the assets are estimated to have a What cash disbursement will be necessary at the end of
salvage value of P25,000 at that time. What is the rate 2002 to purchase the new machine?
of interest for this project to break even? A. P155,890.12
A. 5.74% B. P153,085.56
B. 5.43% C. P154,200.12
C. 5.91% D. P156,930.38
D. 5.67%
333. Robin Padilla possesses a promissory note, due in 2 338. On June 1, 1998, Ms. Brenda Marcial purchased
years hence, whose maturity value is P3,200. What is stock of San Miguel Corporation at a total cost of
the discount value of this note, based on an interest rate P144,000. She then received the following semiannual
of 7%? dividends:
A. P2,795.00 P4,200 on December 1, 1998
B. P2,975.00 P4,400 on June 1, 1999
C. P2,579.00 P4,400 on December 1, 1999
D. P2,759.00 P4,000 on June 1, 2000
334. JM borrowed a certain amount on June 1990 from After receiving the last dividend, Ms. Marcial sold her
DJ. Two years later, JM borrowed again from DJ an stock, receiving P152,000 after deduction of brokerage
amount of P5,000. JM paid P1,000 on June 1993 and fees. What semiannual rate did this dividend realize on
discharged his balance by paying P7,500 on June 1995. her investment?
What was the amount borrowed by JM on June 1990 if A. 4.26%
the interest is 8% compounded annually? B. 4.54%
A. P1,511.61 C. 4.87%
B. P1,611.51 D. 4.91%
C. P1,711.41
D. P1,811.31 339. Engr. Narito has P13,760 in cash and he would like
335. Dr. Gary Sy invests P50,000 in a time deposit that to invest it in business. His estimates of the year-by-year
yields 10% for his retirement 30 years from now. If the receipts and disbursements for all purposes are shown
inflation rate is 5%, what will be the value of the in the tabulation below:
account at maturity in terms of today’s peso. Year Receipts Disbursements
A. P201,689.91 0 0 – P13,760
B. P201,571.91 4 P5,000 + P1,000
C. P201,345.91 5 P6,200 + P1,200
D. P201,869.91 6 P7,500 + P1,500
336. First Benchmark Publisher Inc. invests P100,000 7 P8,800 + P1,800
today to be repaid in five years in one lump sum at 12%
compounded annually. If the rate of inflation is 4% He estimates that his equipment will have a salvage
compounded annually, how much profit, in today’s value of P2,000 at the end of useful life. Find the rate of
pesos, is realized over the five-year period? return of the prospective equipment.
A. P44,512.89 A. 10.11%
B. P44,672.10 B. 11.80%
C. P44,851.64 C. 11.10%
D. P44,901.23 D. 10.51%
337. A manufacturing firm contemplates retiring an
existing machine at the end of 2002. The new machine 340. What interest rate, compounded monthly, is
to replace the existing one will have an estimated cost equivalent to a 10% effective rate?
of P400,000. This expense will be partially defrayed by A. 9.45%
the sale of the old machine as scrap for P30,000. To B. 9.26%
accumulate the balance of the required capital, the firm C. 9.65%
will deposit the following sum in an account earning D. 9.56%
interest at 5% compounded quarterly:
P60,000 at the end of 1999
341. Froyd Wess Network Inc. plans to purchase a piece Model B: P152,000 at the end of 9th year
of land and to build a school building on this land. The two models are alike in all other respects. If the
However, since the school building is not an immediate publisher is earning a 7% return of its capital, which
requirement, the institute is considering whether it model should be purchased? How much savings will be
should purchase this land and build the building now or accrued if the publisher will purchase the more
defer this action for 3 years. The current costs are as economical model?
follows: A. P8,769.18
Land: P800,000 Building: P12,000,000 B. P8,918.23
The purchase price of the land and the cost of the C. P9,012.53
school building are expected to appreciate at the rate of D. P9,341.11
15% and 4% per annum, respectively. What will be the 345. What is the future amount of P50,000 if the single
total cost of the land and structure 3 years hence? payment compound amount factor of this investment is
A. P14,520,120 1.23%
B. P14,715,068 A. P61,700
C. P14,902,189 B. P61,900
D. P15,021,781 C. P61,200
342. Mr. Jimenez owes Mr. Padua the following D. P61,500
amounts: 346. An investment indicates a single compound
P40,000 due 2 years hence amount factor of 1.32 if invested for “n” years. If the
P60,000 due 3 years hence interest rate is 4.73% per annum, find the value of “n.”
P72,000 due 4 years hence A. 4
Having won the lottery, Mr. Jimenez decided to liquidate B. 5
the debts at the present time. If the two parties agree C. 6
on a 5% interest rate, what sum must Mr. Jimenez pay? D. 7
A. P147,520.20 347. Mr. Mondragon invests P50,000 today. Several
B. P147,346.02 years later, it becomes P60,000. What is the single
C. P147,902.89 payment present worth factor of this investment? If the
D. P147,021.81 amount was invested for 5 years, what is the rate of
343. Mr. John Bongat working in the United States interest?
planned of returning to the Philippines at the end of A. 3.1%
2001. He established a fund starting in 1995 with the B. 3.3%
following recorded deposits and withdrawals. C. 3.5%
January 1, 1995 Deposit of P40,000 D. 3.7%
January 1, 1997 Deposit of P80,000 348. Money is deposited in a certain account for which
July 1, 1997 Withdrawal of P12,000 the interest is compounded continuously. If the balance
July 1, 1998 Deposit of P64,000 doubles in 6 years, what is the annual percentage rate?
January 1, 1999 Withdrawal of P48,000 A. 11.55%
His fund earned interest at the rate of 3.5% B. 11.66%
compounded semiannually until the end of 1997. At C. 11.77%
that date, the interest was augmented to 4% D. 11.88%
compounded semiannually. What will be the principal in 349. On January 1, 1999, Ms. Angel Locsin opened an
the fund at the end of 2001? account at Bank of Philippine Islands with an initial
A. P146,323.08 deposit of P1,000,000.00. On March 1, 2000, she
B. P146,992.99 opened an additional P1,000,000.00. If the bank pays
C. P146,846.92 12% interest compounded monthly, how much will be in
D. P146,022.82 the account on April 1, 2000?
344. JRT Publishers is contemplating of installing a labor- A. P2,180,968.95
saving printing equipment. It has a choice between two B. P2,190,968.95
different models. Model A will cost P1,460,000 while C. P2,160,968.95
model B will cost P1,452,000. The anticipated repair D. P2,170,968.95
costs for each model are as follows:
Model A: P60,000 at the end of 5th year 350. The paper currency issued by the Central Bank
P80,000 at the end of 10th year which forms part of the country’s money supply.
A. T-bills D. 23%
B. Bank note 356. What uniform annual amount should be deposited
C. Check each year in order to accumulate P100,000.00 at the
D. Coupon end of the 5th annual deposit if money earns 10%
interest?
351. A machine is under consideration for investment. A. P16,002.18
The cost of the machine is P25,000.00. Each year it B. P15,890.12
operates, the machine will generate a savings of C. P16,379.75
P15,000.00. Given the effective annual interest rate of D. P15,980.12
18%, what is the discounted payback period, in years, 357. In five years, P18,000 will be needed to pay for a
on the investment of the machine? building renovation. In order to generate this sum, a
A. 3.15 sinking fund consisting of three annual payments is
B. 1.75 established now. For tax purposes, no further payment
C. 2.15 will be made after three years. What payments are
D. 2.75 necessary if money worth 15% per annum?
352. A machine costs P20,000.00 today and has an A. P3,919.52
estimated scrap value of P2,000.00 after 8 years. B. P3,871.23
Inflation is 2% per year. The effective annual interest C. P3,781.32
rate earned on money invested is 8%. How much money D. P3,199.52
needs to be set aside each year to replace the machine 358. Find the present value in pesos, of a perpetuity of
with an identical model 8 years from now? P15,000 payable semi-annually if money is worth 8%
A. P3,345.77 compounded quarterly.
B. P3,389.32 A. P371,719.52
C. P3,489.11 B. P371,287.13
D. P3,573.99 C. P371,670.34
353. Engr. Santos borrows P100,000.00 at 10% effective D. P371,802.63
annual interest. He must pay back the loan over 30 359. If P500.00 is invested at the end of each year for 6
years with uniform monthly payment due on the first years, at an annual interest rate of 7%, what is the total
day of each month. What does Engr. Santos pay each peso amount available upon the deposit of the sixth
month? payment?
A. P838.86 A. P3,671.71
B. P849.12 B. P3,712.87
C. P850.12 C. P3,450.12
D. P840.21 D. P3,576.64
354. Instead of paying P100,000.00 in annual rent for 360. How many years must you invest today in order to
office space at the beginning of each year for the next withdraw P1,000.00 per year for 10 years if the interest
10 years, an engineering firm has decided to take out a rate is 12%?
10-year P1,000,000.00 loan for a new building at 6% A. P5,467.12
interest. The firm will invest P100,000.00 of the rent B. P5,560.22
saved and earn 18% annual interest on that amount. C. P5,650.22
What will be the difference between the firm’s annual D. P5,780.12
revenue and expenses? 361. A man paid a 10% down payment of P200,000 for a
A. P10,200.12 house and lot and agreed to pay the balance on
B. P10,205.13 monthly installments for 5 years at an interest rate of
C. P10,210.67 15% compounded monthly. What was the monthly
D. P10,215.56 installment in pesos?
355. A service car whose cash price was P540,000 was A. P42,821.87
bought with a downpayment of P162,000 and monthly B. P42,980.00
installment of P10,874.29 for 5 years. What was the rate C. P43,102.23
of interest if compounded 5monthly? D. P43,189.03
A. 20% 662. A man inherited a regular endowment of
B. 24% P100,000.00 every end of 3 months for x years.
C. 21% However, he may choose to get a single lump sum of
P3,702,939.80 at the end of 4 years. If the rate of
interest was 14% compounded quarterly, what is the
value of x?
A. 10
B. 11
C. 12
D. 13
663. If you obtain a loan of P1M at the rate of 12%
compounded annually in order to build a house, how
much must you pay monthly to amortize the loan within
a period of 10 years?
A. P13,994.17
B. P14,801.12
C. P13,720.15
D. P14,078.78
664. Rej Averion borrowed P50,000.00 from Social
Security System, in the form of calamity loan, with
interest at 8% compounded quarterly payable in equal
quarterly installments for 10 years. Find the quarterly
payments.
A. P1,590.83
B. P1.609.23
C. P1,778.17
D. P1,827.79
665. For having been loyal, trustworthy and efficient,
the company has offered a supervisor a yearly gratuity
pay of P20,000.00 for 10 years with the first payment to
be made one year after his retirement. The supervisor,
instead, requested that he be paid a lump sum on the
date of his retirement less interact that the company
would have earned if the gratuity is to be paid on the
yearly basis. If interest is 15%, what is the equivalently
lump sum that he could get?
