TECHNOLOGICAL UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ENGINEERING

MECHANICAL ENGINEERING DEPARTMENT

ENGINEERING ECONOMY
Module 2

Submitted By: Abella, Christian Ivan Submitted To: Engr. Jomari Picar
Bitong, Jonas P.
Camocamo, Abegail A.
Dula, Jayon P.
Intapa, Ronel G.
Magboo, Joe Mari
Mangabat, Airon Jay T.
Navarro, Kevin
Oliverio, Anna Rose
Tiangan, Jeremy R.
Tingin, John Matthew B.

July 27, 2018

1. The purchase amount of an equipment P100000 has been made available through a loan which earns
12% per annum. It has been agreed that the loan be payable in 10 equal payments. How much then is
the yearly due ?

a.10587.9 b.17698.42 c.27908.65 d.18765.98

Solution:

A
P=
i
[ 1−(1+i)−N ]

Pi
A=
1−(1+i)−N

A=P 17 , 698 . 42

2. How many yearly withdrawals od P100000 can be made from 1 million pesos investment at 10% ?

a.10 b.20 c.30 d.none of the above

Solution:

A Pi Pi ln [ 1 Mx 0.1 ]
P= [ 1−(1+i)−N ] 
A=
 =1−(1+i)
−N
 N=
i 1−(1+i)−N A ln 1.1

N=∞
 A
P=
i

100000
1M = =1 M
0.1

3. A new company developed a program in which the employees will be allowed to purchase shares of
stock of the company at the end offifth year of operation when the company is thought to have
stability already at par value of P100.00 per share. Believing in the good potential of the company, an
employee decided to save in a bank the amount of P8000 at the end of every year which will ean fo
him 9% interest. How many shares of stock will he be able to purchase at the end of fifth year of his
yearly deposits?

a.478 b.479 c.480 d.490

Solution:

Solution:

A
F= [ (1+i)N −1 ]
i

8000
¿ [ (1.09)5−1 ]
0.09

F=P 47,877.8

F
x= =No . of shares
P 100

P 47,877.68
x= =P 478 .78
100

4. An engine costing P 40,000 may be purchased on instalment basts by paying P 10,000 down pament,
P 5,000 at the end of the first year and five equal payments beginning at the end of the second year.
Determne the amount of these equal payments.Money is worth 12% per year.
a.8933.2 b.9339.92 c.6733.92 d.7933.92
 Solution:

[ P 40 k −P10 k−(P 5 k )(1.12)−1 ]

A= = P7 933.92
( 1−1.12−5 ) (1.12)−1

5. The president of a growing engineering firm wishes to give each of 50 employees a holiday bonus.
How much is needed to invest monthly for a year at 12% nominal interest rate, compounded
monthly, so that each employee will receive a P 1000.00 bonus?

a.2750.00 b.3942.44 c.4311.44 d.3892.00

Solution:

A
F=
i
[(1+i)N −1 ]

PFii
A=
(1+i)N −1

( 50 k ) (0.01)
A= =P 3 , 942. 44
1.0112−1

6. Mr. Ramirez barrowed P 15,000.00 two years ago. The term of the loan is at 10% interest for ten years
with uniform payments. He just made his second annual payment. How much principal does he still owe?

a. P 12,000.00 b. P 13,024.00 c. P 10,117.00 d. P 11,700.00

SOLUTION:

PERIOD OPABOP IDAEOP PAYMENT PRAEOP

1 P15000 P1500 P2441.18 P941.18
2 P14058.82 P1405.88 P2441.18 P1035.30
 Pi ( P 15000 ) (0.1)
A= A=
1−(1+i)−n ; 1−1.1
−10 ; A = P 2441.18

X = P14058.82 – P1035.30

X = P13023.47

7. A sinking fund consist of consists of 15 annual deposit P 1000 each, with interest earned at the rate of 4%
compounded annually. What is the principal in the fund at its terminal date?

a. P 28,105 b. P 29,546.23 c. P 25,115 d. P 20,023.59

SOLUTION:

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
15

1000 10001000100010001000100010001000100010001000100010001000

N = 15

A
F=
i
[(1+i)n−1 ]

P 1000
F= [ (1+0.04)15−1 ]
0.04

F=P20023.59

8. A cash flow diagram represents an investment of P 6000 and equal revenue of x pesos at the end of years
one, two and three. At interest rate of 15% compounded annually, what must x be for this cash flow to have
a net present worth of approximately zero?

