1. Determine the exact simple interest on P5, 500 a. P39155.

4
for the period from January 10, 1996 to October b. P31243.2
28, 1996 at 15% interest. c. P39207.8
a. P658.19 d. P34224.4
b. P613.42 10. A bank is advertising 9% accounts that yield
c. P482.84 9.344% annually. How often is the interest
d. P520.13 compounded?
2. Jhomer borrowed P1000 from Nikko and agreed a. Daily
to pay the loan at the end of one year. Nikko b. Monthly
discounted the loan and give P550 in cash. c. Quarterly
Determine the rate of discount. d. Bimonthly
a. 55% 11. What is the effective rate of an account with 12%
b. 45% nominal rate compounded continuously?
c. 25% a. 12.75%
d. 10% b. 11.72%
3. The period is based on one banker year. c. 12.55%
A. Exact Simple Interest d. 12.32%
B. Ordinary Simple Interest 12. How often is the interest compounded if nominal
C. Compound Simple Interest rate is 15% and effective rate is 16.1798%.
D. Annuity a. Monthly
4. One banker year is equal to how many days b. Daily
a. 366 days c. Quarterly
b. 365 days d. Bimonthly
c. 350 days 13. How often is the interest compounded if nominal
d. 360 days rate is 8% and effective rate is 8.16%.
5. A man borrowed P4000 for 75 days at 16% per a. Annually
annum interest rate. How much is the interest? b. Bimonthly
a. P4133.33 c. Quarterly
b. P2133.33 d. Semi- Annually
c. P133.33 14. Suppose a car presently worth $1200
d. P4000.00 depreciates 30% year. About how much will it be
6. If the discount rate is 12%, determine the worth 3 years from now?
interest rate. a. P419.20
a. 13.64% b. P411.60
b. 13.33% c. P2636.40
c. 12.55% d. P2454.32
d. 11.36% 15. A bank charges 12% simple interest on a P300.
7. Compute how much is the interest on P3000.00 00 loan. How much will be repaid if the loan is
from January 15 to June 21, 2009, if the rate of paid back in one lump sum after three years?
simple interest is 14%. a. P408
A. P172.52 b. P203
B. P190.42 c. P422
C. P180.66 d. P345
D. P132.23 16. XYZ Corporation manufactures bookcases that it
8. If the loan was for 15 months at 16.8% interest a sells for P65. 00 each. It costs XYZ P42, 000 per
year and the repayment on a loan was year to operate its plant. This sum includes rent,
P12,100.00, how much was the principal? depreciation charges on equipment and salary
a. P8500 payments. If the cost to produce one bookcase is
b. P10000 P50.00, how many cases must be sold each year
c. P9500 for XYZ to avoid taking a loss?
d. P10500 a. 2500 units
9. An amount of P25,000 is invested at 4.5% b. 2134 units
continuous compounding. Find the amount after c. 2800 units
10 years. d. 2200 units
17. If P5000 shall accumulate for 10 years at 8% the beginning of each month. What does Mr.
compounded quarterly. Find the compounded Raguine pay each month?
interest at the end of 10 years. a. P839
a. 6040.20 b. P870
b. 6100.20 c. P846
c. 6030.20 d. P878
d. 6500.20 25. What is the exact simple interest of P2000 if
18. A person pays interest on a loan semi-annually at invested at 15% from January 23, 1995 to March
a nominal annual interest rate of 16%. What is 12, 1995?
the effective annual interest rate? a. P32.45
a. 15.5% b. P35.74
b. 15.7% c. P39.45
c. 15.65% d. P38.27
d. 16.64% 26. P200,000 was deposited on January 1, 1988 at an
19. The difference between what a negotiable paper interest rate of 24% compounded semi-annually.
is worth in the future and its present worth is How much would the sum on January 1, 1993?
known as: a. P621,170
a. Book value b. P642,322
b. Sunk value c. P631,321
c. Differential cost d. P602,130
d. Discount 27. How long must a P4000 note bearing 4% simple
20. Those cost that arise at the result of a change in interest run to amount P4135?
operations or policy or it is the ratio of a small a. 302 days
increment cost and a small increment of output. b. 310 days
a. Increment cost c. 304 days
b. Marginal Cost d. 308 days
c. Differential cost 28. Tops Corporation’s gross margin is 45% of sales.
