1.

What is the least number of years needed to triple a certain amount of money at 5%
compounded annually?
a. 20.5 years
b. 18.5 years
c. 22.5 years
d. 16.5 years

i n=5 % ,m=1
F=3 P
i n mn
F=P 1+ ( ) m
0.05 1(n)
3 P=P 1+( 1 )
n
3=1.05
ln 3=n ln 1.05
ln 3
n= =22.5
ln 1.05

2. Determine the effective rate of interest corresponding to 18% compounded daily.

a. 13.75%
b. 18.74%
c. 19.72%
d. 17.92%

in m
( )
e i= 1+
m
−1

0.18 365
(
e i= 1+
365 ) −1
e i=19.72 %

3. If ₱5000.00 shall accumulate for 10 years at 8% compounded quarterly. Find the compounded
interest at the end of 10 years.
a. ₱6005.30
b. ₱6000.00
c. ₱6040.20
d. ₱6010.20

F=P+ I
I =F−P
mn
i
( ) −P
I =P 1+ n
m
 mn
in
I =P 1+
[( ) ] m
−1
4 ( 10 )
0.08
[(
I =5000 1+
4 ) −1
]
I =Php 6040.20

4. Tata made a loan from his employer an amount of ₱100,000.00 with a rate of simple interest of
20%, but the interest was deducted form the loan when the money was borrowed. If at the end
of one year, Tata has to pay the full amount of ₱100,000.00, determine the actual rate of
interest.
a. 19.50%
b. 23.50%
c. 25.00%
d. 28.50%

i n mn
F=P 1+ ( )
m
ei 1 (1 )
F=P 1+ ( )
1
10000=80000(1+ei )
ei=0.25=25 %
-or-
I =Pin
I 20000
i= =
Pn ( 80000 ) ( 1 )
i=25 %

5. What is the equivalent nominal interest rate compounded quarterly of 12% compounded semi-
annually?
a. 10.125%
b. 11.825%
c. 9.175%
d. 10.875%

i n=? , compounded quarterly

(ei)q=(ei)S . A .
in m in m
( ) ( )
1+
m
−1= 1+
m
−1

in 4 0.12 2
( ) ( )
1+
4
−1= 1+
2
−1
 2
[ () ]
i n= ( 1.06 )
4
−1 ( 4 )=11.825 %

6. Clara has invested ₱1,000.00 part at 5% and the reminder at 10% simple interest. How much is
invested at higher rate if the total annual interest from these investments is ₱95.
a. ₱900.00
b. ₱890.00
c. ₱100.00
d. ₱110.00

Investment=100 0
x=amount invested at higher rate
1000−x =amount invested at lower rate
I T =95
I T =I 1 + I 2
I 1=interest at higher rate
I 2=interest at lower rate
I =Pin
95=x ( 0.10 )( 1 ) +(1000−x)( 0.05)(1)
95=0.10 x+50−0.05 x
95−50
x=
0.10−0.05
x=Php 900.00

7. Leonard invests ₱450,000.00 now. Given that the interest rate on the investment is 14.5 % per
year, compounded annually, what sum, in Pesos, will be collected eight years hence after the
investment has been deducted?
a. ₱1,402.24
b. ₱987,382.41
c. ₱1,123,000.00
d. ₱879,402.24

i n mn 0.145 1 (8 )
F=P 1+( )
m
=450000 1+ (
1 )
F=1329402.2
x=F−P=1329402.2−450000
x=Php 879402.24
8. The product of interest rate per period and the number of compounding periods is known as
a. Effective rate of interest
b. Nominal rate of interest
c. Discount rate
d. All of these

Nominal Rate of Interest

9. Determine the accumulated amount using the exact simple interest on ₱1000.00 for the period
from January 20, 1990 to November 23 of the same year at 15% interest rate.
a. ₱1,282.00
b. ₱1,1288.22
c. ₱1,130.42
d. ₱2,400.00

1. F=P(1+¿)

Month No. of
Days
January 11
February 28
March 31
April 30
May 31
June 30
July 31
August 31
Septembe 30
r
October 31
November 28
312
312
F=1000 1+[
365
( 0.15 ) ]
F=Php1128.22