a. P 2,628 b. P 3,910 c. P 3,945 d. P 3,920

SOLUTION:

X X X

1 2 3 N=3

i = 15%

P6000
 Pi
A=
1−(1+i)−n

( P 6000 ) (0.15)
A=
1−(1+0.15)−3

A= X=P 2627.86

9. A P 10000 loan is to be paid off in 10 equal annual payment. The annual interest rate is 15%. How much
interest will be paid in the first two years?

a. P 2,296.1 b. P 3,005.1 c. P 2,970.2 d. P 2940.2

SOLUTION:

PERIOD OPABOP IDAEOP PAYMENT PRAEOP

1 P10000 P1500 P1992.52 P492.52
2 P9507.48 P1426.12 P1992.52 P566.40

Pi
A=
1−(1+i)−n

( P 10000 ) (0.15)
A=
1−(1+ 0.15)−10

A=¿ P1992.52

10. ME BD APR 1998. A piece of machinery can bought for P 10000 cash, or for 2000 down and payments
of P 750 per year for 15 years, what is the annual interest rate for the time payments?

a. 4.60% b. 3.81% c. 5.71% d. 11.0%

SOLUTION:
 P 750
P10000 = P20000 + i
[ 1−(1+i)−15 ]

SHIFT SOLVING, WE GET

i=4.6

11. ME BD APR 1999. What is the present worth of a 3 yr annuity paying P3000 at the end of each year,
with interest at 8% compounded annually?

Solution:

₱ 3000
(1−1.08−3)
P= .08

P = ₱ 7731.29

12. A fund is to provide an annual scholarship at P4000 for the first 5 years; P6000 for the next 5 years and
P9000 thereafter. The fund will be established 1 year before first scholarship is awarded. If the fund earns
12% interest, what sum must be deposited?

Solution:

₱ 4000 −5 6000 −5 −5
9000 −10
P = ( 0.12 )(1- 1.12 ) + ( 0.12 )(1-
1.12 )(1.12 ¿ + ( 0.12 )(1.12 ¿

P = 50839.78

13. Engr. Joaquin borrows P60,000 at 12% compounded annually, agreeing to repay the loan in 15 equal
annual payments. How much of the original principal still unpaid after he has made the 8th payment?

Solution:
 PERIOD OPABOP IDAEOP PAYMENT
PRAEOP

1 60 000 7 200 8 809.45 1 609.45

2 58 390.55 7 006.87 8 809.45 1 802.58
3 56 587.97 6 790.56 8 809.45 2 018.89
4 54 569.08 6 548.29 8 809.45 2 261.16
5 52 307.92 6 276.95 8 809.45 2 532.50
6 49 775.42 5 973.05 8 809.45 2 836.40
7 46 939.02 5 632.68 8 809.45 3 176.77
8 43 762.25 5 251.47 8 809.45 3 557.98

Let x = Unpaid money after payment

X= 43 762.25 – 3 557.98

X= 40 204.27

14. What is the future of P600 deposited at the end of every month for 4 years if the interest rate is 12%
compounded quarterly?

Solution:

.12 4 ¿ ¿12 1 A
¿ N
[(1+ 4 – 1 = (1 + 12 -1 ¿2 F= i [(1 + i ¿ -1]

.12 3
1
¿ 600
¿ = 1.009948 -1]
(1 + 4 =1+ 12 .0099 [

In = 11.88 % F= 36 641.32

15. ME BD OCT 1988. The officers of PSME desire to award a P3600 scholarship annually to deserving
mechanical engineering students for as long as scholarship fund shall last. The fund was started July 1, 1987
by a donor in the amount of P18000. The PSME invested this sum at that time at 8% per annum and plans
on adding P600 each year to the fund from its dues starting July 1,1988 for as long as the awards are made.
For how many years starting July 1, 1988 can scholarship be awarded and what will be the balance in the
fund after the last award is made?