A. P100,357.37
B. P100,537.73
C. P100,375.37
D. P100,735.37
666. In anticipation of a much bigger volume of business
after 10 years, a fabrication company purchased an
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 the
required capital expense, 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. P194,089.17
B. P195,780.12
C. P196,801.56
D. P197,008.25
367. A man purchased a car with a cash price of
P350,000. He was able to negotiate with the seller to
allow him to pay only a downpayment of 20% and the
balance payable in equal 48 end of the month
installment at 1.5% interest per month. Once the day he
paid the 20th installment, he decided to pay monthly
payment. How much is his monthly payment?
A. P8,929.29
B. P8,225.00
C. P8,552.00
D. P8,008.20
368. A man purchased a car with a cash price of
P350,000. He was able to negotiate with the seller to
allow him to pay only a downpayment of 20% and the
balance payable in equal 48 end of the month
installment at 1.5% interest per month. Once the day he
paid the 20th installment, he decided to pay monthly
payment. What is the remaining balance that he paid?
A. P186,927.24
B. P188,225.00
C. P187,701.26
D. P185,900.20
369. A company purchased for a cash price of
P500,000.00 a machine which is estimated to have a
salvage value of P50,000.00 at the end of its 10 years
economic life. How much yearly deposit must the
company deposit in a sinking fund that will pay 18%
interest, compounded yearly, to accumulate the needed
fund to purchase the new machine at the end of the
10th year economic life of the machine it purchased if a
new machine will cost 75% more by that time?
A. P34,859.78
B. P35,890.12
C. P35,074.58
D. P34,074.85
370. A car dealer advertises the sale of a car model for a
cash price of P280,000. If purchased on installment, the
regular downpayment is 15% and balance payable in 18
equal monthly installments at an interest rate of 1.5%
per month. How much will be required monthly
payments?
A. P15,185.78
B. P15,289.12
C. P15,783.90
D. P15,632.11
371. A machinery supplier is offering a certain
machinery on a 10% downpayment and the balance
payable in equal end of the year payments without
interest for 2 years. Under this arrangement, the price is
pegged to be P250,000. However, for cash purchase, the
machine would only cost P195,000. What is the
equivalent interest rate that is being charged on the 2-
year payment plan if interest is compounded quarterly?
A. 18.47%
B. 19.21%
C. 19.47%
D. 19.74% original principal is still unpaid after he has made the
372. A company has approved a car plan for its six tenth payment?
senior officers in which the company will shoulder 25% A. P69,890.42
of the cost and the difference payable by each officer to B. P72,000.80
a financing company in 48 equal end of the month C. P72,173.90
installments at an interest rate of 1.5% per month. If the D. P72,311.44
cost of each car is P350,000, determine the amount 377. A debt of P12,000 with an interest of 20%
each officer has to pay the financing company per compounded quarterly is to be amortized by equal
month? semi-annual payments over the next three years, the
A. P7,523.90 first due in 6 months. How much is the semi-annual
B. P7,619.22 payments?
C. P7,190.00 A. P2,775.50
D. P7,710.94 B. P2,662.89
373. If P10,000 is deposited each year for 9 years, how C. P2,590.04
much annuity can a person get annually from the bank D. P2,409.78
every year for 8 years starting 1 year after the 9th 378. A fund donated by a benefactor to PICE to provide
deposit is made. Cost of money is 14%. annual scholarships to deserving CE students. The fund
A. P34,467.21 will grant P5,000 for each of the first five years, P8,000
B. P34,567.81 for the next five years and P10,000 each year thereafter.
C. P34,675.18 The scholarship will start one year after the fund is
D. P34,867.37 established. If the fund earns 8% interest, what is the
374. An employee is earning P12,000.00 a month and amount of the donation?
he can afford to purchase a car which will require a A. P99,490.00
downpayment of P10,000.00 and a monthly B. P99,507.35
amortization of not more than 30% of his monthly C. P99,601.71
salary. What should be the maximum cash value of a car D. P99,723.54
he can purchase if the seller will agree to a 379. If a low cost house and lot worth P87,000 were
downpayment of P10,000.00 and the balance payable in offered at 10% downpayment and P500 per month for
four years at 18% per year payable on monthly basis? 25 years, what is the effective monthly interest rate on
The first payment will be due at the end of the first the diminishing balance?
month? A. 0.492%
A. P135,267.21 B. 4.92%
B. P135,507.42 C. 0.0492%
C. P135,605.48 D. 49.2%
D. P135,807.30 380. The average annual cost of damages caused by
375. A new company developed a program in which the floods at Dona Rosario Village located along Butuanon
employees will be allowed to purchase shares of stocks river is estimated at P700,000. To build a gravity dam to
of the company at the end of its fifth year of operation, protect the area from the floods, would cost P2,500,000
when the company’s thought to have gained stability and would involve an annual maintenance cost of
already. The stock has a par value of P100.00 per share. P20,000. With interest at 8% compounded annually,
Believing in the good potential of the company, an how many years will it take for the dam to pay for itself?
employee decided to save in a bank the amount of A. 4.0 years
P8,000.00 at the end of every year which will earn for B. 4.5 years
him 9% interest, compounded annually. C. 5.0 years
How much shares of stocks will he be able to purchase D. 5.5 years
at the end of the fifth year of his yearly deposits? 381. A businessman borrowed P10,000.00 from a bank
A. 476 at 12% interest, and paid P2,000.00 per annum for the
B. 478 first 4 years. What does he pay at the end of the fifth
C. 480 year in order to pay-off the loan?
D. 482 A. P6,812.54
376. Mr. Juan dela Cruz borrows P100,000 at 10% B. P6,782.31
compounded annually, agreeing to repay the loan in C. P6,917.72
twenty equal annual payments. How much of the D. P6,660.90
382. Engr. Rodel Narito agreed to pay the loan he is
borrowing from a development bank in six annual end-
of-the-year payments of P71,477.70. Interest is 18% per
annum compounded annually and is included in the
yearly amount he will be paying the bank. How much
money Engr. Narito is borrowing from the bank?
A. P250,000
B. P260,000
C. P270,000
D. P280,000
383. Rona wishes to purchase a 29-inch flat-screened
colored TV at Bodega Appliance Center an amount of
P20,000.00. She made a downpayment of P5,000.00
and the balance payable in 24 equal monthly
installments. If financing charge is 12% for each year
computed on the total balance to be paid by installment
and interest rate 12%, how much would Rona pay every
month for the colored TV? What will be the actual cost
of the money?
A. 36.71%
B. 36.21%
C. 35.89%
D. 35.23%
384. Engr. Bacolongan of Main Engineering decided to
purchase a machine which is to be used for their
refrigeration and airconditioning works at an amount of
P1,200,000. The useful life of the machine is estimated
to be 5 years with a salvage value of P80,000 as based
on current prices. The average annual rate of inflation
during the next 5 years will be 7%. The machine will be
replaced with a duplicate and the firm will accumulate
the necessary capital by making equal end-of-year
deposits in a reserve fund that earns 6% per annum.
Determine the annual deposit.
A. P277,189.56
B. P278,664.54
C. P279,180.00
D. P280,673.12
385. Engr. Bacolongan of Main Engineering decided to
purchase a machine which is to be used for their
refrigeration and air-conditioning works at an amount of
P1,200,000. The useful life of the machine is estimated
to be 5 years with a salvage value of P80,000 as based
on current prices. The average annual rate of inflation
during the next 5 years will be 7%. The machine will be
replaced with a duplicate and the firm will accumulate
the necessary capital by making equal end-of-year
deposits in a reserve fund. If money is worth 6% per
annum, determine the annual deposit.
A. P367,890.12
B. P366,062.33
C. P365,089.34
D. P364,890.43
386. Because of the peso devaluation, a car costing
P150,000 is to be purchased through a finance company
instead of paying cash. If the buyer is required to pay
P40,000 as downpayment and P4,000 each month for 4
years, what is the effective interest rate on the
diminishing balance?
A. 35.28%
B. 35.82%
C. 34.89%
D. 34.29%
387. Engr. Edwin Astorga plans to purchase a new office
building costing P1,000,000. He can raise the building by
issuing 10%, 20-year bond that would pay P150,000
interest per year and repay the face amount at maturity.
Instead of buying the new building, he can least it for
P140,000 per year, first payment being due one year
from now. The building has an expected life of 20 years.
Ignoring effects on income tax, what is the difference
between buying the building and leasing the building?
A. P233,779.27
B. P233,070.12
C. P234,070.34
D. P234,560.12
388. Triple J Construction Firm had put up for sale of
some of their heavy equipments for construction works.
There were two interested buyers submitting their
respective bids for the heavy equipments. The bids are
as follows:
Buyer A offers P10,000,000 payable 20% downpayment,
the balance payable P1,000,000 annually for 8
years. Buyer B offers P9,000,000 payable P2,000,000
down payment, the balance payable P500,000 semi-
annually for 7 years.
How much is the difference between the two bids if
money is worth 10% effective?
A. P346,520.05
B. P346,980.12
C. P347,019.45
D. P347,733.29
389. Froyd Review & Training Center Inc. is expanding its
school facilities starting 2001. The program requires the
following estimated expenditures:
P1,000,000 at the end of 2001
P1,200,000 at the end of 2002
P1,500,000 at the end of 2003
To accumulate the required funds, it establish a sinking
fund constituting of 15 uniform annual deposits, the
first deposit has been made at the end of 1992. The
interest rate of the fund is 2% per annum. Calculate the
annual deposit.
A. P217,520.05
B. P216,980.12
C. P217,679.01
D. P216,733.29
390. Froyd Review & Training Center Inc. is expanding its
school facilities starting 2001. The program requires the
following estimated expenditures:
P1,000,000 at the end of 2001
P1,200,000 at the end of 2002
P1,500,000 at the end of 2003
To accumulate the required funds, it establish a sinking
fund constituting of 15 uniform annual deposits, the
first deposit has been made at the end of 1992. The
interest rate of the fund is 2% per annum. Calculate the
balance in the fund on January 1, 2002.
A. P2,185,902.11
B. P2,195,600.03
C. P2,165,399.54
D. P2,175,380.00
391. Padilla Pawnshop sells jewelries on either of the
following arrangements:
Cash Price: Discount of 10% of the marked price
Installment: Downpayment of 20% of the marked price
and the balance payable in equal annual installments for
the next 4 years.
If you are buying a necklace with a marked price of
P5,000, how much is the difference between buying in
cash and buying in installment? Assume that money is
worth 5%.
A. P40.76
B. P41.90
C. P43.54
D. P45.95
392. Lim Bon Fing Y Hermanos Inc has offered for sale
its two-storey building in the commercial district of
Cebu City. The building contains two stores on the
ground floor and a number of offices on the second
floor.
