1.

What is the effective rate of

interest of 10% compounded
continuously?
a. 10.42% c. 10.62%
b. 10.52% d. 10.72%
2. What annuity is required over
12 years to equate with a future
worth of P20,000? Assume i =
6% annually.
a. P1,185.54
c. 1,210.62
b. 1,305.20 d. 1,135.52
3. A VOM has a current selling
price of P400. If the selling price
is expected to decline at a rate
of 10% per annum due to
obsolence, what will be its
selling price after 5 years?
a. P213.10 c. P236.20
b. P249.50 d. P200.00
4. An employee obtained a loan of
P10,000 at the rate of 6%
compounded annually in order
to repair a house. How much
must he pay monthly to
amortize the loan within a
period of 10 years?
a. P110.22 c. P111.22
b. P112.22 d. P109.22
5. If the effective annual interest
rate is 4%. Compute the
equivalent nominal annual
interest rate compounded
continuously.
a. 3.10%
c. 3.69%
b. 3.56%
d. 3.92%
6. A man loans P187,400 from a
bank with interest at 5%
compounded annually. He
agrees to pay his obligations by
paying 8 equal payments, the
first being due at the end of 10
years. Find the annual
payments.
a. P44,600.10
c.
P44,763.20
b. P44,489.47
d.
P44,980.56
7. The Texas Highway Department
expects the cost of
maintenance for a particular
piece of heavy equipment to be
P5000 in year 1, P5500 in year

2 and amounts increasing by

P500 through year 10. At an
interest rate of 10% per year,
the present worth of the
maintenance cost is nearest to
a. P38220
c. P46660
b. P42170 d. P51790
8. The first year maintenance cost
for a new automobile is
estimated to be P10,000 and it
increases at a uniform rate of
10% per year. Using an 8%
interest rate, calculate the
present worth of cost of the first
5 years of maintenance.
a. P48043
c. P27832
b. P35821 d. P19876
9. A machine costs P8000 and an
estimated life of 10 years with a
salvage value of P500. What is
its book value after 8 years
using straight line method?
a. P4000
c. P2000
b. P3000
d. P1000
10.An asset is purchased for
P9,000 its estimated economic
life is 10 years after which it will
be sold for P1,000. Find the
depreciation in the 1st 3 years
using straight line method.
a. P1400
c. P3400
b. P2400
d. P4400
11.A broadcasting corporation
purchased equipment for
P53,000 and paid P1,500 for
freight and delivery charges to
the job site. The equipment has
a normal life of 10 years with a
trade-in value of P5,000 against
the purchase of new equipment
at the end of the life. Determine
the annual depreciation cost by
sinking fund method. Assume
annual interest rate of 6%.
a. P1755.46 c. P3755.46
b. P2755.46 d. P4755.46
12.A radio service panel truck
initially cost P56,000. Its resale
value at the end of the 5th year
of the useful life is estimated at
P15,000. By means of declining
balance method, determine the
depreciation charge for the 2nd
year.

a. P6655.20 c. P8866.20
b. P7755.20 d. P9966.20
13.In the previous problem, what is
the book value after the 4th
year?
a. P43,049.74
c.
P25,405.63
b. P33,063.54
d.
P19,521.38
14.An asset has a 1st cost of
P22,000, an estimated life of 30
years, and an estimated
salvage value of P2,000. Using
the double declining balance
method, find the depreciation
charge in the 6th year.
a. P1038.76 c. P3038.76
b. P2038.76 d. P4038.76
15.In the previous problem, what is
the book value after 10 years.
a. P11,035.46
c. P9,613.11
b. P10,299.76

