OLIVEROS, EALROS M.

BSCE 2 – 5 DECEMBER 2, 2020

ASSESSMENT NO. 1

1. A man wishes to accumulate 3722P after 5 yrs, 8 months and 28 days. How much should be deposited by the
man in a bank if the ordinary simple interest is 15% per annum?

GIVEN:

F = 3722P

i = 15% = 0.15

n=5 years+8 ( 121months

year
)+28 days ( 3601 year
days )
=5.74 years

n=5.74 years
FIND: P

FORMULA:

F=P(1+¿)
SOLUTION:

F
P=
( 1+¿ )
3722 P
P=
( 1+( 0.15 ) ( 5.74 ) )
P=2000 P
FINAL ANSWER: 2000P should be deposited by the man in a bank in order to accumulate 3772P after 5 years.

2. A man deposited 2000P in a bank at the rate of 15% per annum from March 21,1996 to October 25,1997. Find
the exact simple interest.

GIVEN:

P=2000 P i=15 %=0.15

March 21,1996 ¿ March 21,1997=1 year March 22¿ 31=10 days

April=30 days May=31 days June=30 days July=31 days
August =31 days September =30 days October 25=25 days
overall=1 year∧218 days

n=1 year +218 days ( 3661 year

days )
=1.60 years n=1.60 years

FIND: I

FORMULA:
 I =Pi
SOLUTION:

I =Pi

I =( 2000 P )( 0.15 )( 1.60 ) I =480 P FINAL ANSWER: The exact simple interest is 480P.
3. A bank charges 1.5% per month on a loan. Find the equivalent nominal rate of interest.

GIVEN:

i=1.5 % n1=12(monthly)

FIND: j
FORMULA:

j
i=
n1
SOLUTION:

j=in1 j= ( 1.5 )( 12 ) j=18 %

FINAL ANSWER: The equivalent nominal rate of interest is 18%.

4. A financing company charges 1.5% per month on a loan. Find the equivalent effective rate of interest.
GIVEN:

n1=12(monthly) i=1.5 %=0.015

FIND: i e
FORMULA:
n1
i e =( 1+i ) −1

SOLUTION:

i e =( 1+ i )n −1
1
i e =( 1+ 0.015 )12−1 i e =0.1956 i e =19.56 % FINAL ANSWER: The equivalent
effective rate of interest is 19.56%.

5. A nominal rate of 12% compounded monthly is equal to an effective rate of ____.

GIVEN:

j=12%=0.12
n1=12(monthly)

FIND: i e
FORMULA:
 j n 1

( )
i e = 1+
n1
−1

SOLUTION:
j n1
0.12 12

( )
i e = 1+
n1
−1
(
i e = 1+
12 ) −1 i e =0.1268 i e =12.68 %

FINAL ANSWER: The nominal rate of 12% compounded monthly is equal to an effective rate of 12.68%.

6. Convert 16% compounded semi-annually to equivalent nominal rate which is compounded daily.

16% compounded semi-anually = __% compounded daily

i e ( daily )=i e (semi−anually)

GIVEN:

n1=365 days n1=2 j=? j=16 %=0.16

FIND: j
FORMULA:

j n 1

( )
i e = 1+
n1
−1

SOLUTION:

j n 1
j n 1
j 365
0.16 2
( )
1+
n1
−1= 1+
n1( )−1
( 1+
365 ) (
−1= 1+
2 ) −1 j=0.1539 j=15.39%

FINAL ANSWER: The 16% compounded semi-anually is equal to 15.39% compounded daily.

7. Find the accumulated amount of 1000P after 5 yrs when deposited in a bank at a rate of 16%
compounded monthly.

GIVEN:

P=1 OOOP n=5 years j=16 %=0.16 n1=12

FIND: F

FORMULA:
( n1 × n )
j
F=P 1+
( ) n1

SOLUTION:
 ( n1 × n ) ( 12 ×5 )
j 0.16
F=P 1+
( ) n1
F=1000 P 1+ ( 12 ) F=2213.81 P F=2214 P

FINAL ANSWER: The accumulated amount is 2214P.