A prospective buyer estimates that if he buys this
property, he will hold it for about 10 years. He estimates
that the average receipts from the rental during this
period to be P350,000.00 and the average expenses for
all purpose in connection with its ownership and
operation (maintenance and repairs, janitorial services,
insurance, etc.) to be P135,000.00. He believes that the
property can be sold for a net of P2,000,000 at the end
of the 10th year. If the rate of return on this type of
investment is 7%, determine the cash price of this
property for the buyer to recover his investment with a
7% return before income taxes.
A. P2,526,768.61
B. P2,490,156.34
C. P2,390,189.00
D. P2,230,120.56
393. Bicol Hardware Inc is considering two alternative
strategies for a new power tool. According to Jun Ramos
who is introducing the power tool, the new product will
require an outlay of P30,000 with a low price strategy.
The product will generate cash proceeds of P20,000 per
year and will have a life to two years. With a high price
strategy, the product will generate cash proceeds of
P36,000 but will have a life of only one year. The cost of
money for the company is 10%. Determine the net
present value of the low price strategy.
A. P34,389.12
B. P34,490.10
C. P34,518.89
D. P34,710.74
394. Bicol Hardware Inc is considering two alternative
strategies for a new power tool. According to Jun Ramos
who is introducing the power tool, the new product will
require an outlay of P30,000 with a low price strategy.
The product will generate cash proceeds of P20,000 per
year and will have a life to two years. With a high price
strategy, the product will generate cash proceeds of
P36,000 but will have a life of only one year. The cost of
money for the company is 10%. Determine the net
present value of the high price strategy.
A. P32,727.27
B. P33,737.34
C. P33,747.20
D. P33,757.89
395. John Smith plans to purchase a new house costing
P1,000,000. He can raise the building by issuing a 10%,
20 year old bond that would pay P150,000 interest per
year and repay the face amount at maturity. Instead of
buying the new house, Jan Michael has an option of
leasing it for P140,000 per year, the first payment due
one year from now. The building has an expected life of
20 years. If interest charge for leasing is 12%, which of
the following is true?
A. Lease is more economical than borrow and buy.
B. Lease has same result with borrow and buy.
C. Borrow and buy is half the value than lease.
D. Borrow and buy is economical by almost a hundred
thousand than lease.
396. Engr. Edward Zuela is considering establishing his
own business. An investment of P100,000 will be
required which must be recovered in 15 years. It is
estimated that sales will be P150,000 per year and that
annual operating expenses will be as follows:
Materials P40,000
Labor P70,000 would involve building and operating a plant in a foreign
Overhead P10,000 + 10% of sales country. This operation would involve no net cash flow
Selling expenses P5,000 during the first 3 years, but it is believed that, beginning
with the end of the fourth year, an annual flow of
Engr. Zuela will give up his regular job paying P15,000 P4,000,000 would be received, running through the end
per year and devote full time to the operation of the of the 10th year. After that time, it is believed that the
business. This will result in decreasing labor cost by operation and facilities might be expropriated, with
P10,000 per year, material cost by P7,000 per year and little, if any, compensation, being paid. Which of the
overhead cost by P8,000 per year. If he expects to earn following is true?
at least 20% of his capital, is investing in this business a A. Foreign operation yields bigger rate of return.
sound idea? B. Domestic and foreign operations yield the same rate
A. Yes, it is a sound idea of return.
B. No, it is not a sound idea C. Domestic operation has double the rate of return of
C. Neither yes nor no because it simply breakeven the foreign operation.
D. It depends on the current demand of the market. D. Foreign operation yields approximately 3% less rate
of return than domestic operation.
397. A housewife bought a brand new washing machine
costing P12,000 if paid in cash. However, she can
purchase it on installment basis to be paid within 5
years. If money is worth 8% compounded annually, what
is her yearly amortization if all payments are to be made
at the beginning of each year?
A. P2,617.65
B. P2,782.93
C. P2,890.13
D. P2,589.90
398. A Civil Engineering student borrowed P2,000.00 to
meet college expenses during his senior year. He
promised to repay the loan with interest at 4.5% in 10
equal semi-annual installments, the first payment to be
made 3 years after the date of the loan. How much will
this payment be?
A. P252.12
B. P261.89
C. P273.90
D. P280.94
399. A father wishes to provide P40,000 for his son on
his son’s 21st birthday. How much should he deposit
every 6 months in a savings account which pays 3%
compounded semi-annually, if the first deposit was
made when the son was 3 ½ years old?
A. P829.68
B. P815.80
C. P830.12
D. P846.10
400. A group of Filipino Mechanical Engineers formed a ANSWER KEY:
corporation and the opportunity to invest P8,000,000 in
either of the two situations. The first is to expand a 201. P400.00
domestic operation. It is estimated that this investment 202. 12.07%
would return a net year end cash flow of P2,000,000 203. 1 hour
each year for 10 years and at the end of that time, the 204. 18%
physical assets, which would no longer be needed, could 205. P3.80
be sold at P5,000,000. The alternative opportunity 206. 6.58%
207. P44,750 258. 19.72%
208. P32,000 259. 16.32%
209. P4,200 260. 8.24%
210. 37.5% 261. 11.83%
211. 26 days 262. 11.60% compounded monthly
212. P12,000 per cubic meter 263. P3,864.95
213. 166 264. 12.00%
214. P860 265. P6,040.20
215. P1,207,500 266. 19.48%
216. P4.90 267. P30,655.68
217. P949,645 268. 7.86 years
218. 28.33% 269. P215,344.40
219. P829,592.50 270. 14.2 years
220. P1,916,858.24 271. 19.64%
221. 12 months 272. 14.49%
222. Processing method A 273. P6,265.87
223. P630 per engine 274. P13,265.83
224. P473,000 275. 5 years
225. 16.67% 276. 5.96%
226. 25.0% 277. P15,614.59
227. P5,937.50 278. 11.57 years
228. P46,728.97 279. P2,444.32
229. 10.29% 280. P705.42
230. P11,800 281. 3.5%
231. 37.11% 282. P4,626.12
232. 4.00% 283. 12.55%
233. 4.17% 284. Quarterly
234. P25,250 285. 10 years
235. P28,000 286. P1,549.64
236. 16.28% 287. P1,494.52
237. 11.75% 288. P13,498.59
238. P5,166.67 289. P6,716.53
239. 12.07% 290. P4,631.93
240. 19.05% 291. P690,848.73
241. P4,133.33 292. 7.71%
242. P18,800 293. P54.66
243. P18,348.62 294. P2,158.92
244. 13.64% 295. 5.84%
245. 15.92% 296. P621,169.64
246. 13.73% 297. P152.88
247. P1,233.55 298. 16.67%
248. 15.69% 299. P3,260.34
249. P666.39 300. P18,548.38
250. 3.90%

ANSWER KEY:
251. P8,807.92
252. P39.45 301. 17.35%
253. P971.83 302. 7.42 years
254. P31,079.73 303. 5 years
255. 9.14% 304. P15,030.03
256. P71,781.47 305. P7,623.42
257. P40,530.49 306. 20 years
307. P6,209.21 359. P3,576.64
308. P11,025.25 360. P5,650.22
309. P2,000,166.28 361. P42,821.87
310. 4.06% 362. 10
311. P39,026.25 363. P13,994.17
312. P1,550 364. P1,827.79
313. 1.64 years 365. P100,375.37
314. P27,782.36 366. P197,008.25
315. P15,249.13 367. P8,225.00
316. P5,552.64 368. P186,927.24
317. P593,888.96 369. P35,074.58
318. P18,302.85 370. P15,185.78
319. P19,624.49 371. 19.47%
320. 42.57% 372. P7,710.94
321. 19.56% 373. P34,675.18
322. P11,025.25 374. P135,507.42
323. 7.42 years 375. 478
324. P11,717.85 376. P72,173.90
325. 14.27 years 377. P2,775.50
326. P4,838,949.58 378. P99,601.71
327. P77,108.66 379. 0.492%
328. P2,158.92 380. 4.5 years
329. 41.42% 381. P6,917.72
330. 8.00% 382. P250,000
331. 10.00% 383. 36.71%
332. 5.74% 384. P278,664.54
333. P2,795.00 385. P366,062.33
334. P1,611.51 386. 35.28%
335. P201,869.91 387. P233,779.27
336. P44,851.64 388. P347,733.29
337. P153,085.56 389. P217,679.01
338. 4.26% 390. P2,195,600.03
339. 10.11% 391. P45.95
340. 9.56% 392. P2,526,768.61
341. P14,715,068 393. P34,710.74
342. P147,346.02 394. P32,727.27
343. P146,323.08 395. Borrow and buy is economical by almost a hundred
344. P8,769.18 thousand than lease.
345. P61,500 396. No, it is not a sound idea
346. 6 397. P2,782.93
347. 3.7% 398. P252.12
348. 11.55% 399. P846.10
349. P2,170,968.95 400. Foreign operation yields approximately 3% less rate
350. Bank note of return than domestic operation.

351. 2.15 ENGINEERING ECONOMY 3 (200 Items)

352. P3,573.99
353. P838.86 401. An item is purchased for P100,000. Annual cost is
354. P10,205.13 P18,000. Using interest rate of 8%, what is the
355. 24% capitalized cost of perpetual service?
356. P16,379.75 A. P310,000
357. P3,919.52 B. P315,000
358. P371,287.13 C. P320,000
D. P325,000 B. P1,559.50
402. A corporation uses a type of motor which costs C. P1,789.23
P5,000 with 2 life years and final salvage value of P800. D. P1,409.38
How much could the corporation afford to pay for 408. A granite quarry purchased for P1,600,000 is
another type of motor of the same purpose whose life is expected to be exhausted at the end of 4 years. If the
3 years a with a final salvage value of P1,000. Money is resale value of the land is P100,000, what annual
worth 4%. income is required to yield an investment rate of 12%?
