Problem Set 2

Deadline: Sept. 02,2020, 12mn

Mathematics of Investment
Answer the following problems. Show you solutions. Send your solution as PDF FORMAT,
with file name, ps2_moi_surname_given name_mi
1. Mr. Konti borrowed ₱12,000 from Susan Rodriguez who charged a discount rate of
16.5% for three years. How much interest will be collected in advanced from the loan?
(4pts)

2. Manuel is borrowing ₱35, 000 from a bank that charges a discount rate at 8%. If Manuel
received ₱30, 000 from the bank, find the term. (4pts)

3. On January 12, Chimmy applied for a ₱80, 000 loan. After deducting the interest in
advance, he received ₱77, 000. If the loan is to be repaid at the end of 6 months, at what
discount rate was interest charged? (6pts)

4. Suppose that ₱5, 000 is due at the end of 9 months and is discounted to the present date at
8% simple discount. Find the equivalent simple interest rate that will produce the same
present value. (6pts)

5. A loan of ₱25, 000 was repaid by the end of two years at 8% simple interest. What is the
equivalent discount rate on the loan? (5pts)

6. Find the present value of ₱24, 000 for 2 years at: (5pts)

a. 14% simple discount

b. 14% simple interest