Republic of the Philippines

EASTERN VISAYAS STATE UNIVERSITY

Tacloban City

COLLEGE OF ARTS AND SCIENCES

MATHEMATICS AND STATISTICS DEPARTMENT

MATHEMATIC OF INVESTMENT

Name: RONALD J. SEVILLA Course/Year/Section: BSOA-2B

Score: _________
Directions. Solve the following problems. Show all pertinent solutions. If
your final answer has many decimal points, round it off to the nearest
hundredths.
1. On March1, P90,000 was borrowed and repaid on July 26of the same year.
Given an interest rate of 10.75%, how much simple interest was earned
using the following:
a. Exact interest, actual number of days
b. Ordinary interest, actual number of days
c. Exact interest, approximate number of days
d. Ordinary interest, approximate number of days SOLUTION’s:
MONTHS ACTUAL APPROXIMATE

March 30 29

April 30 30

May 31 30

June 30 30

July 26 26

TOTAL 147 DAYS 145 DAYS

 A. Exact interest, actual number of days GIVEN:
P= P 90,000 R= 0.1075
T=?

Formula: Ie= Prt

= P 90,000 (0.1075) (147/365)
= 90,000 (0.1075) (0.40273972602)

Ie= P 3, 896.507

P 3, 896.507 is the simple interest earned using exact interest and actual
number of days.
B. Ordinary interest, actual number of days
Formula: Io= Prt
= P 90,000 (0.1075) (147/360)
= 90,000 (0.1075) (0.40833333333)
Io= P 3, 950.625

P 3,950.625 is the simple interest earned using ordinary interest and actual
number of days.

C. Exact interest, approximate number of days

Formula: Ie= Prt
= P 90,000 (0.1075) (145/365)
= 90,000 (0.1075) (0.39726027397)
Ie= P 3, 843.493

P 3,843.493 is the simple interest earned using exact interest and approximate
number of days.

D. Ordinary interest, approximate number of days

Formula: Io= Prt
= P 90,000 (0.1075) (145/360)
= 90,000 (0.1075) (0.40277777777)
Io= P 3, 896.875
 P 3,8 96.875is the simple interest earned using ordinary interest and
approximate number of days.

2. How long will it take for P15,000 to accumulate to P18,500 if the interest rate
is 14.5%?
GIVEN:
P= P 15,000
I= 3,500
R= 14.5 % or 0.145
T=?

Formula: t=I/Pr
= P 3,500/ 15,000 (0.145)
= 3,500/ 2,175

t= 1.61 or 1 year and 7 months

1.61 or 1 year and 7 months is the time for 15,000 to accumulate to 18,500.

Mary David has P1,000,000 in the money market. If the present

3.
is 18 interest rate %, how much will she earn after 2 years?

GIVEN: P= P 1,000,000
R= 18 % or .18
T=2 ½ years or 2.5
I=?

F=P(1+rt)
Formula: = P 1,000,000 (1+ (0.18) (2.5))
= 1,000,000 (1+ (0.45)
F= P 1,450,000
 P 1 ,450,000 will be the earnings of Mary David after 2 ½ years.

4. Find the proceeds of a P5,000 loan borrowed on July 15 and due on March 15
of the next year if the discount rate is 7.25%.

GIVEN: F= P 5,000
D= 7.25 % or 0.0725
T= 8 months
P=?

Formula: P=F(1-dt)
= P 5,000 (1- (0.0725) (8/12))
= 5,000 (1- (0.0725) (0.66666666666))
= 5,000 (0.95166666667)

P= P 4,758.333

P 4,758.333 will be the proceeds of the loan borrowed in the given period.

5.
Find
and 2the discount of a P90,000 loan if the discount rate is 10.5% for 2 years
40 days.
GIVEN:
F= P 90,000
D= 10.5% or 0.105
T= 2 years and 240 days or 2 years and 8 months or 2.6666666667

Formula: I=Fdt
= P 90,000 (0.105) (2.6666666667)
=90,000 (0.27999999999)
P= P 25,200
 P 25,200 is the discount of a P90,000 loan

6. If P40,000 is the present value of P45,000 due after 240 days, find:
a. The simple interest rates
b. The simple discount rates

GIVEN:
P= P 40,000
I= 5,000
T= 240 days 0r 8 months 0.6666666667

A. The simple interest rates

Formula: r=I/Pt
= P 5,000/ 40,000 (0.6666666667)
= 5,000/ 26,666.666668
r= 0.1875 or 18.75%

