Dimatulac, Aaron Joseph F.

Date: April 2020

GED102 – A7 Score:
CO3, CW

Exercise 1.1 (Page 242)

Solve each problem completely.

1. How much will be the future worth of money after 12 months if the sum of P35,000 is invested today at a simple
interest rate of 3% per month?
F=P[1+ ( r ) (t ) ]
F=35,000[ 1+0.03 ( 12 ) ]
F=47,600
Answer: P47,600

2. A man expects to receive P125,000 in eight years. How much is that money worth now considering an interest rate
of 12% compounded quarterly?
n
F=P ( 1+i )
j mt
F=P 1+( ) m
0.12 4 (8 )
(
125,000=P 1+
4 )
P=48,542.13
Answer: P48,542.13

3. How long will it take the money to triple itself if invested at 9.5% compounded semi-annually?

F=3 P (1+i )n
0.095 n
3 P=P 1+( n
2 )
3=( 1.0475 )
ln ⁡(3)=( n ) ln ⁡(1.0475)
 ln ⁡(3)
n=
ln (1.0475 )
n=23.67
Thus,
n 23.67
t= = =11.84 yrs .
m 2
Answer: 11.84 yrs.

4. By the conditions stated in a will, the sum of P2.5M is left to a son to be held in a trust fund by his guardian until it
amounts to P4.5M. When will the son receive the money if the fund is invested at 10% compounded quarterly?
n
F=P ( 1+i )
mt
j
F=P 1+ ( )
m
4t
0.1
4,500,000=2,500,000 1+
4t
( 4 )
1.8=( 1.025 )
log ⁡(1.8)=log ( 1.025 )4 t
log ( 1.8 )= ( 4 t ) log (1.025)
23.8041=4 t
t=5.95
Answer: 5.95 yrs.

5. What is the effective rate corresponding to 18% compounded daily using 360 days in one year?

j m
ER= 1+
m( ) −1

0.18 360
ER= 1+ ( )
360
−1
ER=1.1972−1
ER=0.1972∨19.72 %
Answer: 19.72%