Solution:
 3 600 600 600
F' 1.088 -
−N 8
( 0.08 ) (1- 1.08 ) = 18 000 ( .08 ) (1- = ( 18 000) (1.08 ¿ + .08 (
−N 1)
1.08 ¿
F' = 39 698.72
N = 8 years

3 600 F
'
1.08
8
X= -F
F = ( .08 ) ( - 1)

X = 39 698.72 – 38 291.86
F = 38 291.86
X = 1 406.86

16.) In anticipation of a much bigger volume of business after 10 years, a fabrication company purchased on
adjacent lot for its expansion program where it hopes to put up a building projected to cost
P4,000,000.00 Then it will be constructed 10 years after. To provide for the required capital expenses, it
plans to put up a sinking fund for the purpose. How must the company deposit each year if interested to
be earned is computed at 15%?

a.) 198,009.30 b.) 197,007.45

c.) 197,008.25 d.) 199,008.23

Answer: c.) 197,008.45

Solution:

(1.15)
[¿ ¿10−1]=197008.25
400 ( 0.15 )
A=
¿

17.) If P10,000 is deposited each for 9 years, how much annuity can a person get annually from the bank
every year for 8 years starting one year after the 9th deposit is made? cost is 14%.

a.) 16489 b.) 34675.15

c.) 197008.25 d.) 12009.12

Answer: b.) 34675.15

Solution:

A 160853.5(0.14 )
P= [1−( 1+i )−N ] A= =34675.2
i −6
[ 1−( 1.14 ) ]
18.) A car dealer advances the sale of a car model for a cash price of P280,00.00. If purchased on
installment, the required down payment is 15% and the balance payable in 18 equal monthly installment
at an interest of 1.5% per month, how much will be the required monthly payment?

a.) 15,186.70 b.) 15,200.87

c.) 15,185.78 d.) 16,187.75

Answer: c.) 15,185.78

Solution:

P=280000−0.15 ( 280000 )=238000

1−(1.015)−18
¿
¿
238000(0.015)
A= ¿

19.) The company has offered a supervisor a yearly gratuity pay of P20000 for ten years with the first
payment to be paid 1 year after his retirement. The same supervisor, instead, request that the lump sum
on the date of his retirement less interest that the company would have earned if the gratuity is to be
paid on yearly basis. If interest is 15%, what is the equivalent lump sum that he could get?

a.) 101,347.30 b.) 110,376.45

c.) 100,375.37 d.) 103,395.36

Answer: c.) 100,375.37

Solution:

LUMP ∑ ¿
¿
x =¿

A −N
x= =[1−( 1+i ) ]
i

−10
1−( 1.15 ) =100,375.3725
20000
x= ¿
0.15

20.) Nadine borrowed P50000 from SSS in the form of calamity loan, with interest at 8% compounded
quart. Payable in equal quarterly installments for 10 years. Find the quarterly payment.

a.) 1830.70 b.) 1827.79

 c.) 1927.67 d.) 1828.75

Answer: b.) 1827.79

Solution:

1−(1.02)−40
¿
¿
50000(0.02)
A= ¿

21. ME BD OCT. 1995. If P500 is invested at the end of each year for 6 years at an annual interest rate of
7%, what is the total peso amount available upon deposit of the sixth payment?

a. P 3,210 b. P 3,577 c. P 3,000 d. P 4,260

Solution:

For F:

A N
F= {( 1+i ) −1 }
i

500
F= { (1+0.07)6−1 }
0.07

F= P3,576.65 ≈ P 3, 577 (Ans)(B)

22. ME BD OCT.1995. How much money must you invest today in order to withdraw P 1000 per year for
10 years if the interest rate is 12%?

a. P 12,000 b. P 5,650 c. P 10,000 d. P 4,800

Solution:

For P:

A
P= {1+ (1+i )−N }
i

1000
P=
0.12
{ 1+(1+0.12)−10 }

P = P5,650.22 ≈ P 5,650(Ans)(B)

23. ME BD APR 1996. In five years P 18000 will be needed to pay for a building renovation. In order to
generate this sum, a sinking fund consisting of three annual payments is established now. For tax purposes,
no further payments will be made after 3 years. What payments are necessary if money is worth 15% per
annum?

a. P 2,870 b. P 3,919 c. P 5,100 d. P 2,670

Solution: For A:

For x: (x)(i)
F= −n
[ (1+i ) +1]
x=F (1+ i)−n

13,610.5( 0.15)
x=18000(1+0.15)
−2 F= −3
[ ( 1+0.15 ) +1]

x = P13,610.5
F= P3,919.54 ≈ P 3, 919

(Ans)(B)

24. ME BD OCT 96. Mr. Ayala borrows P 100,000 at 10% effective annual interest. He must pay back the
loan over 30 years with uniform monthly payments due on the first day of each month. What does Mr. Ayala
pay each month?