0.1875 or 18.75% is the simple interest rate If P40,000

is the present value of P45,000 due after 240 days

B. The simple discount rates

GIVEN:
F= P 45,000
I= 5,000
T= 240 days 0r 8 months 0.6666666667

Formula: d=I/ft
= P 5,000/ 45,000 (0.6666666667)
= 5,000/ 30,000.000001
 d= 0.1666666667 or 16.67%

0.1666666667 or 16.67% is the simple discount rate If

P40,000 is the present value of P45,000 due after 240 days

7. Discount P90,0000 for 5 years and 4 months at:

a. 16.5% simple interest
b. 16.5% simple discount

A. 16.5% simple interest

GIVEN:
F= P90,000
r= 16.5% or 0.165
t= 5 years and 4 months or 5.3333333333

Formula: P=F/1+rt
= P90,000/ 1+ (0.165) (5.3333333333)
= 90,000/ 1+ 0.87999999999
= 90,000/ 1.87999999999

P= P47,872.340

P47,872.340 is the discount of P90,000 using

simple interest.

B. 16.5% simple discount

GIVEN:
F= P47,872.340
r= 16.5% or 0.165
t= 5 years and 4 months or 5.3333333333
Formula: F=P/1-rt
= P47,872.340/ 1- (0.165) (5.3333333333)
= 47,872.340/ 1- 0.87999999999
= 47,872.340/ 0.12000000001

P= P398,936.167

P398,936.167 is the discount of P90,000 using

simple discount.

8. The Maharlika Cooperative approved the P500,000 loan of Ramon at 14% for
4 years. Two years before maturity, Mizrahi Bank discounted the note at
17%. Find the proceeds of the transaction.

GIVEN:
P= P500,000
r= 0.14 d=0.17
t= 4 t= 2

F=P(1+rt)
= 500,000 (1+(0.14) (4))
= 500,000 (1.56)
F= P 780,000 (maturity value)

Formula: P= F (1-dt)
= P 780,000 (1- (0.17) (2)
= 780,000 (1-0.34)
=780,000 (0.66)
P= P514,800

P514,800 Is the proceeds of the transaction.

 9. A non-interest-bearing note was discounted at 16% for 5 years. Find the
maturity value of the note if the proceeds were P450,000.

GIVEN:
P= P450,000
d= 0.16
t= 5 years

Formula: F=P/1-dt
= P 450,000/ 1- (0.16) (5)
= 450,000/ 1-0.8
=450,000/ 0.2
F= P2,250,000
P2,250,000 is the maturity value of the note if the proceeds were
P450,000.

10. A 120-day note promises to pay P125,000 and simple interest at 8.5%. It is
discounted at 10% bank discount rate, 45 days before the maturity date. Find the
maturity value of the note and the proceeds of the sale. GIVEN:
P=P125,000
R=8.5% d=10%
T= 120 days t=45 days

Formula: F=P(1+rt)
P=F(1-dt)
=P 128,541.667 (1- (0.10) (75/360))
=128,541.667 (1- (0.10) (0.208333333333)
= 128,541.667 (1- 0.0208333333333)

= 128,541.667 (0.97916666667)

P = P125, 863.716 (proceeds)

P125,863.716 is the proceeds of the note.

 11. A 9-month simple interest note for P79,500 with interest at 8.5% is sold 30
days before the maturity to a bank that uses 10.5% discount interest rate.
Find the proceeds.

GIVEN:
P=P79,500
R=0.085 d=0.105
T= 9 months t=30 days

Formula: F=P(1+rt)
= P 79,500 (1+ (0.085) (9/12))
= 79,500(1+ (0.085) (0.75
=79,500 (1+ 0.06375)
= 79,500 (1. 0.06375)
F= P 84,568.125(maturity value)

P=F(1-dt)
=P 84,568.125(1- (0.105) (240/360))
=84,568.125 (1- (0.105) (0.66666666666)
= 84,568.125 (1- 0.06999999999)
= 84,568.125 (0.93000000001)

P = P78,648.356 (proceeds)

P78,648.356 is the proceeds of the note.

 12. For P30,000 loan, Mrs. Garcia would pay Robert the principal and interest at
14% simple interest 6 Months after the date of the note. The date of the note
was on October 6. On January 6 of the next year, Robert sold the note to a
bank at 18% simple discount. How much would he receive from the bank?

GIVEN:
P=P30,000
R=0.14 d=0.18
T= 6 months t= 3 months

Formula: F=P(1+rt)
= P 30,000 (1+ (0.14) (6/12))
= 30,000(1+ (0.14) (0.5)
=30,000 (1+ 0.07)
= 30,000 (1. 07)
F= P 32,100(maturity value)

P=F(1-dt)
=P 32,100(1- (0.18) (3/12))
=32,100 (1- (0.18) (0.25)
= 32,100 (1- 0.045)
= 32,100 (0.955)

P = P30,655.5 (proceeds)

P30, 655.5 is the total amount that Mrs. Garcia will receive from
the bank.
 13. What is the compound amount if P38,000 is invested for 4 years at 11.5%
compounded semi-annually?