A. P7,892.13 Use a sinking fund rate of 3%.
B. P7,157.40 A. P550,540.57
C. P7,489.21 B. P551,540.57
D. P7,300.12 C. P552,540.57
403. A motorcycle costs P50,000 and has an expected D. P553,540.57
life of 10 years. The salvage value is estimated to be 409. A manufacturer produces certain items at a labor
P2,000 and annual operating cost is estimated at cost per unit of P315, material cost per unit is P100,
P1,000. What is the appropriate rate of return on the variable cost of P3.00 each. If the item has a selling price
investment if the annual revenue is P10,000? of P995, how many units must be manufactured each
A. 12.12% month for the manufacturer to breakeven if the
B. 12.54% monthly overhead is P461,600?
C. 12.72% A. 782
D. 12.99% B. 800
404. At 6%, find the capitalized cost of a bridge whose C. 806
cost is P250M and life is 20 years, if the bridge must be D. 812
partially rebuilt at a cost of P100M at the end of each 20 410. The annual maintenance cost of a machine shop is
years. P69,994. If the cost of making a forging is P56 per unit
A. P297,308,323.10 and its selling price is P135 per forged unit, find the
B. P298,308,323.10 number of units to be forged to break-even.
C. P296,308,323.10 A. 892
D. P295,308,323.10 B. 870
405. A new broiler was installed by a textile plant at a C. 886
total cost of P300,000 and projected to have a useful life D. 862
of 15 years. At the end of its useful life, it is estimated to 411. A manufacturer produces certain items at a labor
have a salvage value of P30,000. Determine its cost of P115 each, material cost of P76 each and
capitalized cost if interest is 18% compounded annually. variable cost of P2.32 each. If the item has a unit price
A. P323,500.33 of P600, how many units must be manufactured each
B. P322,549.33 month for the manufacturer to break even if the
C. P332,509.33 monthly overhead is P428,000.
D. P341,240.33 A. 1,033
406. A man planned of building a house. The cost of B. 1,037
construction is P500,000 while annual maintenance cost C. 1,043
is estimated at P10,000. If the interest rate is 6%, what D. 1,053
is the capitalized cost of the house? 412. Steel drum manufacturer incurs a yearly fixed
A. P666,000.00 operating cost of $200,000. Each drum manufactured
B. P666,666.67 cost $160 to produce and sells $200. What is the
C. P633,333.33 manufacturer’s break-even sales volume in drums per
D. P650,000.00 year?
407. An untreated electrical wooden pole that will last A. 5,031
10 years under a certain soil condition, costs P1,200.00. B. 5,017
If a treated pole will last for 20 years, what is the C. 5,043
maximum justifiable amount that can be paid for the D. 5,000
treated pole, if the maximum return on investment is 413. XYZ Corporation manufactures bookcases that sell
12%. Consider annual taxes and insurance amount to be for P65.00 each. It costs XYZ corporation P35,000 per
1% of the first cost. year to operate its plant. This sum includes rent,
A. P1,612.01 depreciation charges on equipment, and salary
payments. If the cost to produce one bookcase is
P50.00, how many cases must be sold each year for XYZ
to avoid taking a loss?
A. 2,334
B. 2,443
C. 2,223
D. 2,322
414. A company which manufactures electric motors
has a production capacity of 200 motors a month. The
variable costs are P150.00 per motor. The average
selling price of the motors is P275.00. Fixed costs of the
company amount to P20,000 per month which includes
taxes. Find the number of motors that must be sold
each month to breakeven.
A. 160
B. 157
C. 153
D. 163
415. The annual maintenance cost of a machine is
P70,000. If the cost of making a forging is P56 and its
selling price is P125 per forged unit. Find the number of
units to be forged to breakeven.
A. 1,000
B. 1,012
C. 1,015
D. 1,018
416. A manufacturing firm maintains one product
assembly line to produce signal generators. Weekly
demand for the generators is 35 units. The line operates
for 7 hours per day, 5 days per week. What is the
maximum production time per unit in hours required of
the line to meet the demand?
A. 1.0 hours per unit
B. 1.2 hours per unit
C. 1.4 hours per unit
D. 1.6 hours per unit
417. Compute the number of blocks that an ice plant
must be able to sell per month to break even based on
the following data:
Cost of electricity per block – P20.00
Tax to be paid per block – P2.00
Real Estate Tax – P3,500.00 per month
Salaries and Wages – P25,000.00 per month
Others – P12,000.00 per month
Selling price of ice – P55.00 per block
A. 1,220
B. 1,224
C. 1,228
D. 1,302
418. JRT Industries manufactures automatic voltage
regulators at a labor cost of P85.00 per unit and
material cost of P350.00 per unit. The fixed charges on
the business are P15,000 per month and the variable
costs are P20.00 per unit. If the automatic voltage
regulators are sold to retailers at P580.00 each, how
many units must be produced and sold per month to
breakeven?
A. 120
B. 124
C. 128
D. 130
419. General Electric Company which manufactures
electric motor has a capacity of producing 150 motors a
month. The variable costs are P4,000.00 per month, the
average selling price of the motor is P750.00 per motor.
Fixed costs of the company amount to P78,000.00 per
month which includes all taxes. Determine the number
of motors to be produced per month to breakeven.
A. 100
B. 104
C. 110
D. 112
420. A telephone switchboard 100 pair cable can be
made up with either enamelled wire or tinned wire.
There will be 400 soldered connections. The cost of
soldering a connection on the enamelled wire will be
P1.65, on the tinned wire, it will be P1.15. A 100-pair
cable made up with enamelled wire cost P0.55 per
linear foot and those made up of tinned wire cost P0.75
per linear foot. Determine the length of cable run in feet
so that the cost of each installation would be the same.
A. 1,000 feet
B. 1,040 feet
C. 1,100 feet
D. 1,120 feet
421. A local factory assembling calculators produces 400
units per month and sells them at P1,800 each.
Dividends are 8% on the 8,000 shares with par value of
P250 each. The fixed operating cost per month is
P25,000. Other costs are P1,000 per unit. If 200 units
were produced a month, determine the profit or loss.
A. Profit of P121,666.67
B. Profit of P21,666.67
C. Loss of P121,666.67
D. Loss of P21,666.67
422. Nike shoes manufacturer produces a pair of Air
Jordan Shoes at a labor cost of P900.00 a pair and a
material cost of P800.00 a pair. The fixed charges on the
business are P5,000,000 a month and the variable costs
are P400.00 a pair. Royalty to Michael Jordan is P1,000
per pair of shoes sold. If the shoes sell at P5,000 a pair,
how many pairs must be produced each month for the
manufacturer to breakeven?
A. 2,590
B. 2,632
C. 2,712
D. 2,890
423. In a steel fabrication shop located somewhere in
Cebu, various size rivet holes must be made in structural
members. This may be done by laying out the position
of the hole on the members and using a drill press for
this method, a machinist wage rate is P20.25 per hour
and he can drill 27 holes per hour. An alternative
method is by the use of the multiple punch machine. In
this process, the machinist wage rate is P20.00 per hour
and he can complete 8 holes per minute. This method
requires P0.50 per holes to set the multiple punch
machine and an installation cost of P2,000.00. If all
other costs are the same, for what number of rivet holes
will the multiple punch machine pay for itself?
A. 9,601
B. 9,592
C. 9,581
D. 9,566
424. A new civil engineer produces a certain
construction material at a labor cost of P16.20 per
piece, material cost of P38.50 per piece and variable
cost of P7.40 per piece. The fixed charge on the
business is P100,000.00 per month. If he sells the
finished product at P95.00 each, how many pieces must
be manufactured in each month to breakeven?
A. 3,045
B. 3,035
C. 3,030
D. 3,040
425. The Asian Transmission Co. makes and sells certain
automotive parts. Present sales volume is 500,000 units
per year at a selling price of fifty centavos (P0.50) per
unit. Fixed expenses total P80,000.00 per year. What is
the present total profit for a year?
A. P168,000
B. P170,000
C. P172,000
D. P174,000
426. The Asian Transmission Co. makes and sells certain
automotive parts. Present sales volume is 500,000 units
per year at a selling price of fifty centavos (P0.50) per
unit. Fixed expenses total P80,000.00 per year. What is
the present breakeven point in units?
A. 160,000
B. 162,000
C. 165,000
D. 170,000
427. A factory engaged in the fabrication of an
automobile part with a production capacity of 700,000
units per year is only operating at 62% of capacity due
to unavailability of the necessary foreign currency to
finance the importation of their raw materials. The
annual income is P430,000.00. Annual fixed costs are
P190,000.00 and the variable costs are P0.348 per unit.
What is the current profit or loss?
A. P87,450
B. P88,960
C. P88,450
D. P87,960
428. A factory engaged in the fabrication of an
automobile part with a production capacity of 700,000
units per year is only operating at 62% of capacity due
to unavailability of the necessary foreign currency to
finance the importation of their raw materials. The
annual income is P430,000.00. Annual fixed costs are
P190,000.00 and the variable costs are P0.348 per unit.
What is the breakeven point?
A. 294,560
B. 291,000
C. 290,780
D. 295,490
429. A certain firm has the capacity to produce 650,000
units of product per year. At present, it is operating at
62% capacity. The firm’s annual income is
P4,160,000.00. Annual fixed costs are P1,920,000.00
and the variable costs are equal to P3.56 per unit of
product. What is the firm’s annual profit or loss?
A. P814,320
B. P815,230
C. P816,567
D. P817,239
430. A certain firm has the capacity to produce 650,000
units of product per year. At present, it is operating at
62% capacity. The firm’s annual income is
P4,160,000.00. Annual fixed costs are P1,920,000.00
and the variable costs are equal to P3.56 per unit of
product. What volume of sales does the firm
breakeven?
A. P3,354,680
B. P3,534,880
C. P3,155,690
D. P3,254,680
431. A small shop in Bulacan fabricates threshers for
palay producers in the locality. The shop can produce
each thresher at a labor cost of P1,800.00. The cost of
materials for each unit is P2,500.00. The variable costs
amounts to P650.00 per unit while fixed charges
incurred per annum totals P69,000.00. If the portable
threshers are sold at P7,800.00 per unit, how many
units must be produced and sold per annum to
breakeven?
A. 28
B. 25
C. 26
D. 27
432. The direct labor cost and material cost of a certain D. SYD method
product are P300 and P400 per unit, respectively. Fixed 437. Which of the following depreciation methods
charges are P100,000 per month and other variable cannot have a salvage value of zero?
costs are P100 per unit. If the product is sold at P1,200 A. Declining balance method
per unit, how many units must be produced and sold to B. Sinking fund method
breakeven? C. Straight line method
A. 280 D. SYD method
B. 250 438. A method of depreciation where a fixed sum of
C. 260 money is regularly deposited at compound interest in a
D. 270 real or imaginary fund in order to accumulate an
433. The following data for year 2000 are available for amount equal to the total depreciation of an asset at
Cagayan Automotive Company which manufactures and the end of the asset’s estimated life.
sells a single automotive product line: A. Straight line method
Unit selling price – P40.00 B. Sinking fund method
Unit variable cost – P20.00 C. Declining balance method
Unit contribution margin – P20.00 D. SYD method
Total fixed costs – P200,000.00 439. The function of interest rate and time that
What is the breakeven point in units for the current determines the cumulative amount of a sinking fund
year? resulting from specific periodic deposits.