10. ME BD APR 1989. It is the practice of all banks in the Philippines that when they grant a loan,
the interest for 1 year is automatically deducted from the principal amount upon release of
money to a borrower. Let us therefore assume that you applied for a loan with a bank and the
amount of ₱80,000.00 was approved at an interest rate of 14% of which ₱11,200 was deducted
and you were given a check of ₱68,800. Since you have to pay after, what then will be the
effective rate of interest?
a. 16.00%
b. 16.17%
c. 16.28%
 d. 16.73%

mn
ei
F=P 1+( )
1
1 ( 1)
ei
80000=68800 1+ ( )1
ei=16.279%

11. Find the amount at the end of two years and seven months if ₱1,000.00 is invested at 8%
compounded quarterly using simple interest for any time period at 10%.
a. ₱1,230
b. ₱1,235
c. ₱1,240
d. ₱1,250

x=F 1 ( 1+¿ )
mn
in
x=P 1+( ) m
(1+¿)
4 (2 )
0.08
x=10000 1+ (4 ) [1+ 127 ( 0.1) ]
x=Php 1240.00

12. Annual deposits were made in the fund earning 10% per annum. The first deposit was ₱2,000
and each deposit thereafter was ₱200 less than the preceding one. Determine the amount in
the fund after the sixth deposit.
a. ₱9,000
b. ₱10,000
c. ₱11,000
d. ₱12,000

@ pt . 6 :
1 2 3 4 5
x=1000+1200 ( 1.1 ) + 1400 ( 1.1 ) +1600 ( 1.1 ) +1800 ( 1.1 ) + 2000 ( 1.1 )
x=Php 12000.00

13. ME BD OCT. 1990. A couple decided that for every child that will be born to them they will place
a deposit in the bank so that on the child’s 18 th b-day the child will receive the amount of
₱300,000. If the bank will pay an interest of 18% compounded yearly, how much deposit will the
couple have to make on the birth of the child to them.
a. ₱15,249.13
b. ₱16,230.10
c. ₱17,590.13
d. ₱16,250.23
 −mn
in
P=F 1+ ( ) m
−1 ( 18 )
0.18
P=300000 1+ (
1 )
P=Php 15249.13

14. ME BD APR 1996. A firm borrows ₱2000 for 6 years at 8%. At the end of 6 years, it renews the
loan for the amount due plus ₱ 2000 more for 2 years at 8%. What is the lump sum due?
a. ₱6,034.66
b. ₱6,135.00
c. ₱5,289.00
d. ₱4689.90

2( 1)
0.08
x=( F 6 +2000 ) 1+ ( 1 )
x=[ ( 2000 ) ( 1.08 )6 +2000 ] ( 1.08 )2
x=Php 6034.66

15. ME BD OCT 1997. A nominal interest 3% compounded continuously is given on the account.
What is the accumulated amount of ₱10000 after 10 years?
a. ₱13,620.10
b. ₱13,500.10
c. ₱13,498.60
d. ₱13,439. 16

F=P ei n n

F=( 10000 ) e 0.03( 10)

F=Php13498.59

16. Three Mechanical Engineers met in a school reunion and were discussing their relative successes
by comparing their investments earning 8% compounded annually. Engr. A says he has ₱200,000
invested now. Engr. B says he had ₱160,000 invested 4 yrs. ago and Engr. C says he will receive
₱230,000 five years from now. Considering that these investments are intact and no change in
interest rate is to occur during the study period. Which of the following statement is true basing
your calculation on these investments?
a. Engr. A is the poorest
b. Engr. B is the poorest
c. Engr. C is the poorest
d. Engr. A is the Richest

@ pt . 4 :
M A =20000
 i n mn
M B =F B=P 1+( )
m
0.08 1 (4 )
M B =160000 1+( 1 )
M B =Php217678.23 → richest
i n −mn
M C =PC =F 1+ ( )m
M C =230000 ( 1.08 )−5 (1 )
M C =Php 156534.13→ poorest

