PROBLEM SET NO.

NAME:
RATING
DATE SUBMITTED: Oct. 26, 2020 SCHEDULE: W|Th (9:30 to 11:00)
1. A man deposited P2,000 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= ₧2,000
i= 15% or 0.05
n = 583 days
Year 1996 Year 1997
March 21 – 31 = 10 (excluding march 21) January = 31
April = 30 February = 28
May = 31 March = 31
June = 30 April = 30
July = 31 May = 31
August = 31 June = 30
September = 30 July = 31
October = 31 August = 31
November = 30 September = 30
December = 31 October = 25 (Including October 25)
Total Days = 583
583
( )
I =( P ) ( i ) ( n ) I =( 2000 ) ( 0.15 )
365
=479.18

I = ₧479.18

Cash Flow Diagram

P 2,479.18

March 21, 1996 to October 25, 1997

P 2,000
 2. How long in years will a certain sum of money to triple its amount when deposited at
a rate of 12% compounded monthly?

Let

F&P=A
( m )( n)
r
3 F=P 1+ ( ) m
( 12 ) (n )
0.12
3 A= A 1+ (
12 )
( 12 ) (n)
3A 0.12
A
= 1+ (12 )
3=(1.01)(12)(n)

ln 3=12 ln (1.01)

ln 3
=n
12 ln ( 1.01 )

n=9.20 years

Cash Flow Diagram

3x The original Amount

n = 9.20 years

Amount

3. A parent wishes to develop a fun for a new born child's college education. The fund is
to pay P50,000 on the eighteenth, nineteenth and twentieth and twenty-first birthdays
of the child. the fund will be built up by the deposit of fixed sum on the child's first
seventeenth birthday's. Find the fixed sum if money worth 4% per annum.
 1− (1+i )−n
P= A [ i ]
1−( 1+0.04 )−4 181,494.76
P=P 50,000 [ 0.04 ]=
(1+0.04 )17

P = 93,174.55

Cash Flow Diagram

₧50,000

₧50,000
₧50,000
₧50,000

18th year 19th year 20th year

₧93,174.55

4. A wealthy man donated a certain amount of money in a bank at a rate of 12%

compounded annually to be able to pay the following scholarship awards; P4,000 per
year for the first 5 years; P6,000 per year on the next five years and P9,000 per year
on the years thereafter. Find the amount of money deposited by the man.
 1−(1+i)−n
P= A
i
1−( 1+0.12 )−5
P=4,000 [ 0.12 ]
=14,419.10

1− (1+ 0.12 )−5

P=6,000 [ 0.12 ]
P = 21,628.66

21,628.66
P= 5
=12,272.68
(1+0.12)
9000
0.12
P= =24,147.99
(1+ 0.12)10

P = 14,149.10 + 12,272.68 + 24,147.99

P = 50,839.77

Cash Flow Diagram

24,147.99

12,272.68

14,419.10

4,000 / yr for the 1st 5 yrs. 6,000 / yr for the next 5 yrs. 9,000 / yr for the following yrs.

P = 50,839.77
5. A man inherited a regular endowment P100,000.00 every end of 3 months for 10
years. However, he may choose to get a single lump sum payment at the end of 4
years. How much is this lump sum if the cost of money is 14% compounded
quarterly?
A [ ( 1+i )n−1 ]
P=
i¿ ¿

100,000 [ ( 1+ 0.035 )24−1 ]

P=
(0.035) ¿¿
P=1,605,836.76

A [ (1+i )n−1 ]
F=
i
100,000 [ ( 1+0.035 )16 −1 ]
F=
0.035
F=2 , 097,102.97

Lump sum price = P + F

Lump sum price = 1,605,836.76+2 , 097,102.97
0

Lump sum price = 3,702,939.73

Cash Flow Diagram

P F

0 1 2 15 16 17 18 39 40

16 Payments 24 Payments