A. 10,000 A. Sinking fund factor
B. 10,100 B. Present worth factor
C. 10,050 C. Capacity factor
D. 10,200 D. Demand factor
434. The cost of producing a small transistor radio set 440. The first cost of any property includes:
consists of P230.00 for labor and P370.00 for material. A. The original purchase price and freight and
The fixed charges is operating the plant is P1,000,000.00 transportation charges
per month. The variable cost is P10.00 per set. The radio B. Installation expenses
set can be sold for P750.00 each. Determine how many C. Initial taxes and permits fee
sets must be produced per month to breakeven. D. All of the above
A. 7,123 441. In SYD method, the sum of years digit is calculated
B. 7,133 using which formula with n = number of useful years of
C. 7,143 the equipment.
D. 7,153 A. n(n – 1)/2
435. An item which can be sold for P63.00 per unit B. n(n + 1)/2
wholesale is being produced with the following cost C. n(n+1)
data: D. n(n-1)
Labor cost – P10.00 per unit 442. Capitalized cost of any property is equal to the:
Material cost – P15.00 per unit A. Annual cost
Fixed charges – P10,000.00 B. First cost + Interest of the first cost
Variable cost – P8.00 per unit C. First cost + Cost of perpetual maintenance
What is the breakeven point sales volume if one out of D. First cost + Salvage value
every 10 units produced is defective and is rejected with 443. The lessening of the value of an asset due to the
only full recovery on materials? decrease in the quantity available (referring to the
A. P25,011 natural resources, coal, oil, etc).
B. P25,111 A. Depreciation
C. P25,121 B. Depletion
D. P25,132 C. Inflation
436. A method of depreciation whereby the amount to D. Incremental cost
recover is spread uniformly over the estimated life of 444. Is the simplest form of business organization.
the asset in terms of the periods or units of output. A. Sole proprietorship
A. Straight line method B. Partnership
B. Sinking fund method C. Enterprise
C. Declining balance method D. Corporation
445. An association of two or more persons for a D. 12.25%
purpose of engaging in a profitable business. 453. Agnes Abanilla was granted a loan of P20,000 by
A. Sole proprietorship her employer CPM Industrial Fabricator and
B. Enterprise Construction Corporation with an interest of 6% for 180
C. Partnership days on the principal collected in advance. The
D. Corporation corporation would accept a promissory note for P20,000
446. A distinct legal entity which can practically transact non-interest for 180 days. If discounted at once, find the
any business transaction which a real person could do. proceeds of the note.
A. Sole proprietorship A. P18,600
B. Enterprise B. P18,800
C. Partnership C. P19,000
D. Corporation D. P19,200
447. Double taxation is a disadvantage of which 454.What will be the future worth of money after 12
business organization? months, if the sum of P25,000 is invested today at
A. Sole proprietorship simple interest rate of 1% per month?
B. Partnership A. P30,000
C. Corporation B. P29,000
D. Enterprise C. P28,000
448. Which is NOT a type of business organization? D. P27,859
A. Sole proprietorship 455. If you borrowed money from your friend with
B. Corporation simple interest of 12%, find the present worth of
C. Enterprise P50,000 which is due at the end of 7 months.
D. Partnership A. P46,200
449. What is the minimum number of incorporators in B. P44,893
order that a corporation be organized? C. P46,730
A. 3 D. P45,789
B. 5 456. Annie buys a television set from a merchant who
C. 10 ask P1,250 at the end of 60 days. Annie wishes to pay
D. 7 immediately and the merchant offers to compute the
450. In case of bankruptcy of a partnership, cash price on the assumption that money is worth 8%
A. The partners are not liable for the liabilities of the simple interest. What is the cash price?
partnership A. P1,233.55
B. The partnership assets (excluding the partners’ B. P1,244.68
personal assets) only will be used to pay the liabilities. C. P1,323.66
C. The partners’ personal assets are attached to the D. P1,392.67
debt of the partnership 457. It is the practice of almost all banks in the
D. The partners may sell stock to generate additional Philippines that when they grant a loan. The interest for
capital. one year is automatically deducted from the principal
amount upon the release of money to a borrower. Let
us therefore assume that you applied for a loan with a
451. P4,000 is borrowed for 75 days at 16% per annum bank and the P80,000 was approved at an interest rate
simple interest. How much will be due at the end of of 14% of which P11,200 was deducted and you were
75days? given a check of P68,800. Since you have to pay the
A. P4,133.33 amount of P80,000 one year after, what then will be the
B. P4,333.33 effective interest rate?
C. P4,166.67 A. 15.90%
D. P4,150.00 B. 16.28%
452. A deposit of P110,000.00 was made for 31 days. C. 16.30%
The net interest after deducting 20% withholding tax is D. 16.20%
P890.36. Find the rate of return annually. 458. A man borrowed P20,000 from a local commercial
A. 11.95% bank which has a simple interest rate of 16% but the
B. 12.75% interest is to be deducted from the loan at the time that
C. 11.75% the money was borrowed and the loan is payable at the
end of one year. How much is the actual rate of 466. The amount of P12,800 in 4 years at 5%
interest? compounded quarterly is
A. 12% A. P14,785.34
B. 14% B. P15,614.59
C. 10% C. P16,311.26
D. 19% D. P15,847.33
459. A bank charges 12% simple interest on a P300.00 467. Find the present worth of a future payment of
loan. How much will be repaid if the loan is paid back in P100,000 to be made in 10years with an interest of 12%
one lump sum after three years? compounded quarterly.
A. P408.00 A. P30,444.44
B. P415.00 B. P33,000.00
C. P551.00 C. P30,655.68
D. P450.00 D. P30,546.01
460. A man borrowed P100,000 at the interest rate of 468. On his 6th birthday a boy is left an inheritance. The
12% per annum, compounded quarterly. What is the inheritance will be paid in a lump sum of P10,000 on his
effective rate? 21st birthday. What is the present value of the
A. 3% inheritance as of the boy’s 6th birthday, if the interest is
B. 13.2% compounded annually? Assume i = 4%
C. 12% A. P6,500
D. 12.55% B. P8,600
461. What is the corresponding effective rate of 18% C. P5,500
compounded semi-quarterly? D. P7,500
A. 19.25% 469. The amount of P50,000 was deposited in the bank
B. 19.48% earning at interest of 7.6% per annum. Determine the
C. 18.46% total amount at the end of 5 years, if the principal and
D. 18.95% interest were not withdrawn during the period?
462. Mandarin Bank advertises 9.5% account that yields A. P71,781.47
9.84% annually. Find how often the interest is B. P72,475.23
compounded. C. P70,374.90
A. Daily D. P78,536.34
B. Monthly 470. Alexander Michael owes P25,000.00 due in 1 year
C. Bi-Monthly and P75,000 due in 4 years. He agrees to pay P50,000
D. Quarterly today and the balance in 2 years. How much must he
463. A bank pays one percent interest on savings pay at the end of two years if money is worth 5%
accounts four times a year. The effective annual interest compounded semi-annually?
rate is A. P38,025.28
A. 4.06% B. P35,021.25
B. 1.00% C. P30,500.55
C. 2.04% D. P39,021.28
D. 3.36% 471. At an interest rate of 10% compounded annually,
464. The effective rate of 14% compounded semi- how much will a deposit of P1,500 be in 15 years?
annually is A. P6,100.00
A. 14.49% B. P6,234.09
B. 12.36% C. P 6,265.87
C. 14.94% D. P6,437.90
D. 14.88% 472. How long (in years) will it take money to quadruple
465. An interest rate is quoted as being 7.5% if it earns 7% compounded semi-annually?
compounded quarterly. What is the effective annual A. 20.15
interest rate? B. 26.30
A. 7.71% C. 33.15
B. 7.22% D. 40.30
C. 15.78%
D. 21.81%
473. In how many year is required for P2,000 to increase 480. Fifteen years ago P1,000.00 was deposited in a
by P3,000 if interest at 12% compounded semi- bank account, and today it is worth P2,370.00. The bank
annually? pays interest semi-annually. What was the interest rate
A. 8 paid in this account?
B. 9 A. 3.8%
C. 10 B. 4.9%
D. 7 C. 5.0%
474. Consider a deposit of P600.00 to be paid back in D. 5.8%
one year by P700.00. What are the conditions on the 481. If P5,000.00 shall accumulate for 10 years at 8%
rate of interest, i% per year compounded annually such compounded quarterly, find the compounded interest at
that the net present worth of the investment is the end of 10 years.
positive? Assume i is greater than or equal to 0. A. P6,005.30
A. 0 <= i < 14.3% B. P6,000.00
B. 0<= i <16.7% C. P6,040.20
C. 12.5%<= i <14.3% D. P6,010.20
D. 16.7% <= i <100% 482. A sum of p1,000 is invested now and left for eight
475. A company invests P10,000 today to be repaid in 5 years, at which time the principal is withdrawn. The
year in one lump sum at 12% compounded annually. interest has accrued is left for another eight years. If the
How much profit in present day pesos is realized? effective annual interest rate is 5%, what will be the
A. P7,632 withdrawal amount at the end of the 16th year?
B. P7,236 A. P706.00
C. P7,326 B. P500.00
D. P7,362 C. P774.00
476. A firm borrows P2,000 for 6 years at 8%. At the end D. P799.00
of 6 years, it renews the loan for the amount due plus 483. P1,500.00 was deposited in a bank account, 20
P2,000 more for 2 years at 8%. What is the lump sum years ago. Today it is worth P3,000.00. Interest is paid
due? semi-annually. Determine the interest rate paid on this
A. P5,355.00 account.
B. P5,892.00 A. 3%
C. P6,035.00 B. 2.9%
D. P6,135.00 C. 3.5%
477. A deposit of P1,000 is made in a bank account that D. 4%
pays 8% interest compounded annually. Approximately 484. A merchant puts in his P2,000.00 to a small
how much money will be in the account after 10 years? business for a period of six years. With a given interest
A. P1,925.00 rate on the investment of 15 % per year, compounded
B. P1,860.00 annually, how much will he collect at the end of the
C. P2,345.00 sixth year?
D. P2,160.00 A. P4,400.00
478. P200,000 was deposited on January 1, 1988 at an B. P4,390.15
interest rate of 24% compounded semi-annually. How C. P4,200.00
much would the sum be on January 1,1993? D. P4,626.00
A. P401,170 485. A man expects to receive P25,000 in 8 years. How
B. P421,170 much is that money worth now considering interest at
C. P521,170 8% compounded quarterly?
D. P621,170 A. P13,859.12
479. If P500,000 is deposited at a rate of 11.25% B. P13,958.33
compounded monthly, determine the compounded C. P13,675.23
interest after 7 years and 9 months. D. P13,265.83
A. P660,550 486. P500,000 was deposited 20.15 years ago at an
B. P670,650 interest rate of 7% compounded semi-annually. How
C. P680,750 much is the sum now?
D. P690,850 A. P2,000,000
B. P2,000,150
C. P2,000,300 D. P10,200.56
D. P2,000,500 493. You need P4,000 per year for four years to go to
487. In year zero, you invest P10,000.00 in a 15% college. Your father invested P5,000 in 7% account for
security for 5 years. During that time, the average your education when you were born. If you withdraw
annual inflation is 6%. How much, in terms of year zero P4,000 at the end of your 17th, 18th, 19th and 20th
pesos will be in the account at maturity? birthday, how much will be left in the account at the end
A. P12,020 of the 21st year?
B. P13,030 A. P1,700
C. P14,040 B. P2,500
D. P15,050 C. P3,400
488. By the condition of a will, the sum of P20,000 is left D. P4,000
to a girl to be held in trust fund by her guardian until it 494. What is the accumulated amount of five year
amounts to P50,000. When will the girl receive the annuity paying P6,000 at the end of each year, with
money if the fund is invested at 8% compounded interest at 15% compounded annually?