17. Exactly 140 years ago, my grandfather deposited ₱190 in large New York bank as a part of a
saving plan. She forgot all about the deposit during her lifetime. Two years ago, the bank
notified my family that the account was worth ₱200,000. What is the effective annual interest
rate in this situation?
a. 8.35%
b. 6.65%
c. 5.20%
d. 7.00%

ei mn
F=P 1+( )1
200000=190 ( 1+ei )138 (1)
ei =5.172=5.2 %

18. A loan of ₱ 20,000 payable in three months has a discounted amount of ₱17,500. What is the
difference between the actual and the theoretical interest rate of the investment in one year?
a. 6.31%
b. 7.41%
c. 13.45%
d. 19.76%

d
i=
1−d
F−P 20000−17500
d= =
F 20000
12.5 %
d=
3 mo .
i=14.28 ( 4 )=57.12 %
i m
( )
ei = 1+ n −1=( 1+ 0.1428 )4 −1
m
ei =0.7059 %
 ∆ i=ei−i=70.59−57.14
∆ i=13.45 %

19. A man borrows ₱6,400 from a loan association. In repaying this debt he has to pay ₱400 at the
end of every 3 months on the principal and a simple interest of 16% on the principal outstanding
at that time. Determine the total amount he has paid after paying all his debt.
a. ₱10,496
b. ₱8,320
c. ₱8,405.33
d. ₱8,576.00

I 1=( 6400 ) ( 0.25 ) ( 0.16 )=25 6

I 2=( 6000 ) ( 0.25 ) ( 0.16 )=240
…
I 16=( 400 )( 0.25 ) ( 0.16 ) =16
TP=6400+ S
n
S= (a 1+ an )
2
16
S= ( 256+16 ) =2176
2
TP=6400+ 2176=Php 8576.00

20. A ₱1M debt is to be paid in 4 installments the next payment being 20% larger than the
preceding. If money worth 10% and the first payment is made 3 years after the debt has been
granted, compute the sum of the payments.
a. ₱1,560,252.58
b. ₱1,555,312 .71
c. ₱1,289,464.94
d. ₱1,285,382.41

@ pt . 0 : S=x +1.2 x+1.44 x+1.728 x

S=5.368 x
−3 −4 −5 −6
1000000=x ( 1.1 ) +1.2 x ( 1.1 ) +1.44 x ( 1.1 ) +1.728 x ( 1.1 )
1000000
x=
[ ( 1.1 ) + ( 1.2 ) (1.1 ) + ( 1.44 ) ( 1.1 )−5 + ( 1.728 ) ( 1.1 )−6 ]
−3 −4

x=290658.08
S=Php 1560252.58

21. A man’s will direct that his insurance benefit of ₱150,000 he invested at 12% and from this fund
his widow receives ₱12,000 each year, the first payment immediately, so long as she lives. On
the payment date following the death of his wife, the remainder of the fund is to be given to a
foundation. If his wife died 4 years and 3 months later how much will the foundation receive?
a. ₱178,968.98
b. ₱166,968.98
c. ₱180,000.33
 d. ₱182,589.36

12000
150000=12000+ [ 1−( 1.12 )−4 ]+ x ( 1.12 )−5
0.12
x=Php 178968.98

22. The purchase amount of an equipment ₱100,000 has been made available through a loan which
earns 12% per annum. It has been agreed that the loan b payable in 10 equal payments. How
much then is the yearly due?
a. ₱10,587.90
b. ₱17,698.42
c. ₱27,908.65
d. ₱18,765.98

A
P= [ 1−( 1+i )−N ]
i
Pi
A= −N
[1−( 1+i ) ]
10000(0.12)
A= −10
=Php17698.42
[1−( 1.12 ) ]

23. How many yearly withdrawals of ₱100,000 can be made from 1-million-peso investment at
10%?
a. 10
b. 20
c. 30
d. None of these

A
P= ; N =∞
i

24. A new company developed a program in which the employees will be allowed to purchase
shares of stock of the company at the end of fifth year of operation when the company is
thought to have stability already at par value of ₱100.00 per share. Believing in the good
potential of the company, an employee decided to save in a bank the amount of ₱8,000 at the
end of every year which will earn for him 9% interest. How many shares of stock will he be able
to purchase at the end of fifth year of his yearly deposits?
a. 478
b. 479
c. 480
d. 490

A
F= [ ( 1+i )N −1 ]
i
 8000
F= [ ( 1.09 )5−1 ]
0.09
F=Php 47877.68
47877.68
n= =478.78
100
n=478 shares

25. An engine costing ₱40,000 may be purchased on installment basis by paying ₱10,000 down
payment, ₱5,000 at the end of the first year and five equal payments beginning at the end of the
second year. Determine the amount of these equal payments. Money is worth 12% per year.
a. ₱8,9333.20
b. ₱3,942.44
c. ₱6,733.92
d. ₱7,9333.92