d. Sunk Cost Operating expenses such as sales and
21. What is the present worth of a P100 annuity administration are 15% of sales. Tops is in a 40%
over a ten-year period, if the interest rate is 8%? tax bracket. What percent of sales is their profit
a. 671 after taxes?
b. 642 a. 0%
c. 623 b. 5%
d. 705 c. 18%
22. A 40-year old consulting engineer wants to set d. 24%
up a retirement fund to be used starting at age 29. Annual maintenance costs for a particular
65. P20000 is invested now at 6% compounded section of highway pavement are P100,000. The
annually. placement of a new surface would reduce the
a. P205714.36 annual maintenance cost to P25, 000 per year
b. P882899.43 for the first five years and to P50,000 per year
c. P85837.41 for the next five years. The annual maintenance
d. P20423.32 after 10 years would again be P100, 000. If the
23. For some interest rate I and some number of maintenance costs are the only saving, what
interest periods n, the uniform series capital maximum investment can be justified for the
recovery factor is 0.0854 and the sinking fund new surface? Assume interest at 4%
factor is 0.0604. The interest rate I must be: a. P517,000
a. 3.5% b. P417,000
b. 2.5% c. P520,000
c. 4.5% d. P512,000
d. 8% 30. The balance sheet of Allied Company is as
24. Mr. Raguine borrows $100,000 at 10% effective follows: Assets( Cash: $14, 000, Receivables
annual interest. He must pay back the loan over $12,000, inventory: $4000, Capital Equipment:
30 years with uniform monthly payments due on $20,000, Total $49,000)
Liabilities: (Payables: $17,000, Notes Due: $10000, 37. Mr. Johnson borrows P90000 at 12% effective
Long term debt: $7000, Owner’s Equity, $23,000 annual interest. He must pay back the loan over
Total: $53,000). What is the acid test ratio? 25 years with uniform monthly payments due on
the first day of each month. Approximately what
a. 0.846 amount does Mr. Johnson pay each month?
b. 0.882 a. 886
c. 0.765 b. 890
d. 0.924 c. 848
31. Determine how long will it take money to double d. 899
itself if invested at 10% compounded annually? 38. A man borrowed P100,000 at 11% compounded
a. 7 annually for 12 years. And promised to pay the
b. 8 amount starting 5 years from now. Find the
c. 9 annual payment.
d. 6 a. P23382
32. Determine how long will it take money to b. P24421
quadruple itself if invested at 12% compounded c. P23586
annually? d. P23450
a. 10 39. Permanent mineral rights on a parcel of land are
b. 12 purchased for an initial lump-sum payment of
c. 9 P150,000. The expenses for mining is P12000 for
d. 13 the month of June. Profits from mining activities
33. You deposit P1000 into a 9% account today. At are P16,000 each year, and these profits are
the end of two years, you will deposit another expected to continue indefinitely. What
P3000. In five years, you plan a P4000 purchase. approximate interest rate is being earned on the
How much is left in the account one year after initial investment?
the purchase? a. 8%
a. P1211.83 b. 10.67%
b. P1155.86 c. 18.67%
c. P1551.83 d. 12%
d. P2151.83 40. An electrical Engineer obtained a loan of P50,000
34. The school dentist Dr. Escoreal bought a lot at the rate of 6% compounded annually in order
worth P1,000,000 if paid in cash just for Lester to repair his mistress house. How much must the
Dave. On the installment basis, he paid a down electrical Engineer pay monthly to amortize the
payment of P200,000; P300,000 at the end of loan within a period of ten years?
one year; P400,000 at the end of three years and a. P560.90
a final payment at the end of five years. What b. P505.90
was the final payment if the interest was 20%? c. P550.90
a. P792,576 d. P507.90
b. P297456 41. A manufacturing firm wishes to give each 80
c. P972576 employees a holiday bonus. How much is needed
d. P297665 to invest monthly for a year at 12% nominal
35. What is the future worth of my P100,000 after 5 interest rate compounded monthly so that each
years if I invest today at a rate of 12% employee will receive a P2000 bonus?