quarterly? A. P40,454.29
A. 7.98 years B. P41,114.29
B. 10.34 years C. P41,454.29
C. 11.57 years D. P40,544.29
D. 10.45 years 495. How much must be deposited at 6% each year
489. You borrow P3,500.00 for one year from a friend at beginning on January 1, year 1, in order to accumulate
an interest rate of 1.5% per month instead of taking a P5,000 on the date of the last deposit, January 1, year
loan from a bank at a rate of 18% per year. Compare 6?
how much money you will save or lose on the A. P751.00
transaction. B. P717.00
A. You will pay P155.00 more if you borrowed from the C. P715.00
bank. D. P725.00
B. You will save P55.00 by borrowing from your friend. 496. A debt of P10,000 with 10% interest compounded
C. You will pay P85.00 more if you borrowed from the semi-annually is to be amortized by semi-annual
bank payment over the next 5 years. The first due is in 6
D. You will pay P55.00 less if you borrowed from the months. Determine the semi-annual payment.
bank. A. P1,200.00
490. What is the present worth of two P100 payments B. P1,295.05
at the end of the third year and fourth year? The annual C. P1,193.90
interest rate is 8%. D. P1,400.45
A. P153 497. A young engineer borrowed P10,000 at 12%
B. P160 interest and paid P2,000 per annum for the last 4 years.
C. P162 What does he have to pay at the end of the fifth year in
D. P127 order to pay off his loan?
491. Anne purchased on monthly installment a A. P6,919.28
P100,000 worth of land. The interest rate is 12% B. P5,674.00
nominal and payable in 20 years. What is the monthly C. P6,074.00
amortization? D. P3,296.00
A. P1,101.08 498. Mr. Cruz plans to deposit for the education of his 5
B. P1,121.01 years old son, P500 at the of each month for 10 years at
C. P1,152.15 12% annual interest compounded monthly. The amount
D. P1,128.12 that will be available in two years is
492. Money borrowed today is to be paid in 6 equal A. P13,000
payments at the end of 6 quarters. If the interest is 12% B. P14,500
compounded quarterly. How much was initially C. P13,500
borrowed if quarterly payment is P2,000.00? D. P14,000
A. P10,834.38 499. If you obtain a loan of P1M at the rate of 12%
B. P10,382.90 compounded annually in order to build a house, how
C. P10,586.99
much must you pay monthly to amortize the loan within at the end of each year for a period of 10 years, starting
a period of ten years? at the end of 5 years from the date of purchase. If
A. P13,994.17 money is worth 14% compounded annually, what is the
B. P12,955.21 cash price of the property?
C. P15,855.45 A. P810,100
D. P12,900.25 B. P808,811
500. How much must you invest today in order to C. P801,900
withdraw P2,000 annually for 10 years if the interest D. P805,902
rate is 9%? 506. A piece of machinery can be bought for P10,000
A. P12,853.32 cash or for P2,000 down and payments of P750 per year
B. P12,881.37 for 15 years. What is the annual interest rate for the
C. P12,385. 32 time payments?
D. P12,835.32 A. 4.61%
B. 3.81%
501. A person buys a piece of lot for P100,00 down C. 5.71%
payment and 10 deferred semi-annual payments of D. 11.0%
P8,000 each, starting three years from now. What is the 507. A man inherited a regular endowment of P100,000
present value of the investment if the rate of interest is every end of 3 months for 10 years. However, he may
12% compounded semi-annually? choose to get a single lump sum payment at the end of
A. P134,666.80 4 years. How much is this lump sum if the cost of money
B. P143,999.08 is 14% compounded quarterly?
C. P154,696.80 A. P3,802,862
D. P164,969.80 B. P3,702,939
502. A man loans P187,400 from a bank with interest at C. P3,502,546
5% compounded annually. He agrees to pay his D. P3,602,431
obligations by paying 8 equal annual payments, the first 508. A parent on the day the child is born wishes to
being due at the end of 10 years. Find the annual determine what lump sum would have to be paid into
payments. an account bearing interest at 5% compounded
A. P44,982.04 annually, in order to withdraw P20,000 each on the
B. P56,143.03 child’s 18th,19th,20th and 21st birthdays. How much is
C. P62, 334.62 the lump sum amount?
D. P38,236.04 A. P35,941.73
503. A housewife bought a brand new washing machine B. P33,941.73
costing P12,000 if paid in cash. However, she can C. P30,941.73
purchase it on installment basis to be paid within 5 D. P25,941.73
years. If money is worth 8% compounded annually, what 509. An instructor plans to retire in exactly one year and
is her yearly amortization if all payments are to be made want an account that will pay him P25,000 a year for the
at the beginning of each year? next 15 years. Assuming a 6% annual effective interest
A. P2,782.85 rate, what is the amount he would need to deposit
B. P2,872.58 now? (the fund will be depleted after 15 years).
C. P2,400.00 A. P249,000
D. P2,827.58 B. P242,806
504. Mr. Ayala borrows P100,000 at 10% effective C. P248,500
annual interest. He must pay back the loan over 30 D. P250,400
years with uniform monthly payments due on the first 510. An investment of P350,000 is made to be followed
day of each month. What does Mr. Ayala pay each by payments of P200,000 each year for 3 years. What is
month? the annual rate of return on investment for the project?
A. P870.00 A. 41.7%
B. P846.00 B. 32.7%
C. P878.00 C. 51.1%
D. P839.00 D. 15%
505. A house and lot can be acquired by a down 511. A small machine has an initial cost of P20,000, a
payment of P500,000 and a yearly payment of P100,000 salvage value of P2,000 and a life of 10 years. If your
cost of operation per year is P3,500 and your revenues 517. A unit of welding machine cost P45,000 with an
per year is P9,000, what is the approximate rate of estimated life of 5 years. Its salvage value is P2,500. Find
return on the investment? its depreciation rate by straight-line method.
A. 25.0% A. 17.75%
B. 22.5% B. 19.88%
C. 23.9% C. 18.89%
D. 24.8% D. 15.56%
512. A man paid 10% down payment of P200,000 for a 518. A machine has an initial cost of P50,000 and a
house and lot and agreed to pay the balance on salvage value of P10,000 after 10 years. Find the book
monthly installments for ‘x’ years at an interest rate of value after 5 years using straight-line method.
15% compounded monthly. If the monthly installment A. P12,500
was P42,821.87, find the value of x? B. P30,000
A. 11 C. P16,400
B. 9 D. P22,300
C. 5 519. The initial cost of a paint sand mill, including its
D. 7 installation, is P800,000. The BIR approved life of this
513. A manufacturing firm wishes to give each 80 machine is 10 years for depreciation. The estimated
employees a holiday bonus. How much is need to invest salvage value of the mill is P50,000 and the cost of
monthly for a year at 12% nominal interest rate dismantling is estimated to be P15,000. Using straight-
compounded monthly, so that each employee will line depreciation, what is the annual depreciation
receive a P2,000 bonus? charge and what is the book value of the machine at the
A. P12,608 end of six years?
B. P12,610 A. P74,500; P340,250
C. P12,600 B. P76,500; P341,000
D. P12,300 C. P76,500; P342,500
514. Find the present value in pesos, of a perpetuity of D. P77,500; P343,250
P15,000 payable semi-annually if money is worth 8% 520. The cost of equipment is P500,000 and the cost of
compounded quarterly. installation is P30,000. If the salvage value is 10% of the
A. P372,537 cost of equipment at the end of 5 years, determine the
B. P374,977 book value at the end of the fourth year. Use straight-
C. P373,767 line method.
D. P371,287 A. P155,000
515. A fund donated by a wealthy person to IIEE to B. P140,000
provide annual scholarships to deserving EE students. C. P146,000
The fund will grant P5,000 for each of the first five years, D. P132,600
P8,000 for the next 5 years and P10,000 for each year 521. An asset is purchased for P500,000.00. The salvage
thereafter. The scholarship will start one year after the value in 25 years is P100,000.00. What is the total
fund is established, if the fund earns 8% interest, what is depreciation in the first three years using straight-line
the amount of the donation? method?
A. P101,605.71 A. P48,000
B. P101,505.21 B. P24,000
C. P100,506.21 C. P32,000
D. P 99,601.71 D. P16,000
516. A company issued 50 bonds of P1,000.00 face value 522. A machine has an initial cost of P50,000 and a
each, redeemable at par at the end of 15 years to salvage value of P10,000.00 after 10 years. What is the
accumulate the funds required for redemption. The firm block value after 5 years using straight line
established a sinking fund consisting of annual deposits, depreciation?
the interest rate of the fund being 4%. What was the A. P35,000.00
principal in the fund at the end of the 12th year? B. P25,000.00
A. P35,983.00 C. P15,500.00
B. P38,378.00 D. P30,000.00
C. P41,453.00
D. P37,519.00
523. An equipment costs P10,000 with a salvage value 529. An asset is purchased for P9,000.00. Its estimated
of P500 at the end of 10 years. Calculate the annual life is 10 years after which it will be sold for P1,000.00.