A
40000=10000+5000 ( 1.12 )−1+ [ 1−( 1.12 )−5 ] ( 1.12 )−1
0.12
A=Php7933.92

26. Mr. Ramirez borrowed ₱15,0000.00 two years ago. The term of the loan is at 10% interest for 10
years with uniform payments. He just made his second annual payment. How much principal
does he still owe?
a. ₱12,000.00
b. ₱13,024.00
c. ₱10,117.00
d. ₱11,700.00

A
x=
i
[ 1−( 1+i )−N ]
A
x= [1−( 1.1 )−8 ]
0.1
Pi 15000(0.1)
A= −N
= −10
[1−( 1+i ) ] [1−( 1.1 ) ]
A=2441.18
2441.18
x= [1−( 1.1 )−8 ]
0.1
x=Php 13023.52

27. A sinking fund consist of 15 annual deposits of ₱1,000 each, with interest earned at the rate of
4% compounded annually. What is the principal in the fund at its terminal date?
a. ₱28,105
b. ₱29,546.23
c. ₱25,115
d. ₱20,023.59
 A
F= [ ( 1+i )N −1]
i
1000
F= [ ( 1.04 )15−1]
0.04
F=Php 20023.59

28. A ₱10,000 loan is to be paid off in 10 equal annual payments. The annual interest rate is 15%.
How much interest will be paid in the first two years?
a. ₱2,926.1
b. ₱3,005.1
c. ₱2,970.2
d. ₱2,940.2

Pi
A= ; i=0.1 5
[1−( 1+i )−N ]
A=1992.52
I T =I 1 + I 2
I T = (10000 )( 0.15 ) ( 1 ) + I 2
I 2=[ 10000−( 1992.52−1500 )( 0.15 ) ]
I 2=1426.12
I T =1426.122+1500=Php2926.12

29. A fund is to provide an annual scholarship at ₱4,000 for the first 5 years; ₱6,000 for the next 5
years and ₱9,000 thereafter. The fund will be established 1 year before the first scholarship is
awarded. If the fund earns 12% interest, what sum must be deposited?
a. ₱50,840
b. ₱60,921
c. ₱45,076
d. ₱12,632

4000 6000 9000

x= [ 1−( 1.12 )−5 ] + [ 1− (1.12 )−5 ] ( 1.12 )−5 + ( 1.12 )−10
0.12 0.12 0.12
x=Php 50839.78

30. Engr. Juoaquin borrows ₱60,000 at 12% compounded annually, agreeing to repay the loan in 15
equal annual payments. How much of the original principal still unpaid after he has made the 8 th
payment?
a. ₱35,976
b. ₱40,204
c. ₱42,098
d. ₱60,364

A
x= [1−( 1+ i )−N ]
i
 ( 60000 )( 0.12 )
A= =8809.45
[ 1− (1.12 )−15]
8809.45
x= [ 1−( 1.12 )−7 ]
0.12
x=Php 40204.20

31. What is the future of ₱600 deposited at the end of every month for 4 years if the interest rate is
12% compounded quarterly?
a. ₱24,980
b. ₱16,900
c. ₱36,641
d. ₱59,476

A
F= [ ( 1+i )N −1]
i
( ei )q =( ei )m
0.12 4
(1+
4 ) 12
−1=( 1+i ) −1
i=0.00990163405
600
F= [( 1.0099016 )48−1]
0.0099016
F=36642.95

32. ME BD OCT 1988. The officers of PSME desire to award a ₱3600 scholarship annually to
deserving mechanical engineering students for as long as scholarship fund shall last. The fund
was started July 1, 1987 by a donor in the amount of ₱18,000. The PSME invested this sum at
that time at 8% per annum and plans on adding ₱600 each year to the fund from its dues
starting July 1, 1988 for as long as the awards are made. For how many years starting July 1,
1988 can scholarship be awarded and what will be the balance in the funds after the last award
is made?
a. 8 yr., ₱1,406
b. 9 yr., ₱1,207
c. 8 yr., ₱2,033
d. 9 yr., ₱1,200