compounded annually. Inflation rate is 8% per a. P12608
year. b. P12615
a. P109,292 c. P12224
b. P239,942 d. P12316
c. P129,942 42. How much money must you invest today in
d. P119,942 order to withdraw P2000 annually for 10 years if
36. What is the actual rate if inflation rate is given as the interest rate is 9%
7% and interest rate is 12%? a. 12835.32
a. 4.55% b. 12853.32
b. 4.44% c. 12322.42
c. 4.67% d. 12881.17
d. 4.32%
43. What will be the future worth of money after 12 51. An individual needs $12,000 immediately as
months, if the sum of P25, 000 is invested today down payment on a new home. Suppose he can
at simple interest rate of 1% per year? borrow this money from his insurance company.
a. P29000 He must repay the loan in equal payments every
b. P30000 six months over the next eight years. The
c. P27859 nominal interest rate being charge is 7%
d. P28000 compounded continuously. What is the amount
44. A man expects to receive P25000 in 8 years. How of each payment?
much is that money worth now considering A. $997
interest at 8% compounded quarterly? B. $1067
a. 13265.63 C. $1245
b. 13122.43 D. $1024
c. 13211.70 52. Find the present worth of all the cash
d. 13625.63 disbursements using gradient interest formulas if
45. At an interest rate of 10% compounded annually, money is worth 20% per annum. Annual cash
how much will a deposit of P1500 be in 15 years? disbursements increases by P1000 every year
a. P6265.87 thereafter, until the end of the fourth year. The
b. P6234.09 first cash disbursement amounts to P5000.
c. P6109.21 a. 16503.45
d. P6144.20 b. 18061.32
46. The effective rate of 14% compounded semi- c. 16242.28
annually is: d. 12775.34
a. 14.49% 53. A newly acquired machinery requires annual
b. 12.36% maintenance costs of P10000. If the annual
c. 14.94% maintenance costs is increased by 24% each year
d. 14.88% every year for 10 years, what is the estimated
47. The effective rate of 14% compounded semi- present worth of the maintenance costs if
monthly is: money is worth 15%
a. 14.84% a. 124934.5
b. 15.32% b. 106100.5
c. 14.98% c. 134221.5
d. 14.93% d. 134226.5
48. What is annuity? 54. If the salvage is 2000 with useful life of 5 years
a. The future worth of a present amount and the first cost is 10000, Determine the
b. An annual repayment of a loan constant ratio k using declining balance method.
c. A series of uniform amounts over a period a. 0.2455
of time b. 0.2752
d. A lump sum at the end of the year c. 0.2322
49. A steel drum manufacturer incurs a yearsly fixed d. 0.2143
operating cost of $200,000. Each drum 55. A machine has an initial cost of P40,000 and a
manufactured costs $160 to produce and sells salvage value of P20,000 after 5 years. What is
for $200. What is the manufacturer’s break-even the book value after three years using straight
sales volume in drums per year? line depreciation?
a. 1000 a. 25,000
b. 1250 b. 26,000
c. 2500 c. 27,000
d. 5000 d. 28,000
50. Annuity in which the first payment does not 56. Company A purchases $220,000 of equipment in
begin until some later date in the cash flow. year 0. It decides to use straight line depreciation
a. Deferred Annuity over the expected 20 yr life of the equipment.
b. Annuity due The interest rate is 15%. If its overall tax rate is
c. Perpetuity 40%, what is the present worth of the after-tax
d. Ordinary Annuity depreciation recovery?