a. P 870.3 b. P 856.3 c. P 865.7 d. P 839.2

Solution:

For A:

1
1+ ¿
i
¿
P
A=
¿

1
1+ ¿
0.10
¿
100,000
A=
¿

A= P839.19 ≈ P 839.2(Ans)(D)

25. What is the present worth of P 1000 monthly deposit at 2% per month for one year if the payments are
made at the beginning of each month?

a. P 10,786.85 b. P 9, 786.85 c. P 11, 786.85 d. P 8, 786.85

Solution:

For P:
 1
P= A {1+
i
[ 1− (1+i )(1− N ) ] }

1
P=1000 {1+
0.02
[ 1− (1+ 0.02 )(1−12) ] }

P= P 10,786.85(Ans) (A)

26. Determine the present worth of a deferred annuity consisting of ten semi-annual payments each
P1000, the first to be paid at end of third year. Money is worth 14% compounder semi-annually.

a. P5,245.34 b. P 5,007.72 c. P6,709.56 d. P4,900.89

Solution:

P= ( Php0.071,000 ) ( 1−1.07 −10

) ( 1.05 )−5

P=Php 5,007.72

27. Determine the capitalized cost of a research laboratory w/c requires P5 000 000 for original construction;
P100 000 at the end of every year for the first 6 years and then P120 000 each year thereafter for
operating expenses; and P500 000 every five years for replacement of equipment w/ interest at 12% per
annum.

a. P5,917,772 b. P6,573,646 c. P9,815,789 d. P7,908,907

Solution:

CC=FC + P+ x

−1.12
Php120,000 Php 500,000
(¿¿−6+1)+ (
0.12
−6
( 1.12 ) + )
1.125−1 ( )
Php 100,000
CC =Php5 M +
0.12 ( ¿ )
CC=Php 6,573,646

28. Determine the capitalized cost of a structure that requires an initial investment of P1.5M and an annual
maintenance of P150,000 interest is 15%.

a. P1.0M b. P2.5M c. P3.4M d. P5.0M

Solution:

Php 150,000
CC=Php 1.5 M +
0.15
 CC=Php 2.5 M

29. A foundation was endowed with P10M in July 1980. In July 1984, P 4M was expended for initial
facilities, and it was decided to provide for P 1M of capital replacements at the end of every fifth year
thereafter. If all money earns interest at 15% after the time of the endowment, what annual end of year
perpetuity can be provided for operating expenses?

a. P3,987,257.00 b. P1,209,876.89 c. P9,098,456.98 d. P 1,875,193.82

Solution:

x=
[ −4
Php10 M −( Php 4 M ) ( 1.15 ) −
−4
Php 1 M
( 1.15 −1 )
5
( 1.15 )−4
] ( 0.15 )

( 1.15 )

x=Php1,875,193.82

30. A loan was to be amortized by a group of four end of year payments forming an ascending arithmetic
progression. The initial payment was to be five thousand pesos and the difference between successive
payment was to be P400. But the loan was renegotiated to provide for the payment of equal rather than
uniformly varying sums. If the interest rate of the loan was 15% what was the annual payment?

a. P5,530.51 b. P3,908.88 c. P6,890.90 d. P4,903.00

Solution:

)( )
−4
Php 5000 ( Php 400 1.15 −1
P= ( 0.15 ) 1−1.15−4 ) + (
0.15 0.15
−4 ( 1.15 )
−4

P=Php 15,789.47

Pi
A=
1−( 1+i )− N

( Php15, 789.47 ) ( 0.15 )

A=
1−1.15−4

A=Php 5530.50

31. Today, a businessman borrowed money to be paid in 10 equal payments for 10 quarters. If the interest
rate is 10% compounded quarterly and the quarterly payment is ₱2000, how much did he borrow?

a. ₱15,390.20 b. ₱16,890.20 c. ₱17,504.13 d. ₱17,890.20

Solution:
 A=2000

i 0.10
i= n = =0.025
m 4

1+i
¿
1−¿
A
P= ¿
i

1+ 0.025
¿
1−¿
2000
P= ¿
0.025

P=₱ 17,504.13 32. EE BD OCT 1999. A factory operator bought a Diesel generator set for ₱ 10,000

and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded
annually, that the final payment will cancel the debt for principal and interest. What is the annual payment?

a. ₱2,504.57 b. ₱2,780.56 c. ₱2,389.17 d. ₱2,129.00

Solution:

