Plates on Annuity Topics

1. An employee borrowed ₱700,000 with 12% interest compounded semi-annually

2. A machine needs ₱5,000 semi-annually for its maintenance during its perpetual
life. If effective interest is 16%, find the present worth of maintenance.

3. A farmer bought an equipment costing ₱12,000. The equipment may be

4. What is the present worth of a 4 year annuity paying ₱4,000 at the end of each
year, with interest at 10% compounded annually?

5. The maintenance cost of a machine this year is expected to be ₱5,000. The cost
will increase ₱1,000 each year for the subsequent 4 years. The interest is 15%
compounded annually. What is the approximate worth of maintenance for the
machine over the full 5 years?

6. A machine needs ₱15,000 annually for its maintenance during its perpetual life.
Find the present amount of maintenance if the interest is 4%.

7. What is the effective interest rate per year of a machine having a present amount
of ₱900,000 with ₱890 amount of maintenance during its perpetual life.

8. A car needs ₱5,000 quarterly for its maintenance during its perpetual life. If the
effective interest is 28%, find the present amount of maintenance.

9. A contractor bought a concrete mixer at ₱150,000 if paid in cash. The mixer may
also be purchased by installment to be paid within 7 years. If money worth 9%.
 The amount of each annual payment, if all payments made at the beginning of
each year, is ______.

10. The maintenance cost of a machine this year is expected to be ₱500. The cost will
increase ₱150 each year for the subsequent 4 years. The interest is 8%
compounded annually. What is the approximate worth of maintenance for the
machine over the full 5 years?

11. A mother on the day the child is born wishes to determine what lump sum that
would have to be paid into an account bearing interest at 15% compound annually,
in order to withdraw ₱29,000 each on the child’s 18th, 19th, 20th and 21st birthday.
What is the lump sum?

12. A man borrowed ₱40,000 and promise to pay the amount annually for 11 years, at
the beginning of each period with interest rate of 15% compounded annually. Find
the annual amount.

13. Mr. Gomez deposit ₱74,000 and withdraw ₱10,000 per year at the beginning of
each period with interest rate of 10%. In how many years will a deposit become
zero?

14. Ms. Villamor’s annual payment was ₱7,000, becomes ₱470,123 in 15 years at
beginning of each. Find the annual interest of the investment.

15. A president borrowed ₱40,000 and promised to pay amount annually for 20 years
at the beginning of each period with interest rate of 17% compounded semi-
annually. Find the annual amount.

16. A local firm is establishing a sinking fund for the purpose of accumulating sufficient
capital to retire its outstanding bonds at maturity. The bonds are redeemable 11
 years, and their maturity values ₱160,000. How much deposited each year if the
fund pays interest at the rate of 4%?

17. How much money must you invest today in order to withdraw ₱2000/year for 11
years if the interest rate 10%?

18. The president of a growing engineering firm wishes to give each of 60 employees
a holiday bonus. How much is needed to invest monthly for a year at 11% interest
rate, compounded monthly, so that each employee will receive a ₱2,000 bonus?

19. An employee is about to receive the sum of ₱400 at the end of each year for 5
years. One year prior to the receipt of the first sum, he decides to discount all 5
sums. If the rate is 7%. What proceeds will he obtain?

20. An investor is to receive an annuity of $1,000 per year for 15 years, with the first
payment to be made annually, what is a fair price?

21. What is the present worth of a $100 annuity over a ten-year period, if the interest
rate is 8%?

22. What is the present worth of a $100 annuity starting at the end of the third year
and continuing to the end of the fourth year, if the annual interest rate is 8%?

23. What is the annuity over a 10-year period at 8% interest is equivalent to a present
worth of $100?

24. You are thinking about retirement and you are considering investing money each
month so you will have $ 100,000 in 30 years. If the nominal annual interest rate is
8% and the interest is compounded monthly, calculate the money investment’s
amount.
25. Congratulation you won $1,000,000 in the lottery. Unfortunately, the lottery
commission will not pay you the entire amount now. Instead, they will pay you
$50,000 each year for the next 20 years starting at the end of the first year. What
is the present worth of your winnings? Assume a nominal annual interest rate of
10%.

26. A person invests $450 to be collected in 8 years. Given that the interest rate on the
investment is 14.5% per year, compounded annually, what sum, in dollars will be
collected eight years hence?

27. If $500 is invested at the end of each year for six years, at an effective annual
interest rate of 7%, what is the total dollar amount available upon the deposit of the
sixth payment?