a. $22541
 b. $23541 63. A VOM has a selling price of P400.00. If the
c. $27541 selling price is expected to decline at a rate of
d. $28541 10% per annum due to obsolescence, what will
57. What is the book value of equipment purchase 3 be its selling price after 5 years?(Clue: use DBM)
years ago for $15,000 of it is depreciated using a. P240
the sum of the year’s digits (SOYD) method? The b. P210
expected life is 6 yr. c. P220
a. 4124.7 d. P200
b. 4428.5 64. A firm bought an equipment for P56000. Other
c. 4762.2 expenses including installation amounted to
d. 4285.7 P4000. The equipment is expected to have a life
58. A machine initially costing $25,000 will have a of 16 years with a salvage value of 10% of the
salvage value of $6000 after five years. Using original cost. Determine the book value at the
MACRS depreciation, what will its book value be end of 12 years using sinking fund method at
after the second year? 12% interest.
a. 7200 a. P29,400
b. 12000 b. P29,520
c. 15000 c. P29,740
d. 5000 d. P29,590
59. A machine has an initial cost of P50,000 and a 65. Determine the book value at the end of 4 years
salvage value of 10,000 after 10 years. What is of a machine costing P20,000 having a
the book value after six years using the MACRS serviceable life of 8 years and a salvage value of
method of depreciation? P2000 at the end of that time. Use SOYD
a. 12500 method.
b. 18432 a. P6000
c. 14745 b. P5000
d. 15624 c. P4000
60. A lathe machine costs P300,000 with a salvage d. P7000
value of P15,000 is expected to last for 26,500 66. A machine costing P720,000 is estimated to have
hours in period for 5 years. In the first year of a life of 10 years. If the annual rate of
service it was used for 9000 hours. Compute the depreciation is 25%, determine the book value at
depreciation for the first year. 5 years. Use Declining balance method
a. 96800 a. P170,860
b. 90000 b. P162,545
c. 80000 c. P132,398
d. 95400 d. P140,552
61. Determine the book value at the end of 6 years 67. If the first cost is P50000 and the salvage value is
of a machine costing P20,000 having a P1000 after 8 years, Determine the book value at
serviceable life of 8 years and a salvage value of the 4th year using sinking fund method. The
P2000 at the end of that time. Use SOYD interest rate is 8%.
method. a. 24241.6
a. 7000 b. 29241.6
b. 4200 c. 26241.6
c. 3500 d. 27241.6
d. 6750 68. A machine has an initial cost of P100,000 and a
62. A machine costing P720,000 is estimated to have salvage value of P20,000 after 7 years. What is
a life of 10 years. IF the annual rate of the book value after 5 years using straight line
depreciation is 25%, determine the total depreciation?
depreciation using constant percentage method a. 43858.32
or declining balance method. b. 42857.14
a. 680,000 c. 41224.12
b. 40,550 d. 42662.51
c. 610,500 69. A machine costing P720,000 is estimated to have
d. 41,220 a life of 10 years. If the annual rate of
 depreciation is 25%, determine the book value at 75. The purchase of a motor for $6500 and a
5 years. Use Double Declining balance method generator for $4500 will allow a company to
a. P170,860 produce its own energy. The configuration can
b. P235,930 be assembled for $800. The service will operate
c. P220,440 for 1650 h/yr for 10 yr. The maintenance cost is
d. P215,760 $350/yr and the cost to operate is $0.87/h for
70. Determine the capital recovery of an equipment fuel and related costs. There is $500 in salvage
investment costing P100,000 with salvage value value for the system at the end of 10 yr. Using
of P30,000 in 10 years using straight line straight-line depreciation, what is the annual
method. The interest rate is 10%. cost for the operation?
a. 24125 A. 2615
b. 13850 B. 2315
c. 12465 C. 2815
d. 22425 D. 2915
71. A company must relocate one of its factories in 3 76. A bridge is constructed for 20 million pesos. The
years. Equipment for the loading dock is being estimated annual maintenance cost is P400,000.
considered for purchase. The original cost is If the interest rate is 8% per annum, what is the
$20,000 and the salvage value after 3 years is capitalized cost of the bridge?