3000
18000= [ 1−( 1.08 )− N ] ; N=?
0.08
ln(1−0.48)
N= =8.49 years ≅ 8
−ln 1.08
3000
18000= [ 1−( 1.08 )−8 ] + x ( 1.08 )−8
0.08
x=1406.8 6
33. ME BD April 1990. If ₱10,000 is deposited each 9 years, how much annuity can a person get
annually from the bank every year for 8 years starting one year after the 9 th deposit is made?
Cost of money is 14%.
a. ₱16,489.00
b. ₱34,675.15
c. ₱23,782.33
d. ₱12,009.12

Pi
x=
[1−( 1+i )− N ]
9
10000 [ ( 1.14 ) −1 ] ( 0.14 )
x=
0.14 {
[ 1−( 1.14 )−8 ] }
x=34675.1 8

34. ME BOARD OCT. 1990. A car dealer advertises the sale of a car model for a cash price of
₱280,000. If purchased on installment, the required down payment is 15% and the balance
payable in 18 equal monthly installments at an interest of 1.5 % per month. How much will be
the required monthly payment?
a. ₱15,186.70
b. ₱15,200.87
c. ₱15,185.78
d. ₱16,187.75

A
( 28000 ) ( 0.85 )=
0.015
[ 1−( 1.015 )−18 ]
A=15185.7 8

35. ME BD OCT 96. Mr. Ayala borrows ₱100,000 at 10% effective annual interest. He must pay back
the loan over 30 years with uniform monthly payments due on the first day of each month.
What does Mr. Ayala pay each month?
a. ₱870.00
b. ₱845.90
c. ₱865.00
d. ₱839.20
Pi
A=
[1−( 1+i )−N ]
1
2
ei=( 1+i ) −1
1
2
i=( 1.1 ) −1
i=0.00797414
(100000)(0.00797414)
A= −30 ( 12 )
[1−( 1+0.00797414 ) ]
A=845.9 0
36. What is the percent worth of ₱1,000 monthly deposit at 2% per month for one year if the
payments are made at the beginning of each month?
a. ₱10,786.85
b. ₱9,786.85
c. ₱11,786.85
d. ₱8,786.85

A
P= A+ [1−( 1+i )− N ]
i
1000
P=1000+ [1−( 1.02 )−11 ]
0.02
P=10786.8 5

37. Determine the present worth of a deferred annuity consisting of ten semi-annual payments
each ₱1000, the first to be paid at end of the third year. Money is worth 14% compounded semi-
annually.
a. ₱5,245.34
b. ₱5,007.72
c. ₱6,709.56
d. ₱4,900.89

P=x ( 1.07 )−5

1000
P= [1−( 1.07 )−10 ]¿
0.07
P=5007.7 5

38. Determine the capitalized cost of a research laboratory w/c requires ₱5,000,000 for original
construction; ₱100,000 at the end of every year for the first 6 years and then ₱120,000 each
year thereafter for operating expenses; and ₱500,000 every five years for replacement of
equipment w/ interest at 12% annum.
a. ₱5,917,772
b. ₱6,573,646
c. ₱9,815,789
d. ₱7,908,907

S
CC =FC + P+
(1+i ) L−1
100000 120000
P= [ 1−( 1.02 )−6 ] + ( 1.12 )−6
0.12 0.12
P=917771.85
1500000
CC =5000000+ 917771.85+
[ ( 1.12 )5 −1 ]
CC =6,573,645.74
39. A foundation was endowed with ₱10M in July 1980. In July 1984, ₱4M was expanded for initial
facilities, and it was decided to provide for ₱1M of capital replacements at the end of every fifth
year thereafter. If all money earn interest at 13% after the time of the endowment, what annual
end of year perpetuity can be provided for operating expenses?
a. ₱3,987,257.00
b. ₱1,209,876.89
c. ₱9,098,456.98
d. ₱1,875,193.82

6
( 10000000 ) ( 1.15 )7=4 ×106 + 1 ×10 5
+
A
( 1.15 ) −1 0.15
A=Php1,875,193.82

40. A loan was to be amortized by a group of four end of year payments forming an ascending
arithmetic progression. The initial payment was to be five thousand pesos and the difference
between successive payments was to be ₱400. But the loan was renegotiated to provide for the
payment of equal rather than uniformly varying sums. If the interest rate of the loan was 15%
what was the annual payment?
a. ₱5,530.51
b. ₱3,908.88
c. ₱6,8900.90
d. ₱4,903.00