P=10000 1+i
¿
1−¿
i=0.08 A
P= ¿
i
N=5 periods
 1+i 1+0.08
¿ ¿
1−¿ 1−¿
¿ ¿
Pi 10000(0.08)
A= A=
¿ ¿

A=₱ 2,504.57 33. A man paid 10% down payment of ₱ 2,000,000 for a house and lot and agreed to pay

the 90% balance on monthly installment for 60 months at an interest rate of 15% compounded monthly.
Compute the amount of the monthly payment.

a. ₱45,892.04 b. ₱44,826.08 c. ₱43,849.39 d. ₱42,821.86

Solution:

i 0.15 PT (i)
i= n = =0.0125 A=
m 12 [1−( 1+i )
−N
]

N=60 periods 1800000(0.0125)

A= −60
[1−( 1+ 0.0125 ) ]
PT =2000000−( 0.1 ) ( 2000000 )=1800000

A
P=PT + [1−( 1+i )−N ]
i

A=₱ 42,821.87 34. A debt of ₱ 10,000 with 10% interest compounded semi-annually is to be amortized

by semi-annual payment over the next 5 years. The first due in 6 months, determine the semi-annual
payment.

a. ₱1,309.85 b. ₱1,389.05 c. ₱1,295.05 d. ₱1,259.05

Solution:
 i 0.10 ( 10000 ) (0.05)
i= n = =0.05 A=
m 2 (1−( 1+0.05 ) )
−10

N=10 periods A=₱ 1,295.05

Pi
A=
( 1−( 1+ i)−N )

36. A man loans P 187,400 from a bank with interest at 5% compounded annually. He agrees to pay his
obligations by paying 8 equal annual payments, the first being due at the end of 10 year. Find the
annual payments.
a.P41,873.90 b.P42,864.90 c.P43,763.20 d.P44,980.55

CFD

i= 5%
Solution:

A 1−( 1+0.5 )
P=
i
[ 1−( 1+ i )−N ] ( 1+i )−M −9
[¿ ¿−8 ] ( 1+0.05 )
A (187,400)(0.05)
Pi ¿
A= ¿
[1−( 1+i )−N ] ( 1+i )−M

A=44,980.56

37. A house and lot can be acquired by down payment of P500,000 and a yearly payment of P100,000 at
the end of each year for a period of 10 years, starting at the end of 5 years from the date of purchase.
If money is worth 14% compounded annually, what is the cash price of the property?
a.P807,783.54 b.P806,789.20 c.P808,835.92 d.P809,278.90
 CFD

i= 14%

Solution:

P 100,000
P= P500,000+
( 1−1.14 )−10 ( 1.12 )−4
0.14

P=P808,835.92

38. A young engineer borrowed P 10,000 at 12% interest and paid P2,000 per annum for the last 4 years.
What does he have to pat at the end of fifth year in order to pay off his loan?
a.P6,922.93 b.P6,633.22 c.P6,872.89 d.P6,760.20

CFD
i = 0.12

Solution:

Solve for X

A
x=P−
i
[ 1−( 1+i ) ]
−N

P 2,000
P 10,000−
0.12
[ 1−( 1+ 0.12 )−4 ]
x=
( 1.12 )−5
x=P 6,922.93

39. A parent on the day of the child is born wishes to determine what lump sum would have to be paid
into an account bearing interest at 5% compounded annually, in order to withdraw P20,000 each on
the child’s 18th, 19th,20th, and 21st birthdays. How much is the lump sum amount?
a.P30,149.37 b.P30,194.73 c.P30,941.73 d.P30,491.37
 CFD
i= 5%

Solution:

A
P=
i
[ 1−( 1+ i)−N ] ( 1+i )−N

P2,000
P=
0.05
[ 1−( 1+0.05 )−4 ] (1+ 0.05 )−17

P=P 30,941.7

40. A man inherited a regular endowment of P100,000 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 the lump sum if
the cost of money is 14% compounded quarterly?
a.P3,720,399.73 b.P3,399,720.37 c.P3,702,939.73 d.P3,279.933.79

CFD

i= ¿ 0.14
¿ =0.035
in= 14% ; m= 4; m ; 4

Solution:

A A
x=
i
[ ( 1+i )N −1 ] + [ 1− (1+i )− N ]
i

P 100,000 P 100,000
x=
0.035
[ (1+ 0.035 )16−1 ] +
0.035
[ 1−( 1+ 0.035 )−24 ]

x=P 3,702,939.73
41. An amortization of a debt is in a form of gradient series. What is the future worth of these payments: ₱
5000, ₱ 4500, ₱ 4000, and ₱ 3500, at the end of first, second, and third and fourth year respectively?
Money worth 5%.