$8000. The company’s rate of return on money a. 25,000,000
invested is 12%. The capital recovery rate per b. 24,000,000
year is most nearly: c. 23,000,000
a. 5124.2 d. 22,000,000
b. 5656.2 77. A new engine was installed by a textile plant at
c. 5265.2 cost of P300,000 and projected to have a useful
d. 5956.2 life of 15 years. At the end of its useful life, it is
72. An alternative for manufacturing a certain part estimated to have a salvage value of P30,000.
has a first cost of $50,000, an annual cost of Determine its capitalized cost if interest is 18%
$10,000 and a salvage value of $5,000 after its 10 compounded annually?
year life. At an interest rate of 10% per year, find a. 324600
the capitalized cost of the alternative. b. 234600
a. P168240 c. 134600
b. P178240 d. 124600
c. P188240 78. An investment of $350,000 is made, to be
d. P158240 followed by payments of $200,000 each year for
73. The construction of a volley ball court for the three years. What is the annual rate of return on
employees of a highly successful mid-sized investment for this project?
publishing company in California is expected to a. 0.317
cost $1200 and have annual maintenance costs b. 0.387
of $300. At an effective annual interest rate of c. 0.327
4%, what is the project’s capitalized cost? d. 0.427
a. P7200 79. A machine shop installs new lathe machine that
b. P8700 costs of P6,500,000. The machine shop expects
c. P30300 annual gross revenue to increase P500,000 while
d. P6700 it incurs an annual expense of P50,000 for the
74. A $1000 face-value bond pays dividends of $110 machine operations and maintenance. What is
at the end of each year. If the bond matures in the payback period?
20 years, what is the approximate bond value at a. 14.4
an interest rate of 12% per year, compounded b. 12.4
annually? c. 0.07
a. P670 d. 11.8
b. P925 80. An industrial firm uses an economic analysis to
c. P750 determine which of two different machine to
d. P820 purchase. Each machine is capable of performing
 the same task in a given amount of time. Assume d. 1.225
the minimum attractive rate of return is 8%: 84. The following data is tabulated:

Deyn’s Machine Initial cost: $300,000

Life: 9 years
Initial Cost: $6000 Annual Operation and Maintenance: $55,000
Estimated Life: 10 years Annual Benefits: $150,000
Salvage Value: none Salvage Value: $2000
Annual Maintenance Cost: $200 Annual interest: 15%

What is the appropriate equivalent uniform Determine the benefit to cost ratio.
annual cost of Deyn’s machine? a. 1.256
a. 1124.17 b. 1.232
b. 1300.17 c. 1.217
c. 1094.17 d. 1.274
d. 1248.17 85. How much should a prospective investor pay for
81. An industrial firm uses an economic analysis to a bond, if he desires a 6% return of his
determine which of two different machine to investment and the bond will return P5000 per
purchase. Each machine is capable of performing year for 20 years and P100,000 after 20 years?
the same task in a given amount of time. Assume a. P89930
the minimum attractive rate of return is 9%: b. P88590
c. P86530
Jhomer’s Machine d. P88530
86. A company which manufactures electric motors
Initial Cost: $12000 has a production capacity of 200 motors a
Estimated Life: 12 years month. The variable costs are P150.00 per
Salvage Value: $2000 motor. The average selling price of the motors is
Annual Maintenance Cost: $400 P275.00. Fixed costs of the company amount ot
P20,000 per month which includes taxes. Find
What is the appropriate equivalent uniform the no. of motors that must be sold each month
annual cost of Deyn’s machine? to break even.
a. 1946.5 a. 150
b. 1976.5 b. 160
c. 1958.5 c. 170
d. 1928.5 d. 180
82. From the two above questions, Which of the two 87. A company produces a gear that is commonly
machines should the firm choose and why? used by several lawnmower manufacturing
a. Deyn’s Machine companies. The base cost of operation(rent,
b. Jhomer’s Machine utilities, etc.) is $750,000 per year. The cost of
c. Both manufacturing is $1.35 per gear. If these gears
d. None of the above are sold at $7.35 each, how many must be sold
83. The following data is tabulated: each year to break even?
a. 65,000
Initial cost: $300,000 b. 90,000
Life: 8 years c. 100,000
Annual Operation and Maintenance: $45,000 d. 125,000
Annual Benefits: $150,000 88. The volatility β of a stock is found to be 2.5
Salvage Value: $0 times the stock market average. If the risk
Annual interest: 16% premium for buying stocks averages 8.3% and
the present Treasury bill rate (assumed to be risk
Determine the benefit to cost ratio. free) is 7%, what is most nearly the expected
a. 1.215 return on the stock?