depreciation cost by sinking fund method at 4% interest. Find the book value during the first year if sum-of-years
A. P791.26 digit(SYD) depreciation is used.
B. P950.00 A. P8,000
C. P971.12 B. P6,500
D. P845.32 C. P7,545
524. A machine costing P720,000 is estimated to have a D. P6,000
book value of P40,545.73 when retired at the end of 10 530. The maintenance cost for a sewing machine this
years. Depreciation cost is computed using a constant year is expected to be P500. The cost will increase P50
percentage of the declining book value. What is the each year for the subsequent 9 years. The interest is 8%
annual rate of depreciation in %? compounded annually. What is the approximate present
A. 28 worth of maintenance for the machine over the full 10-
B. 25 year period?
C. 16 A. P4,700
D. 30 B. P5,300
525. A machine costing P45,000 is estimated to have a C. P4,300
book value of P4,350 when retired at the end of 6 years. D. P5,500
Depreciation cost is computed using a constant 531. At 6%, find the capitalized cost of a bridge whose
percentage of declining book value. What is the annual cost is P250M and life is 20 years, if the bridge must be
rate of depreciation in %? partially rebuilt at a cost of P100M at the end of each
A. 33.25 20years.
B. 32.25 A. P275.3M
C. 35.25 B. P265.5M
D. 34.25 C. P295.3M
526. ABC Corporation makes it a policy that for any new D. P282.1M
equipment purchased, the annual depreciation cost 532. A corporation uses a type of motor truck which
should not exceed 20% of the first cost at any time with costs P5,000 with life of 2 years and final salvage value
no salvage value. Determine the length of service life of P800. How much could the corporation afford to pay
necessary if the depreciation used is the SYD method. for another type of truck of the same purpose whose
A. 9 years life is 3 years with a final salvage value of P1,000. Money
B. 10 years is worth 4%.
C. 12 years A. P8,450.66
D. 19 years B. P7,164.37
527. A company purchases an asset for P10,000.00 and C. P6,398.24
plans to keep it for 20 years. If the salvage value is zero D. P9,034.56
at the end of 20th year, what is the depreciation in the 533. A company must relocate one of its factories in
third year? Use SYD method. three years. Equipment for the loading dock is being
A. P1,000 considered for purchase. The original cost is P20,000,
B. P857 the salvage value of the equipment after three years is
C. P937 P8,0000. The company’s rate of return on the money is
D. P747 10%. Determine the capital recovery rate per year.
528. A telephone company purchased a microwave A. P5,115
radio equipment for P6 million, freight and installation B. P4,946
charges amounted to 4% of the purchased price. If the C. P5,625
equipment will be depreciated over a period of 10 years D. P4,805
with a salvage value of 8%, determine the depreciation 534.The annual maintenance cost of a machine shop is
cost during the 5th year using SYD. P69,994. If the cost of making a forging is P56 per unit
A. P626,269.10 and its selling price is P135 per forged unit, find the
B. P622,786.07 number of units to be forged to break-even.
C. P638,272.08 A. 886 units
D. P627,989.90 B. 885 units
C. 688 units
D. 668 units 540. XYZ Corporation manufactures bookcases that sell
535. A manufacturer produces certain items at a labor for P65.00 each. It costs XYZ Corporation P35,000 per
cost of P115 each, material cost of P76 each and a year to operate its plant. This sum includes rent,
variable cost of P2.32 each. If the item has a unit price depreciation charges on equipment, and salary
of P600, how many number of units must be payments. If the cost to produce one bookcase is
manufactured each month for the manufacturer to P50.00, how many cases must be sold each year for XYZ
break even if the monthly overhead is P428,000? to avoid taking a loss?
A. 1053 A. 2334
B. 1138 B. 539
C. 946 C. 750
D. 1232 D. 2333
536. Steel drum manufacturer incurs a yearly fixed 541. A company which manufactures electric motors
operating cost of $200,000. Each drum manufactured has a production capacity of 200 motors a month. The
cost $160 to produce and sells $200. What is the variable costs are P150.00 per motor. The average
manufacturer’s break-even sales volume in drums per selling price of the motors is P275.00. Fixed costs of the
year? company amount to P20,000 per month which includes
A.1250 taxes. The number of motors that must be sold each
B. 2500 month to break even is closest to:
C. 5000 A. 40
D. 1000 B. 150
537. JRT Industries manufactures automatic voltage C. 80
regulator at a labor cost of P85.00 per unit and material D. 160
cost of P350.00 per unit. The fixed charges on the 542. A price tag of P1200 is specified if paid within 60
business are P15,000 per month and the variable costs days but offers 3% discount for cash in 30 days. Find the
are P20.00 per unit. If the automatic voltage regulators rate of interest.
are sold to retailers at P580.00 each, how many units a. 37.11%
must be produced and sold per month to breakeven? b. 38.51 %
A. 104 c. 40.21 %
B. 200 d. 39.31 %
C. 120 543. Mr. Almagro made a money market of P1 000 000
D. 150 for 30 days at 7.5% per year. If the withholding tax is
538. Compute for the number of locks that an ice plant 20%, what is the net interest that he will receive at the
must be able to sell per month to break even based on end of the month?
the following data: a. P3 000
Cost of electricity per block – P20.00 b. P4 000
Tax to be paid per block – P2.00 c. P6 000
Real estate Tax – P3,500.00 per month d. P5 000
Salaries and Wages – P25,000.00 per month 544. A deposit of P110 000 was made for 31 days. The
Others – P12,000.00 per month net interest after deducting 20% withholding tax is
Selling price of ice – P55.00 per block P890.36. Find the rate of return annually.
A.1228 a. 12.25
B. 1285 b. 11.75
C. 1373 c. 12.75
D. 1312 d. 11.95
539. The annual maintenance cost of a machine is 545. A nominal interest of 3% compounded
P70,000. If the cost of making a forging is P56 and its continuously is given on the account. What is the
selling price is P125 per forged unit. Find the number of accumulated amount of P10 000 after 10 years?
units to be forged to break even. a. P13 610.10
A. 1015 units b. P13 500.10
B. 985 units c. P13 498.60
C. 1100 units d. P13 439.16
D. 1000 units
546. A man expects to receive P25 000 in 8 years. How b.38.51%
much is that worth now considering interest at 8% c. 17.30%
compounded quarterly? d. 39.31%
a. P13 859.12 553. Mr. J. Dela Cruz borrowed money from the bank.
b. P13 958.33 He received from the bank P1,340.00 and promised to
c. P13 675.23 pay P1,500.00 at the end of 9 months. Determine the
d. P13 265.83 simple interest rate and the corresponding discount rate
547. P200 000 was deposited for a period of 4 years and or often referred to as the “Banker’s Discount”.
6 months and bears on interest of P85 649.25. What is a. 12.95% ; 17.33%
the rate of interest if it is compounded quarterly? b. 15.92% ; 13.73%
a. 8% c. 18.28% ; 13.12%
b. 7% d. 19.25% ; 13.33%
c. 6% 554. A man borrowed from the bank under a promissory
d. 5% note that he signed in the amount of P25000.00 for a
548. Find the time required fro a sum of money to triple period of 1year. He received only the amount of
itself at 5% per annum compounded continuously? P21,915.00 after the bank collected the advance
a. 18.23 yrs. interest and an additional amount of P85.00 for notarial
b. 21.97 yrs. and inspection fees. What was the rate of interest that
c. 23.36 yrs. the bank collected in advance?
d. 25.34 yrs. a.10.32%
549. If the nominal interest is 12% compounded b.13.64%
continuously, compute the effective rate of annual c. 16.43%
interest. d. 18.37%
a. 12.40% 555. Agnes Abanilla was granted a loan of P20,000 by
b. 11.26% her employer CPM Industrial Fabricator and
c. 12.75% Construction Corporation with an interest at 6% for
d. 11.55% 180days on the principal collected in advance. The
550. If a sum of money triples in a certain period of time corporation would accept a promissory note for P20,000
at a given rate of interest, compute the value of the non-interest for 180days. If discounted at once, find the
single payment present worth factor. proceeds in the note.
a. 0.292 a. P18,000
b. 0.333 b. P19,000
c. 1.962 c. P18,800
d. 3 d. P18,400
556. P4000 is borrowed for 75 days at 16% per annum
551. A price tag of P1200 is specified if paid within 60 simple interest. How much will be due at the end of 75
days but offers a 3% discount for cash in 30 days. Find days?
the rate of interest. a. P4186.43
a.37.11% b. P5124.54
b.38.51% c. P4133.33
c. 40.21% d. P5625.43
d. 39.31% 557. Mr. Almagro made a money market placement of
552. It is the practice of almost all bank in the P1,000,000 for 30 days at 7.5% per year. If withholding
Philippines that when they grant a loan, the interest for tax is 20%, what is the net interest that Mr. Almagro will
1 year is automatically deducted from the principal receive at the end of the month?
amount upon release of money to a borrower. Let us a. P3,000
therefore assume that you applied for a loan with the b. P4,000
bank and the P80000 was approved at an interest rate c. P6,000
of 14% of which P11200 was deducted and you were d. P5,000
given ac check of P68800. Since you have to pay the 558. A bill for motorboat specifies the cost as P1,200
amount of P80000 one year after, what then will be the due at the end of 100 days but offers a 4% discount for
effective interest rate? cash in 30days. What is the highest rate, simple interest
a.16.28%
at which the buyer can afford to borrow money in order c. 66.6%
to take advantage of the discount? d. 67.6%
a. 18.4% 565. A man is required to pay P200 at the end of
b. 19.6% 160days or P190 at the end of 40 days. Determine the
c. 20.9% rate of interest.
d. 21.4% a. 18.4%
559. In buying a computer disk, the buyer was offered b. 19.6%
the options of paying P250 cash at the end of 30days or c. 15.8%
P270 at the end of 120days. At what rate is the buyer d. 16.4%
paying simple interest if he agree to pay at the end of 566. Compute the discount if P2000 is discounted for
120days? 6months at 8% simple interest.
a. 32% a. P29.67
b.40% b. P67.29
c. 28% c. P76.92
d. 25% d. P92.76
560. On March 1, 1996 Mr. Almagro obtains a loan of 567. The amount of P12800 in 4years at 5%
P1500 from Mr. Abella and signs a note promising to pay compounded quarterly is _____.
the principal and accumulated simple interest at the a. P14,785.34
rate of 5% at the end of 120days. On May 15, 1996, Mr. b. P15,614.59
Abella discounts the note at the bank whose discount c. P16,311.26
rate is 6%. What does he receive? d. P15,847.33
a. P2,201.48 568. A man borrows money from a bank which uses a
b. P1,123.29 simple discount rate of 14%. He signs a promissory note
c. P1,513.56 promising to pay P500.00 per month at the end of 4th,
d. P938.20 6th, and 7th month respectively. Determine the amount
561. A deposit of P110,000 was made for 31 days. The of money that he received from the bank.
net interest after deducting 20% withholding tax is a. P1403.68
P890.36. Find the rate of return annually. b. P1340.38
a. 12.25 c. P1102.37
b. 11.75 d. P1030.28
c. 12.75 569. A nominal interest of 3% compounded
d. 11.95 continuously is given on the account. What is the
562. If you borrowed money from your friend with accumulated amount of P10,000 after 10 years?
simple interest of 12%, find the present worth of a. P13,610.10
P50,000 which is due at the end of 7 months. b. P13,500.10
a. P46,200 c. P13,498.60
b. P44,893 d. P13,439.16
c. P46,729 570. BY the condition of a will, the sum of P2000 is left
d. P45,789 to a girl to be held in trust fund by her guardian until it
563. A man borrowed P2000 from a bank and promise amount to P50000.00. When will the girl receive the
to pay the amount for 1year. He received only the money of the fund is invested at 8% compounded
amount of P1,920 after the bank collected an advance quarterly?