d. P8972.24

16.A telephone company

purchased a microwave radio
equipment for P6million. Freight
and installation charges
amounted to 4% of the
purchased price. If the
equipment will be depreciate
over a period of 10 years with
salvage value of 8%. Determine
the depreciated cost during the
5th year using SYD.
a. P626,269.10
c.
P638,272.08
b. P622,708.07
d.
P627,987.06
17.In the previous problem, what is
the total depreciation after 5
years?
a. P2,818,210.91
b. P3,548,858.18
c. P4,175,127.27
d. P4,697,018.18
18.A concrete aggregate mix is
required to contain at least 31%
sand by volume for proper
batching. One source of
material, which has 25% sand
and 75% coarse aggregate,
sells for $3 per cubic meter.
Another source, which has 40%

sand and 60% coarse

aggregate, sells for $4.40/m3.
Determine the least cost per
cubic meter of blended
aggregates.
a. $3.70
c. $3.60
b. $3.56
c. $3.46
19.Calculate the time required to
produce the hundredth unit of
production run if the first unit
took 32 minutes to produce and
the learning curve rate for
production is 80%.
a. 4.27min c. 6.27min
b. 5.27min d. 7.27min
20.A machine is under
consideration for purchase. The
cost of the machine is $25,000.
Each year it operates, the
machine will generate a savings
of $15,000. Given an effective
annual interest rate of 18%,
what is the discounted payback
period on the purchase in the
machine?
a. 1.67yr
c. 2.15yr
b. 1.75yr
d. 3.17
21.Bing borrowed a certain amount
on October 1990 from Jason.
Two years later, Bing borrowed
again from Jason an amount of
P500. Bing paid P200 on
October 1993 and discharged
his balance by paying P700 on
October 1995. What was the
amount borrowed by Bing on
October 1990 if the interest rate
is 8% compounded annually.
a. P260.51 c. P206.51
b. P216.51 d. P261.51
22.The volatility of a stock is found
to be 1.5times the stock market
average. If the risk premium for
buying stocks averages 8.3%
and the present treasury bill
rate (assumed to be risk free) is
7%, what is most nearly the
expected return (ER) on the
stock?
a. 12.45% c. 18.49%
b. 15.43% d. 19.45%
23.An investment of x dollars is
made at the end of each year
for 3 years, at an interest rate

of 9% per year compounded

annually. What will the dollar
value of the total investment
be, most nearly, upon the
deposit of the 3rd payment?
a. P0.77x
c. P2.38x
b. P1.38x
d. P3.28x
24.TOP ECE Review and Training
Center gross margin is 45% of
sales. Operating expenses such
as sales and administrative
costs are 15% of sales. TOP is in
a 40% tax bracket. What
percent is their profit after
taxes?
a. 0.0%
c. 18.0%
b. 5.0%

d. 24.0%

25.The maintenance on a machine

is expected to be P155 at the
end of the first year and it is
expected to increase P35 each
year for the following 7 years.
What sum of money should be
set aside now to pay the
maintenance for the eight year
period? Assume 6% interest.
a. P1757.90 c. P1665.98
b. P1656.98 d. P1955.89
26.The maintenance of a room air
conditioner is expected to be
P2000 at the end of the first
year and is expected to increase
by P100 each year for the
following 7 years. Assuming
rate of interest is 6%, compute
the equivalent uniform annual
maintenance cost.
a. P2319.52 c. P5638.12
b. P1245.36 d. P5586.74
27.How long will it take to double
itself if invested at 5%
compounded annually?
a. 13.7yrs
c. 14.2yrs
b. 14.7yrs
d. 15.3yrs
for problems 28 to 30
A loan shark lends money on
the following terms: "If I give
you $50 on Monday, you owe
me $60 on the following
Monday."
28.What nominal interest rate per
year (r) is the loan shark
charging?

a. 1010%
b. 1020%

c. 1030%
d. 1040%

29.What effective interest rate per

year is he charging?
a. 13,104% c. 1,310,400%
b. 131,040%
13,104,000%

d.

30.If the loan shark started with

$50 and was able to keep it, as
well as all the money he
received, out in loans at all
times, how much money would
he have at the end of one year?
a. $555,231.55
c.
$755,231.55
b. $655,231.55
d.
$855,231.55