b. 1.415 a. 19.45%
c. 1.315 b. 27.75%
 c. 25.8% d. $12,800
d. 13.75% 94. An asset is purchased for P9000. Its estimated
89. A manufacturer of sports equipment produces life is 12 years, after which it will be sold for
tennis rackets for which there is a demand of P1000. Find the book value during the 4th year if
200/month. The production setup cost for each the sum of the years digit method is used?
batch of rackets is $300. In addition, the a. 4692
inventory carrying cost for each racket is $24/yr. b. 6100
Using the EOQ model, which is most nearly the c. 5072
best production batch size for the rackets? d. 4137
A. 120 95. A machine has a first cost of P60,000 and has an
B. 170 expected salvage value after 10 years is P6,000.
C. 250 Find the book value after 6 years using declining
D. 350 balance method.
90. A steel drum manufacturer incurs a yearly fixed a. 10,028
operating cost of $200,000. Each drum b. 15071
manufactures costs $160 to produce and sells for c. 20083
$200. What is the manufacturer’s break-even d. 16042
sales volume in drums per year? 96. A member of congress wants to know the
a. 1000 capitalized cost of maintaining a proposed
b. 1250 national park. The annual maintenance cost is
c. 2500 expected to be $20,000. At an interest rate of 6%
d. 5000 per year, the capitalized cost of the maintenance
91. A company plans to manufacture a product and would be closest to:
sell it for $3.00 per unit. Equipment to a. 150,042
manufacture the product will cost $250,000 and b. 253,422
will have a net salvage value of $12,000 at the c. 333,333
end of its estimated economic life of 15 years. d. 416,667
The equipment can manufacture up to 2,000,000 97. A man buys a small garden tractor. There will be
units per year. Direct labor costs are $0.35 per no maintenance cost the first year as the tractor
unit, and fixed overhead costs are $200,000 not is sold with one year’s free maintenance. The
including depreciation. If capital investments and second year, the maintenance is estimated at
return on the investment are excluded, what is $20. In subsequent years of the maintenance
the number of units that the company must cost will increase $20 per year(that is, 3rd year
manufacture and sell in order to break even? maintenance will be $40; 4th year maintenance
Use straight line method for the depreciation. will be $60 and so forth). How much would need
A. 161,131 to be set aside now at 5% interest to pay the
B. 139,268 maintenance costs on the tractor for the first six
C. 145,241 years of ownership?
D. 151,131 a. $255.2
92. A machine has an initial cost of $50,000 and a b. $212.3
salvage value of $10,000 after 8 years. What is c. $239.4
the straight line depreciation rate as a d. $284.1
percentage of the initial cost? 98. Company A has fixed expenses of $15,000 per
a. 8% year and each unit of product has a $0.002
b. 10% variable set. Company B has fixed expenses of
c. 12% $5000 per year and can be produce the same
d. 14% unit of product at a $0.05 variable cost. At what
93. A machine that costs $20,000 has a 10 year life number of units of annual production will
and $2000 salvage value. If straight line company A have the same overall cost as
depreciation is used, what is the book value of Company B?
the machine at the end of the fourth year? a. 208333
a. $12,200 b. 108333
b. $12,400 c. 308333
c. $12,600 d. 408333
99. The cost C of a product is a function of the
quantity x of the product: C(x) =
x 2−4000 x +50. Find the quantity for which
the cost is minimum.
a. 3000
b. 2000
c. 1000
d. 1500
100. A machine has been purchased and installed at a
total cost of P18,000. The machine will be retired
at the end of 5 years, at which time it is expected
to have a scrap value of P2000 based on current
prices. The machine will then be replaced with
an exact duplicate. The company plans to
establish a reserve funds to accumulate the
capital needed to replace the machine. If an
average annual rate of inflation of 3% is
anticipated, how much capital must be
accumulated?
A. P15,030.39
B. P18 548.39
C. P13,392.40
D. P15,386.71