N
G ( 1+i ) −1
A −N
P= [ (1+i ) ]+
i i [i
4
]
−N ( 1+ i )−N

400 ( 1.15 ) −1
P=
5000
0.15
[ −4
( 1.15 ) ] + [
0.15 0.15 ]
−4 ( 1.15 )−4

P=15789.46151457
Pi
A=
[ 1−( 1+ i)−N ]
(15789.46)(0.15)
A= −4
[1−( 1.15 ) ]
A=5530.5

41. EE BD OCT 1999. A factor operator bought a diesel generator set for ₱10,000 and agreed to pay
the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually,
that the final payment will cancel the debt for principal and interest. What is the annual
payment?
a. ₱2,504.57
b. ₱2,780.56
c. ₱2,389.17
d. ₱2,129.00
 A
P= [1−( 1+i )−N ]
i
A
10000=
0.08
[ 1−( 1.08 )−5 ]
A=Php2504.5 6

42. A parent on the day the child is born wishes to determine what lump sum would have to be paid
into an account bearing interest at 5% compounded annually, in order to withdraw ₱20,000
each on the child’s 18th, 19th, 20th, and 21st birthdays. How much is the lump sum amount?
a. ₱30,149.37
b. ₱30,194.73
c. ₱30,941.73
d. ₱30,491.37

20000
P= [ 1−( 1.05 )−4 ] ( 1.05 )−17
0.05
P=30941.7 3

43. A man inherited a regular endowment of ₱100,000 every end of 3 months for 10 years.
However, he may choose to get a single lump sum payment at the end of 4 years. How much is
this lump sum if the cost of money is 14% compounded quarterly?
a. ₱3,720,399.73
b. ₱3,399,720.37
c. ₱3,702,939.73
d. ₱3,279,933.79

x=F 1+ P 1
100000
x= ¿¿
0.035
x=3,702,939.7 3

44. An amortization of a debt is in a form of gradient series. What is the future worth of these
payments: ₱5,000, ₱4,500, ₱4,000, and ₱3,500 at the end of the first, second, third, and fourth
year respectively?
a. ₱15,781.43
b. ₱15,187.34
c. ₱15,178.34
d. ₱18,449.37

4
F=P ( 1+i )
N
F=
A
i {
[ ( 1+ i ) N −1 ]−
G ( 1+ i ) −1
i [ i ]}
−N ( 1+i )
4

F=18449.37
45. A small shop in Bulacan fabricates portable rice thresher for palay producers in the locality. The
shop can produce each thresher at a labor cost of ₱1,800. The cost of materials for each unit is
₱2,500. The additional variable cost amount to ₱650/unit while the fixed charges incurred per
annum totals ₱69,000. If the portable thresher are sold at ₱7,800/unit. What will be the profit
or loss per year at 40 units per year capacity?
a. ₱12,000 loss
b. ₱12,000 profit
c. ₱45,000 loss
d. ₱45,000 profit

P=2850 ( 40 )−69000=4500 0

46. ME BD OCT. 1990. Compute the number of ice 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 -- ₱20.00
Tax to be paid per block ------- ₱2.00
Real estate tax ------------------- ₱3,500/month
Salaries and wages -------------- ₱25,000/month
Others ------------------------------ ₱12,000/month
Selling Price of ice --------------- ₱55/block
a. 1,228 units
b. 3,333 units
c. 3,902 units
d. 2,258 units

I =E
55 x=( 20+2 ) x+(3500+25000+12000)
units
x=1227.27 ≅ 1228
mo.

47. ME BD APR 1996. Steel drum manufacture incurs a yearly fixed operating cost of ₱200,000. Each
drum manufactured costs of ₱160 to produce and sells ₱200. What is the manufacturer’s break-
even sales volume in drums per year?
a. 1250 units
b. 2500 units
c. 5000 units
d. 1000 units

I =E
200 x=200000+160 x
x=5000 units
 48. ME BD APR 1998. XYZ Corporation manufacturers bookcases that it sells for ₱65 each. It costs
XYZ ₱35,000 per year to operate its plant. The sum includes rent, depreciation charges on
equipment, and salary payments. If the cost to produce one bookcase is ₱50, how many cases
must be sold each year for XYZ to avoid a loss?
a. 2334 cases
b. 539 cases
c. 750 cases
d. 2233 cases