Given:
P= P38,000
T= 4 I= j/m N=tm
J= 0.115 =0.115/2 =4 (2)

M=2 I=0.0575 N=8

Formula: F=P(1+i) ^n
= P 38,000 (1+ 0.057) ^8
= 38,000(1.5640225427)
F= P 59,432.857

P 59,432.857 is the compound amount if P38,000 is invested for 4 years at

11.5% compounded semi-annually

14. Homer borrowed P10,000 from a bank charging 16% compounded monthly.
How much would he pay at the end of five years?

Given:
P= P10,000
T= 5 I= j/m N=tm
J= 0.16 =0.16/12 =5(12)

M=12 I=0.01333 N=60

333333

Formula: F=P(1+i) ^n
= P 10,000 (1+ 0.01333333333) ^60
= 10,000(2.2138068823) F= P
22,138.069
 P22,138.069 is the amount that Homer should pay at the end of five years.

15. On January 5, Crisel borrowed P28,000 from Philip at 8% compounded

quarterly for 6 years and 4 months. How much would she pay then?

Given:
P= P28,000
I= j/m N=tm
T= 6 years and 4 months
=0.08/4 = (6 4/12) (4)
J= 0.08
I=0.02 N= 25.3333333333
M=4

Formula: F=P(1+i) ^n
= P 28,000 (1+0.02) ^25.3333333333
= 28,000(1.6514712515)

F= P 46,241.195
P46, 241.195 is the amount that Crisel should pay.

16. If P400,000 is invested today in a universal bank, how much will Bob have
after 7 years and 2 months if interest is at 16% converted annually?

Given:
P= P400,000
I= j/m N=tm
T= 7 years and 2 months
=0.16/1 = (7 2/12) (1)
J= 0.16
I=0.16 N= 7.16666666666
M=1

Formula: F=P(1+i) ^n
= P 400,000 (1+0.16) ^7.16666666666
= 400,000(2.8970028523)

F= P 1,158,801.141
 P1, 158,801.141is the total amount that Bob will have after 7 years and 2
months.

17. How much should a farmer deposit today for his son’s college education 8
years and 11 months from today if his deposit P 650,000 earning at 9.5%
compounded annually?

Given:
F= P650,000
I= j/m N=tm
T= 8 years and 11 months
=0.095/1 = (8 11/12) (1)
J= 0.095
M=1 I=0.095 N=8.91666666666

Formula: P=F(1+i) ^-n

= P 650,000 (1+ 0.095) ^-8.91666666666
= 650,000(0.445202339)

P= P 289,381.520
P 289,381.520 is the total amount that a farmer should deposit today for his son’s
college education.

18. Find the compound amount if P90,000 is invested for 8 years at 8.5%
compounded continuously.

GIVEN:
P=P90,000
j=0.085
T= 8 years
F=?

Formula: f=Pe^jt
=90,000 (2.71828) ^0.085 (8)
=90,000 (2.71828) ^0.68
f = P177,648.915
P 177,648.915 is the compound amount.

19. To provide for his son’s education, Mr. Lopez deposited P45,000 in a
cooperative. It was invested at 7% compounded daily for the first five years,
8% compounded quarterly for the remaining years. How much will he have
for his son’s tuition fees if the money was invested for 10 years?

Given:
F= P45,000
T1= 5 t2= 5
J1= 0.07 j2= 0.08
M1=365 m2= 4

Formula: F=P(1+i1) ^n1 (1+i2) ^n2

=P 45,000 (1+ 0.07/365) ^5(365) … (1+0.08/4) ^5(4)
= 45,000 (1.00019178082) ^1,825 (1.02) ^20
F= P94,886.503

P 94,886.503 is the total amount that Mr. Lopez should invest for 10 years for his
son’s tuition fees.

20. How long will it take for P74,500 to accumulate to P101,000 if the interest
rate is 10.5% compounded quarterly?

Given:
F= P101,000
P= 74,500
J= 0.105
M=4
N= log (f/p) =log (101,000/74,500) = 11.74469945
Log (1+i) log (1+ (0.105/4))

T=n/m
= 11.74469945/4
t = 2.936

2.936 is the time that it will take for P74,500 to accumulate to P101,000

“Winners from all walks of life have their own strategies and plans but they all have one
thing in common – they TRY. Keep trying!”
GOD BLESS YOU ALL! KEEP SAFE EVERYONE!

Prepared by:

Hanna Rachelle A. Gohil

Instructor I