8. How long in yrs will a certain sum of money to triple its amount when deposited at a rate of 12%
compounded annually?
GIVEN:

F=1 P P=1 P j=12%=0.12 n1=12

FIND: n
FORMULA:
( n1 × n )
j
F=P 1+
( ) n1

SOLUTION:
( n1 × n ) ( 12 ×n )
j 0.12
F=P 1+
( ) n1
3 P=1 P 1+ ( 12 ) n=9.2 years

FINAL ANSWER: It will took 9.2 years before a certain sum of money to triple its amount when
deposited at a rate of 12% compounded annually

9. How much should be deposited in a bank at a rate of 12% compounded continuously for 5 yrs if its
accumulated amount is 9110.60P?

GIVEN:

F=9110.60 P j=12%=0.12 n=5 years

FIND: P
FORMULA:
jn
F=P e
SOLUTION:

F 9110.60 P
P= P= P=5000 P
e jn e (0.12 ×5 )

FINAL ANSWER: An amount of 5000P should be deposited in a bank at a rate of 12% compounded
continuously for 5 yrs if its accumulated amount is 9110.60P.

10. An effective rate of interest, which is 12.75%, is equivalent to what percent if compounded
continuously.

GIVEN:
 i e =12.75=0.1275

FIND: j

FORMULA:

i e =e j−1
SOLUTION:

i e =e j−1

0.1275=e j−1 j=0.12 j=12.00 %

FINAL ANSWER: An effective rate of interest, which is 12.75%, is equivalent to 12.00% if compounded
continuously.

11. How much is expected to be received by a man that makes a loan of 851.06P, which is payable at
once, if the bank gave him a discount of 6% is payable at once, if the bank gave him a discount of 6%.

GIVEN:

F=851.06 P d=6 %=0.06

FIND: P

FORMULA:

D=Fd D=F−P
SOLUTION:

D=Fd D=( 851.06 P ) ( 0.06 ) D=51.06 P

D=F−P P=F−D P=851.06 P−51.06 P P=800 P

FINAL ANSWER: A man is expected to receive 800P.

12. Find the cash price of a generator which was bought in installment basis that requires a down
payment of 50,000P and payment of 30,000P after 1 yr, 40,000P after 2 yrs and a final payment of
76,374.34P after 4 yrs at a rate of 15% per annum.
GIVEN:
P

i= 15% = 0.15 “per year”

0 1 2 3 4

−1
30,000 P ( 1.15 )
 30,000P
−2
40,000 P ( 1.15 ) 40,000P

50,000P

−4
76,374.34 P (1.15 ) 76,374.34P

SOLUTION:

using zero as focal date,

∑ ↑=∑ ↓
−1 −2
P=50,000 P+30,000 P ( 1.15 ) + 40,000 P ( 1.15 ) +76,374.34 P ( 1.15 )
−4
P=149,999.98 P
P=150,000 P FINAL ANSWER: The cash price of a generator is 150,000P.
13. A man made a loan of 100,000P at a rate of 15% per annum and promise to pay it according to the
following manner, 30,000P at the end of 1st yr, unknown payment at the end of 2nd yr and a final
payment of 76,374.38P at the end of 4th yr. Find the unknown payment made by the man.

GIVEN: 100,000P 100,000 P ( 1.15 )2

i= 15% = 0.15 “per year”

0 1 2 3 4
1
30,000 P ( 1.15 )

30,000P

Unknown payment (x)

−2
76,374.34 P (1.15 ) 76,374.34P

SOLUTION:

using 2 as focal date,

∑ ↑=∑ ↓
2 1
100,000 P ( 1.15 ) =30,000 P ( 1.15 ) + x+76,374.34 P ( 1.15 )
−2
x=39,999.99 P x=40,000 P
FINAL ANSWER: The unknown payment is 40,000P.

14. Find the present worth of the following payments, 5000P after 1 yr, 4000P after 2 yrs, 8000P after 4
yrs at a rate of 12% per annum.
P

GIVEN:

i= 12% = 0.12 “per year”

0 1 2 3 4

4,000 P ( 1.12 )−2

4,000P
−1
5,000 P ( 1.12 ) 5,000P

−4
8,000 ( 1.12 ) 8,000P

SOLUTION:

using zero as focal date,

∑ ↑=∑ ↓
−1 −2
P=5,000 P ( 1.12 ) + 4,000 P ( 1.12 ) + 8,000 ( 1.12 )
−4
P=12,737.26 P P=12,737 P

FINAL ANSWER: The present worth of the following payments is 12,737P.