I =E
65 x=50 x+ 35000
x=2333.33 ≈ 2334 units

49. A local company assembling stereo radio cassette produces 3000 units per month at a cost of
₱800 per unit. Each stereo radio cassette sells for ₱1,200. If the fixed charges is ₱20,000 per
month. At what percent of the full capacity should the company be operated to materialize a
profit of ₱50,000 per month?
a. 58.33%
b. 33.33%
c. 66.67%
d. 60.00%

P=I −E
50000=400 x−20000
700000
x= =1750
400
1750
%cap= ×100 %=58.33 %
3000

 a plant produces 300 units of auto air conditioners a month at ₱3,600 each. A unit sells for ₱4,800.
The company has 10,000 shares of stock at ₱200 par value whose annual dividend is 20%. The fixed
cost of production is ₱120,000 a month.

50. What is the unhealthy point per month?

Note: Unhealthy point is the point where income is equal to expenses where the dividend on
stock has been included in the expenses.
a. 100 units
b. 128 units
c. 160 units
d. 200 units

I =E
200(10000)(0.2)
4800 x=3600 x +120000+
12
 153333.33 units
x= =127.78 ≅ 128
1200 mo .

51. What is the profit or loss per month at 60% capacity?

a. ₱54,988
b. ₱45,900
c. ₱26,766
d. ₱62,667

P=4800 x−3600 x−153333.33

P= (1200 )( 300 ) ( 0.6 ) −153333.33
P=Php 62,666.6 7

52. ME BD APRIL 1987. A fixed capital investment of ₱10,000,000 is required for a proposed
manufacturing plant and an estimated working capital of ₱2,000,000 annual depreciation is
estimated to be 10% of the fixed capital investment. If the annual profit or net annual cash flow
is ₱2,500,000, Determine the rate of return on the total investment.
a. 12.50%
b. 15.00%
c. 17.00%
d. 20.33%

Annual Cash Flow− Annual Dep .

ROR=
Investment
2.5 M −0.1(10 M )
ROR= ×100 %
10 M + 2 M
ROR=12.5 %

53. A Diesel engine uses type A filter and high-grade lubricating oil costing ₱55 per liter. With this
filter, the oil and the filter have to be changed every 500hr of operation, and 5 liters of oil have
to be added every 100hr. this filter cost ₱1,480 apiece. Eighty liters of oil costing ₱48 per liter.
However, if this filter is used the oil and filter have to be changed every 300hr. and 10 liters are
added after each 150 hours the engine is used. Which of the following statements is correct?
Hint: Consider cost per hr.
a. Type A filter and high-grade lubricating oil is more economical by about ₱4.44/hr.
b. Type B filter and high-grade lubricating oil is more economical by about ₱4.44/hr.
c. Type B filter and low-grade lubricating oil is more economical by about ₱4.44/hr.
d. Type B filter and low-grade lubricating oil is more economical by about ₱4.44/hr.

Type A :500 hr based

Cost =( 80 ) ( 55 ) + ( 20 ) (55 )+ 1480
6990 13.96
Cost =Php =Php
500 hr hr
Type B:300 hr based
Cost =( 80 ) ( 48 ) + ( 10 ) ( 48 )+1200
 5520 18.4
Cost =Php =Php
300 hr hr
∴ Type A is better by
4.44
¿ ( 18.4−13.96 )=Php
hr
54. BD OCT 1987. The Asset Privatization Trust had put up for sale a machine tools manufacturing
plant. There were two bidders with the following proposals:
A.) Bidder “A” offered ₱10M, payable 20% down payment, the balance payable ₱1M
annually for 8yrs.
B.) Bidder “B” offered ₱9M, payable ₱2M down payment, the balance payable ₱0.5M semi-
annually for 7yrs. Which bid is more beneficial to APT, if money is worth 10% effective?
a. Bid A is more beneficial to APT.
b. Bid B is more beneficial to APT.
c. Bids A and B are equally beneficial to APT.
d. All of these is correct.