interest of P80. What was the rate of discount and the a. 7.98 years
rate of interest that the bank collected in advance? b. 10.34 years
a. 4% ; 4.17% c. 11.57 years
b. 3% ; 3.17% d. 10.45 years
c. 4% ; 4.71% 571. A man expects to receive P25,000 in 8 years. How
d. 3% ; 3.71% much is that worth now considering interest at 8%
564. An engineer promised to pay P36,000 at the end of compounded quarterly?
90days. He was offered a 10% discount if he pays in 30 a. P13,859.12
days. Find the rate of interest. b. P13,958.33
a. 64.6% c. P13,675.23
b. 65.6% d. P13,265.83
572. P500,000 was deposited at an interest of 6% b. 8.28%
compounded quarterly. Compute the compound c. 9.28%
interest after 4 years and 9 months. d. 10.28%
a. P163,475.37 580. How will it take a money to double itself if invested
b. P178,362.37 at 5% compounded annually?
c. P158,270.37 a. 12.2 years
d. P183,327.37 b. 13.2 years
573. If the nominal interest rate is 3%, how much is c. 14.2 years
P5000 worth in 10 years in a continuously compounded d. 15.2 years
account? 581. Compute the effective annual interest rate which is
a. P5750 equivalent to 5% nominal annual interest compounded
b. P6750 continuously.
c. P7500 a. 5.13%
d. P6350 b. 4.94%
574. P200,000 was deposited for a period of 4 years and c. 5.26%
6 months and bears on interest of P85649.25. What is d. 4.90%
the rate of interest if it is compounded quarterly? 582. Find the time required for a sum of money to triple
a. 8% itself at 5% per annum compounded continuously.
b. 6% a. 21.97 years
c. 7% b. 25.34 years
d. 5% c. 18.23 years
575. How many years will P100,000 earn a compound d. 23.36 years
interest of P50,000 if the interest rate is 9% 583. A man wishes to have P40,000 in a certain fund at
compounded quarterly? the end of 8 years. How much should he invest in a fund
a. 3.25 years that will pay 6% compounded continuously?
b. 4.55 years a. P24,751.34
c. 5.86 years b. P36,421.44
d. 2.11 years c. P28,864.36
576. A certain amount was deposited 5 years and 9 d. P30,468.42
months ago at an interest of 8% compounded quarterly. 584. If the effective annual interest rate is 4%, compute
If the sum now is P315,379.85, how much was the the equivalent nominal annual interest compounded
amount deposited? continuously.
a. P200,000 a. 3.80%
b. P180,000 b. 4.10%
c. P240,000 c. 3.92%
d. P260,000 d. 4.09%
For Problems 577-579: 585. What is the nominal rate of interest compounded
577. When compounded Bi-monthly, P15000 becomes continuously for 10 years if the compound amount
P22,318.30 after 5years. factor is equal to 1.34986?
1077. What is the nominal rate of interest? a. 3%
a. 7% b. 4%
b. 8% c. 5%
c. 9% d. 6%
d. 10%
578. What is the equivalent rate if it is compounded
quarterly? 586. American Express Corp. charges 1.5% interest per
a. 7.03% month, compounded continuously on the unpaid
b. 8.03% balance purchases made on this credit card. Compute
c. 9.03% the effective rate of interest.
d. 10.03% a. 19.72%
579. What is the effective rate if it is compounded b. 20.25%
quarterly? c. 21.20%
a. 7.28% d. 19.90%
587. If the nominal interest is 12% compounded b. 7%
continuously, compute the effective annual rate if c. 5%
interest. d. 6%
a. 12.40% 595. If the single payment present worth factor for a
b. 11.26% period of 8 years is equal to 0.58201, compute the
c. 12.75% nearest value of the rate of interest for that period.
d. 11.55% a. 6%
588. Compute the difference in the future amount of b. 7%
P500 compounded annually at nominal rate of 5% and if c. 5%
it is compounded continuously for 5 years at the same d. 8%
rate. 596. If money is worth 8% compounded quarterly,
a. P3.87 compute the single payment amount factor for a period
b. P4.21 of 6 years.
c. P5.48 a. 1.60844
d. P6.25 b. 0.62172
589. If the effective rate is 24%, what nominal rate of c. 1.70241
interest is charged for a continuously compounded d. 0.53162
loan? 597. A sum of P1,000 is invested now and left for 8
a. 21.51% years, at which time the principal is withdrawn. The
b. 22.35% interest has an accrued left for another 8 years. If the
c. 23.25% effective annual interest is 5%, what will be the
d. 21.90% withdrawn amount at the end of the 16th year?
590. What is the nominal rate of interest compounded a. P507.42
continuously for 8 years if the present worth factor is b. P705.42
equal to 0.6187835? c. P750.42
a. 4% d. P425.07
b. 5% For problems 598-600:
c. 6% 598. Compute the interest for an amount of P200,000
d. 7% for a period of 8 years.
591. What is the difference of the amount 3 years from 1098. If it was made at a simple interest rate of 16% .
now for a 10% simple interest and 10% compound a. P274,000
interest per year? (P5000 accumulated) b. P265,000
a. P155 c. P256,000
b. P100 d. P247,000
c. P50 599. If it was made at 16% compounded bi-monthly.
d. same a. P507,267.28
592. Find the discount if P2,000 is discounted for 6 b. P507,365.96
months at 8% compounded quarterly. c. P407,283.01
a. P76.92 d. P459,923.44
b. P80.00 600. If it was made at 16% compounded continuously.
c. P77.66 a. P422,462.64
d. P78.42 b. P507,233.24
593. If a sum of money triples in a certain period of time c. P524,242.46
at a given rate interest, compute the value of the single d. P519,327.95
payment present worth factor.
a. 0.333 ANSWER KEY:
b. 3.000
c. 0.292 401. P325,000
d. 1.962 402. P7,157.40
594. If the single payment amount factor for a period of 403. 12.72%
5 years is 1.33822. What is the nearest value of the 404. P295,308,323.10
interest rate? 405. P322,549.33
a. 8% 406. P666,666.67
407. P1,559.50 457. B. 16.28%
408. P550,540.57 458. D. 19%
409. 800 459. A. P408.00
410. 886 460. D. 12.55%
411. 1,053 461. B. 19.48%
412. 5,000 462. D. Quarterly
413. 2,334 463. B. 1.00%
414. 160 464. A. 14.49%
415. 1,015 465. A. 7.71%
416. 1.0 hours per unit 466. B. P15,614.59
417. 1,228 467. C. P30,655.68
418. 120 468. C. P5,500
419. 110 469. A. P71,781.47
420. 1,000 feet 470. D. P39,021.28
421. Profit of P121,666.67 471. C. P 6,265.87
422. 2,632 472. A. 20.15
423. 9,601 473. A. 8
424. 3,040 474. B. 0<= i <16.7%
425. P170,000 475. A. P7,632
426. 160,000 476. C. P6,035.00
427. P88,960 477. D. P2,160.00
428. 295,490 478. D. P621,170
429. P814,320 479. D. P690,850
430. P3,354,680 480. D. 5.8%
431. 25 481. C. P6,040.20
432. 250 482. A. P706.00
433. 10,000 483. C. 3.5%
434. 7,143 484. D. P4,626.00
435. P25,011 485. D. P13,265.83
436. Straight line method 486. B. P2,000,150
437. Declining balance method 487. D. P15,050
438. Sinking fund method 488. C. 11.57 years
439. Sinking fund factor 489. D. You will pay P55.00 less if you borrowed from
440. All of the above the bank.
441. n(n + 1)/2 490. A. P153
442. First cost + Cost of perpetual maintenance 491. B. P1,121.01
443. Depletion 492. A. P10,834.38
444. Sole proprietorship 493. A. P1,700
445. Partnership 494. A. P40,454.29
446. Corporation 495. B. P717.00
447. Corporation 496. C. P1,193.90
448. Enterprise 497. C. P6,074.00
449. 5 498. D. P14,000
450. The partners’ personal assets are attached to the 499. B. P12,955.21
debt of the partnership 500. D. P12,835.32
ANSWER KEY:

451. A. P4,133.33 501. A. P134,666.80

452. C. 11.75% 502. A. P44,982.04
453. B. P18,800 503. A. P2,782.85
454. C. P28,000 504. C. P878.00
455. C. P46,730 505. B. P808,811
456. A. P1,233.55 506. A. 4.61%
507. C. P3,502,546 557. d. P5,000
508. C. P30,941.73 558. d. 21.4%
509. B. P242,806 559. a. 32%
510. B. 32.7% 560. c. P1,513.56
511. B. 22.5% 561. b. 11.75
512. A. 11 562. c. P46,729
513. D. P12,300 563. a. 4% ; 4.17%
514. D. P371,287 564. c. 66.6%
515. D. P 99,601.71 565. c. 15.8%
516. D. P37,519.00 566. c. P76.92
517. C. 18.89% 567. b. P15,614.59
518. B. P30,000 568. a. P1403.68
519. B. P76,500; P341,000 569. c. P13,498.60
520. B. P140,000 570. c. 11.57 years
521. A. P48,000 571. d. P13,265.83
522. D. P30,000.00 572. a. P163,475.37
523. A. P791.26 573. b. P6750
524. B. 25 574. a. 8%
525. B. 32.25 575. b. 4.55 years
526. A. 9 years 576. a. P200,000
527. B. P857 577. b. 8%
528. D. P627,989.90 578. b. 8.03%
529. C. P7,545 579. b. 8.28%
530. C. P4,300 580. c. 14.2 years
531. C. P295.3M 581. a. 5.13%
532. B. P7,164.37 582. a. 21.97 years
533. C. P5,625 583. a. P24,751.34
534. A. 886 units 584. c. 3.92%
535. A. 1053 585. a. 3%
536. C. 5000 586. a. 19.72%
537. C. 120 587. c. 12.75%
538. A.1228 588. a. P3.87
539. A. 1015 units 589. a. 21.51%
540. A. 2334 590. c. 6%
541. D. 160 591. a. P155
542. a. 37.11% 592. c. P77.66
543. d. P5 000 593. a. 0.333
544. b. 11.75 594. d. 6%
545. c. P13 498.60 595. b. 7%
546. d. P13 265.83 596. a. 1.60844
547. a. 8% 597. b. P705.42
548. b. 21.97 yrs. 598. c. P256,000
549. c. 12.75% 599. b. P507,365.96
550. b. 0.333 600. d. P519,327.95

551. a.37.11%
552. a.16.28%
553. b.15.92% ; 13.73%
554. b.13.64%
555. c. P18,800
556. c. P4133.33