BMAT2-X

Module 4 In-class Problems

1. A man obtains a Php500,000 housing loan at 9% interest (m = 12). If he amortizes monthly for
25 years, find the monthly payment.
2. An Php80,000 loan at 12% interest (m = 4) is to be amortized every 3 months for 4 years and 6
months. Find the quarterly payment.
3. A Php22,000 debt is to be amortized in 15 payments every 6 months. Find the semi-annual
payment and the outstanding balance after the 7th payment. Money is worth 13% converted
semi-annually.
4. An Php88,750 loan is to be amortized in 30 quarterly payments. The interest is 13% payable
quarterly. How much will the outstanding principal be in 4 years?
5. A Php75,000 loan is amortized annually at Php8,000. The interest is 10% effective. Find the
outstanding principal after the 5th payment.
6. Raymar Trading obtains a Php35M loan, at 12% interest converted semi-annually, to construct
a warehouse. The interest is to be paid every 6 months. The company repays the loan by
paying Php2.5M every 6 months. What is the outstanding principal after the 20th payment?
7. A Php150,000 loan at 12% compounded quarterly is to be amortized every 3 months for 1 ½
years. Find the quarterly payment and construct an amortization schedule.
8. A Php250,000 debt at 18% converted quarterly will be discharged by quarterly payments over
6 ½ years.
a) Find the quarterly payment.
b) Find the outstanding balance after the 15th payment.
c) How much of the 16th payment is interest payment?
d) How much of the 16th payment is repayment of principal?
e) Find the total interest charged on the loan.
9. How much will be the semi-annual amortization for a Php700,000 loan with interest at 10%
converted semi-annually for a term of 8 years? How much interest will be paid on the 6th
payment? What is the outstanding principal in 5 years?
10. A Php25,000 refrigerator is bought with a downpayment of Php5,000 and monthly installments
of Php2,000. If the buyer pays 18% interest (m = 12),
a) how much will be the outstanding balance after the 5th installment?
b) how much interest is paid on the 9th installment?
c) how much of the principal has been reduced by the 7th installment?
d) what is the final irregular installment? When is it due?
11. In order to have Php80,000 in 5 years, a man deposits each year in a sinking fund earning 6%
effective. Find the annual deposit and construct a sinking fund schedule.
12. To pay for plant expansion, a factory manager estimates that Php25M will be needed in 6 ½
years. He decides that the factory should invest a sum every 3 months in a fund. Interest is
earned at 12% converted quarterly.
a) How much is the quarterly investment?
b) How much will be in the fund after the 10th deposit?
c) How much interest is earned on the 8th deposit date?
d) How much will the fund increase be on the 10th deposit date?

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13. A Php200,000 loan at 8% effective interest rate is to be repaid in 5 years through a sinking
fund. Equal deposits are made each year into a fund that earns 7% effective. Find the total
annual cost of the loan.
14. A Php100,000 loan is to be repaid in lump sum in 8 years. The lender charges 10% interest
payable semi-annually. The debtor decides to pay the interest semi-annually and to repay the
principal by creating a sinking fund.
a) How much is the debtor’s semi-annual expense if the fund is invested at 9% compounded
semi-annually?
b) How much will be in the fund after the 10th deposit?
15. A Php500,000 loan at 16% interest rate payable semi-annually is to be discharged in 10 years.
Find the semi-annual expense if
a) the loan is to be amortized every 6 months;
b) the loan is repaid by a sinking fund earning at 15% compounded semi-annually.
Also, find which method is cheaper and how much the debtor can save semi-annually by
choosing it.

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