28. If ₱5,000 is invested at the end of each year for six years at an effective annual
interest rate of 7%, what is the total peso amount available upon the deposit of the
sixth payment?

29. A debt of ₱1,000 is to be paid off in five equal yearly payments, each payment
combining an amortization installment and interest at 8% on the previously unpaid
balance of the debt. What should be the amount of each payment?

30. An old boiler cost ₱2,400 a year to maintain. What expenditures to a new boiler is
justified if no maintenance will be required for the first 3 years, ₱600 per year for
the next 7 years, and ₱2,400 a year thereafter? Assume money to cost 4%
compounded annually and no other cost to be considered.

31. If money is worth 8%, obtain the present value of the perpetuity of ₱1,000 payable
annually when the first payment due at end of 5 years.

32. A corporation foresees the necessity of making a large payment at some future
date, business prudence leads to the formation to the sinking fund by annual
 deposits of ₱250 invested at 3%. Find the amount in the fund just after in the
fourth deposit.

33. A father invests ₱10,000 now for the college education for his two-year-old son. If
the fund earns 14% effective, how much will the son get each year starting from
his 18th to the 22th birthday?

34. A man loans ₱187,400 from a bank with interest at 5% compounded annually. He
agrees to pay his obligation by paying 8 equal payments, the first is being due at
the end at 10 years. Find the annual payments.

35. If you obtain a loan of ₱1,000,000 at the rate of 12% compounded annually in
order to build a house, how much must you pay to amortize the loan within a
period of ten years?

36. A person buys a piece of lot ₱100,000 down payment and 10 deferred semi-
annually payments of ₱8,000 each, starting three years from now. What is the
present value of the investment if the rate of interest is 12% compounded semi-
annually?

37. How much would be accumulated in the sinking fund at end of 18 years if ₱3600 is
deposited at the end of each month and interest is 4% compounded annually?

38. Engr. Dela Cruz borrowed ₱150,000 two years ago. The terms of the loan are 10%
interest for 10 years with uniform payments. He just made his second annual
payment. How much principal does he still owe?

39. A business man wants to have ₱500,000 four years from now. What amount he
invest now if it will earn interest of 6% compounded quarterly for the first two years
and 8% compounded semi-annually during the next two years
40. Annual deposits were made in a fund earning 10% per annum. The first deposit
was ₱2,000 and each deposit thereafter was ₱200 less than preceding one.
Determine the amount in the fund after the 6th deposit.

41. What nominal rate of interest compound semi-annually can be used instead of
16% compounded quarterly?

42. The amount that must be deposited to provide annual payments of ₱10,000 that
are to continue indefinitely if the endowment fund earns an interest at 4%
compounded semi-annually.

43. For how many years must an investment of ₱63,000 provide a continuous flow of
funds at the rate of ₱16,000 per year so that a nominal interest rate of 10%
continuously compounded will be earned?

44. A series of equal quarterly deposits of ₱1000 extends over a period of 3 years.
The future worth of this quarterly deposits series at 9% interest compounded
monthly is ____.

45. What is the equal payment series for 10 years that is equivalent to a payment
series of ₱12,000 at the end of the first year, decreasing by ₱1000 each year over
10 years? Interest is 8% compounded annually?

46. A geometric gradient has an initial amount of ₱500 and increase at G = 6% per
year for 15 years. The annual interest rate is 12%. The present equivalent value of
this gradient is _____.

47. What is the accumulated amount after 5 years of ₱10,000 invested at the rate of
10% per year compounded semi-annually?
48. A $10,000 loan is to be repaid at the rate of $200 per month, with an annual
effective interest rate of 19.56% charged against the unpaid balance. What
principal remains to be paid after the third payment?

49. Assume an effective interest rate of 15% per year compounded annually. An
investment requires $1500 at the end of each year for the next 5 years plus a final
investment of $3000 in 5 years. What is the equivalent lump sum investment now?

50. What annual investment is required at 8% per year compound annually to

51. An investor is to receive an annuity of $1, 000 per year for 15 years, with the first
payment to be made annually, what is a fair price?

52. You are thinking about retirement and you are considering investing money each
month so you will have $ 100,000 in 30 years. If the nominal annual interest rate is
8% and the interest is compounded monthly, calculate the money investment
amount.

53. The amount of ₱50,000 is deposited in a bank. How much money are you going to
withdraw after 8 years at 8% compounded annually?