1× 106 −8
P A =2 M + [1−( 1.1 ) ]
0.1
P A =Php7334926.19
i=√ 1+ei−1
i=0.048808848
0.5
PB =2 M + [1−( 1.048808848 )−14 ]
0.048808848
PB =Php 6987229.79
∴ Bid A ismore beneficial

55. ME BD APRIL 1989. Data for the two 10-hp motors are as follows:
Motor A Motor B
Original cost ₱12,500 ₱16,000
Efficiency 87% 92%
Life, years 10 10
Annual Maintenance 500 250
Taxes and Insurance 3% 3
Power cost is ₱0.25 per kW-hr. If money is worth 18%, how many hours per year would the
motors have to be operated at full load for them to be equally economical? If the expected
number of hours of operation per year exceeds the break-even point which motor is more
economical? And if the expected number of hours of operation per year is less than the break-
even point which motor is more economical?
a. 5441, Motor A, Motor B
b. 5445, Motor A, Motor B
c. 1445, Motor A, Motor B
d. 5441, Motor B, Motor A

Motor A:
 (12500)(0.18)
d= =531.4330166
( 1.18 )10−1
I =( 12500 ) ( 0.18 )=2250
10 hp Php 0.25 0.746 kw
O= ( )(
0.87 kw−hr )( hp )
N =2.1436 N

M =500
Tax=( 0.03 )( 12500 )=375
TAC A =3656.433+2.1436 N
Motor B:
(16000)(0.18)
d= =680.2342612
( 1.18 )10−1
I =( 16000 ) ( 0.18 )=2880
(10)(0.25)(0.746) N
O= =2.02717 N
0.92
M =250
Tax=( 0.03 )( 16000 )=480
TAC B =4290.23+ 2.02717 N

3656.433+2.1436 N=4290.23+2.02717 N
N=5440.15
if N =5442
TAC A =3656.433101+ 2.143678161(5439)
TAC A =15315.89
TAC B =4290.2342612+2.027173913(5439)
TAC B =15316.033
∴ 5441, Motor B , Motor A

 A company is producing a product at ₱6 per unit and sell at (20-0.01X) peso per unit where X is the
number of units sold. Fixed charges are ₱900.

56. What is the maximum profit?

a. ₱1,000.00
b. ₱7,000.00
c. ₱3,000.00
d. ₱4,000.00

Pmax =−0.01 x 2+14 x −90 0

Pmax =−0.01 ( 700 )2+ 14 ( 700 )−900
Pmax =Php 4000.0 0

57. What is the profit at 1500 units capacity?

a. -₱2,400
 b. ₱2,400
c. -₱4,200
d. ₱4,200

P=? ; if x=150 0
2
P=−0.01 ( 1500 ) +14 ( 1500 ) −900
P=Php 2400.0 0

58. A 220V, 2hp motor has an efficiency of 80%. If power costs ₱3.00 per kW-hr for the first 50kW-
hr, ₱2.90 per kW-hr for the second 50kW-hr, ₱2.80 per kW-hr for the third kW-hr and so on until
a minimum is reached. How much does it cost to run this motor continuously for 7 days?
a. ₱840
b. ₱880
c. ₱820
d. ₱860

2 hp 0.746 kw 24 hr
E= × ×7 days ×
0.8 1 hp day
E=313.32 kw−hr
Php 3.00
50 kw−hr = (50)=150
kw−hr
Php 2.90
50 kw−hr = (50)=145
kw−hr
Php 2.80
50 kw−hr = (50)=140
kw−hr

Php 2.70
50 kw−hr = (50)=135
kw−hr
Php 2.60
50 kw−hr = (50)=130
kw−hr
Php 2.50
63.32 kw−hr= ( 63.32)=158.30
kw−hr
Total=Php 858.3 0

59. A local factory assembling calculators produces 400 units per month and sells them at ₱1,800
each. Dividends are 8% on the 8,000 shares with par value of ₱250 each. The fixed operating
cost per month is ₱25,000. other costs are ₱1,000 per unit. If 200 units were produced per
month, determine the profit or loss.
a. ₱114,200 profit
b. ₱121,667 loss
c. ₱121,667 profit
d. ₱114,200 loss

P=I −E ; x=200
P=1800 x−1000 x−13333.33−25000
 P=800 ( 200 )−13333.33−25000
P=121,666.6 7

60. A manufacturer produces certain items at a labor cost per unit of ₱315, material cost per unit is
₱100, variable cost of ₱3 each. If the item has a selling price of ₱995, how many units must be
manufactured each month for the manufacturer to break even if the monthly overhead is
₱461,600?
a. 755
b. 775
c. 800
d. 815

I =E
995 x=( 315+100+3 ) x +461600
x=80 0