15. Find the amount of the following payments at the end of 5th yr, 3000P at the end of 1st yr, 4500P at
the end of 2nd yr and 6000P at the end of 4th yr if money worth 12% per annum.

0 1 2 3 4 5

i= 12% = 0.12 “per year”

 3,000 P ( 1.15 ) 4
3,000P
3
4,500 P ( 1.15 )
4500P
1
6,000 P ( 1.15 )
6,000P

SOLUTION:

using 5 as focal date,

∑ ↑=∑ ↓

0=3,000 P ( 1.15 )4 + 4,500 P ( 1.15 )3 +6,000 P ( 1.15 )1+ x x=17,762.73 P x=17,763 P FINAL
ANSWER: The amount of the following payments at the end of 5th year is 17,763P.

16. How many yrs will it take for a certain sum of money to triple its amount when deposited at a rate of
12% compounded continuously?

GIVEN:

F=3 P

P=1 P j=12%=0.12

FIND: n
FORMULA:
jn
F=P e
SOLUTION:

F=P e jn

3 P=1 P e( 0.12n ) n=9.16 years

FINAL ANSWER: It will take 9.16 years for a certain sum of money to triples its amount when deposited at a rate
of 12% compounded continuously.

17. A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the interest
compounded?
GIVEN:

j=9.5 %=0.095 i e =9.84 %=0.0984

FIND: n1
FORMULA:

5th year payment (x)

 j n
1

( )
i e = 1+
n1
−1

SOLUTION:

j n n1
1
0.095
( )
i e = 1+
n1
−1 0.0984= 1+
( n1 ) −1 n1=3.88 years n1=4 years∨quarterly

FINAL ANSWER: The interest is compounded quarterly.

18. A man borrows 2000P for 6 yrs at 8%. At the end of 6 yrs, he renews the loan for the amount due
plus 2000P more for two yrs at 8%. What is the lump sum due?

GIVEN: F

2,000P 2,000P 2,000 P ( 1+0.08 )8

2
2,000 P ( 1+0.08 )
i= 8% = 0.08 “per year”

0 6 8

SOLUTION:

using 8 as focal date,

∑ ↑=∑ ↓

F=P ( 1+i )8 + P ( 1+ i )2
8 2
F=2,000 P ( 1+0.08 ) + 2,000 P ( 1+0.08 ) F=6034.66 P F=6035 P

FINAL ANSWER: The lump sum due is 6035P.

19. You deposit 1000P into a 9% account today. At the end of two yrs, you will deposit another 3000P. In
five yrs, you plan a 4000P 13 purchase. How much is left in the account one year after the purchase?
0
GIVEN: 1 2 3 4 4,000P 5 4,000 P ( 1.09
6 )1

i= 9% = 0.09 “per year”

 6
1,000 P ( 1.09 )
1,000P balance(x)

3,000P
4
3,000 P ( 1.09 )
SOLUTION:

using 6 as focal date,

∑ ↑=∑ ↓
6 4 1
1,000 P ( 1.09 ) +3,000 P ( 1.09 ) =4,000 P ( 1.09 ) + x
6 4 1
x=1,000 P ( 1.09 ) +3,000 P ( 1.09 ) −4,000 P (1.09 ) x=1,551.84 P x=1,552 P

FINAL ANSWER: 1,552P is left in the account one year after the purchase.

20. Consider a business which involves the investment of 100,000P now and 100,000P at the end of one
year. Revenue of 150,000P will be generated at the end of years 1 and 2. What is the net present value of
this business if the effective annual interest rate is 10%?
GIVEN:

i= 10% = 0.10 “per year”

−2
150,000 P ( 1.10 ) 150,000P

−1
150,000 P ( 1.10 ) 150,000P

0 1 2

100,000 (1.10 )−1

100,000P

100,000P

Net present value (x)

SOLUTION:

using zero as focal date,

 ∑ ↑=∑ ↓

150, 000 P (1. 10 )−1 +150 , 000 P (1. 10 )−2 =100,000 P+ x +100,000 (1.10 )−1
x=150,000 P ( 1.10 )−1+150,000 P ( 1.10 )−2−100,000 P−100,000 ( 1.10 )−1 x=69,421.5 P
x=69,422 P
FINAL ANSWER: 69,422P is the net present value of this business.