A. ₱ 15,781.43 B.₱15,187.34 C.₱15,178.34 D. ₱18,449.37

Solution:

F = (₱5000/0.05) (1.054 – 1) – (₱500/0.05) [(1.054 – 1)/0.05 – 4]

F = ₱18449.37

42. ME BD OCT. 1995. How much money must you invest today in order to withdraw ₱1000 per year for
10 years if interest rate is 12%?

A. ₱5,650 B. ₱6,550 C.₱5,560 D.₱7,550

Solution:

P = (₱1000/0.12) (1-1.12-10)

P = ₱5650

43. Determine the present worth of an annual payment of ₱2500 at the end of each year for 12 years at 8%
compounded annually.

A. ₱18,840.20 B. ₱30,000.00 C. ₱15000.00 D. ₱17,546.04

Solution:

P = (₱2500/0.08) (1 – 1.08-12)

P = ₱18840.20

44. ECE BD NOV. 1995. An employee obtained a loan of ₱10000 at the rate of 6% compounded annually
in order to repair a house. How much must he pay monthly to amortize the loan within a period of 10 years?

A. ₱198.20 B. ₱150.55 C. ₱110.22 D. ₱112.02

Solution:

( ₱ 10000 ) ( 0.00487 )
12
0.06 = (1 + in/12) – 1 A= 1−1.00487
−120

In= (1.061/12 – 1) – 1 A = ₱110.22

In= 5.84%

I = in/m = 5.84/12
 I = 0.487%

45. CE BD MAY 1996. A service car whose cash price was ₱540000 was bought with a down payment of
₱162000 and monthly payments of ₱10378.24 for 5 years. What is the rate of interest if compounded
monthly?

A. 20% B. 26% C. 24% D. 22%

Solution:

₱ 10874.24
in
in
₱540000 = ₱162000 + [1 – (1 + 12 )-60] :By Shift Solve using calculator
12

In= 0.24 x 100%

In = 24%
46. CE BD. NOV 1995. Find the present value in pesos of a perpetuity of ₱ 15000 payable semi-annually if
money is worth 8% compounded quarterly.

a. ₱371287 b. ₱ 386227 c. ₱ 392422 d. ₱ 358477

Solution:

1+ ¿ ¿ 2−1 ¿=8.08
2
0.08 4
1+ ¿ −1=¿
4 ₱ 15000
¿ P=
0.0404

0.08 2 P=₱ 371287

1+ ¿ −1
a
[ ¿ ( 2 ) } x 100
¿¿
47. At 6%, Find the capitalized cost of a gas turbine whose first cost is ₱ 200M and life is 20 years. If the
gas turbine must be partially rebuilt at a cost of ₱ 100M at the end of each 20 years.

a. ₱245.3M b. ₱215M c. ₱210M d. ₱220M

Solution:

₱ 100 M
CC=₱ 200 M +
1.06 20−1

CC=₱ 245.31 M

48. ME BD OCT 1997. An item is purchased for ₱100000. Annual costs are ₱18000. Using 8% what is the
capitalized cost of perpetual service?

a. ₱350000 b. ₱335000 c. ₱320000 d. ₱325000

Solution:

CC=₱ 100000+ ( ₱0.08

18000
)
CC=₱ 325000

49. ME BD OCT 1997. A car was bought on instalment basis with monthly instalment of ₱10000 for 60
months. If interest is 12% compounded annually calculate the cash price of the car.

a. ₱455877.95 b. ₱567539.75 c. ₱678519.75 d. ₱345539.75

Solution:

1+ ¿ ¿12−1
12
0.12=¿
 1
¿=( 1.12 −1 ) ( 12 ) x 100
2

¿=11.39

₱ 10000
P= ( 1−1.00948 9−60 )
0.009489

P=₱ 455877.95

50. ME BD OCT 1995. If ₱500 is invested at the end of each year for 6 years, at an effective annual interest
rate of 7%. What is the total amount available upon the deposit of the 6th payment?

a. ₱3455 b. ₱3544 c. ₱ 3577 d. ₱3688

Solution:

F= ( ₱0.07500 ) (1.0 7 −1)

6

F=₱ 3577