BALDEVINO, NATHANIEL V.

BSCpE 3-1

1. A man wishes to accumulate 3722P after 5 yrs., 8 months and 28 days. How much
should be deposited by the man in a bank if the ordinary simple interest is 15% per
annum?

𝑛 = 5 𝑦𝑟𝑠.+(8𝑚𝑜𝑠.)(1𝑦𝑟/12𝑚𝑜𝑠.)+(28𝑑𝑎𝑦𝑠)(1𝑦𝑟/365𝑑𝑎𝑦𝑠) = 5.74𝑦𝑟𝑠.
𝑖 = 15%=0.15
𝐹 = 𝑃 3,722
3,722 = (1+(0.15)(5.74))
3,722 = (1.861)
𝑃 = 𝑃 2,000

2. A man deposited P2000 in a bank at the rate of 15% per annum from March
21,1996 to October 25,1997. Find the exact simple interest.
P = 2,000
i = 15% = 0.15
n = March 21, 1996 – Oct 25, 1997
March 21 – 31, 1996 (exclude Mar 21) - 10
Apr 1996 - 30
May 1996 - 31
June 1996 - 30
Jul 1996 - 31
Aug 1996 - 31
Sept 1996 - 30
Oct 1, 1996 – Oct 1, 1997 - 365
Oct 2, 1997 – Oct 25, 1997 - 24
Total - 582 days

𝑛 = (582𝑑𝑎𝑦𝑠)(1𝑦𝑟/365𝑑𝑎𝑦𝑠) = 1.59𝑦𝑟𝑠.𝑜𝑟 1.6𝑦𝑟𝑠.

𝐼 = 𝑃𝑖𝑛
𝐼 = 2,000(0.15)(1.6)
𝐼 = 𝑃 480
3. A bank charges 1.5% per month on a loan. Find the equivalent nominal rate of
interest.

𝑛 = 12𝑚𝑜𝑠.
𝑖 = 1.5% 𝑝𝑒𝑟 𝑚𝑜. = 0.015
𝑖 = 𝑗/𝑛1

0.015 = 𝑗/12
𝑗 = 0.18 = 18% 𝑝𝑒𝑟 𝑦𝑟.

4. A financing company charges 1.5% per month on a loan. Find the equivalent
effective rate of interest.

𝑖 = 1.5% 𝑝𝑒𝑟 𝑚𝑜.

𝑛 = 12𝑚𝑜𝑠.

𝑖𝑒 = (1+𝑖)^𝑛1−1
𝑖𝑒 = (1+0.015)^12−1
𝑖𝑒 = 0.1956181715
𝑖𝑒 = 19.56%

5. A nominal rate of 12% compounded monthly is equal to an effective rate of

𝑗 = 12% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑚𝑜𝑛𝑡ℎ𝑙𝑦

𝑛 = 12

𝑖𝑒 = (1+𝑗/𝑛1)^𝑛1−1
𝑖𝑒 = (1+0.12/12)^12−1
𝑖𝑒 = 0.1268250301
𝑖𝑒 = 12.68%
6. Convert 16% compounded semi-annually to equivalent nominal rate which is
compounded daily.
𝑗1 = 16% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑠𝑒𝑚𝑖−𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦
𝑛1 = 2
𝑛2 = 365

(1+𝑗1/𝑛1)^𝑛1−1= (1+𝑗2/𝑛2)^𝑛2−1
(1+0.16/2)^2−1= (1+𝑗2/365)^365−1

𝑗2 = 0.1539545416
𝑗2 =15.39%

7. Find the accumulated amount of 1000P after 5 yrs when deposited in a bank at a rate of
16% compounded monthly.

𝑖 = 16% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 = 1.33% 𝑝𝑒𝑟 𝑚𝑜.= 0.0133

𝑛 = 5 𝑦𝑒𝑎𝑟𝑠 = 60 𝑚𝑜𝑠.
𝑃 = 𝑃 1,000
𝐹 = (1+𝑖)^𝑛
𝐹 = 1,000(1+0.0133)^60
𝐹 = 𝑃 2,209.44 𝑜𝑟 𝑃 2,210

8. How long in yrs. will a certain sum of money to triple its amount when deposited at a
rate of 12% compounded annually?

𝑛=?
𝑖 = 12% 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚
𝐹 = 3𝑃

𝐹 = (1+𝑖)^𝑛
3𝑃 = (1+0.12)^𝑛
3 = 1.12^𝑛
𝑛 = 9.69 𝑦𝑒𝑎𝑟𝑠
9. How much should be deposited in a bank at a rate of 12% compounded
continuously for 5 yrs. if its accumulated amount is P9110.60?

𝑖 = 12% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑐𝑜𝑛𝑡𝑖𝑛𝑢𝑜𝑢𝑠𝑙𝑦

𝑛 = 5 𝑦𝑒𝑎𝑟𝑠
𝐹 = 𝑃 9,110.6
𝑃=?
𝐹= 𝑃𝑒^𝑗𝑛
9,110.6 = 𝑃𝑒^(0.12)(5)
𝑃 = 𝑃 5,000

10. An effective rate of interest, which is 12.75%, is equivalent to what percent if

compounded continuously.
𝑖𝑒=12.75%=0.1275
𝑖𝑒 = 𝑒𝐼 −1
0.1275 = 𝑒𝐼 −1
1+0.1275 = 𝑒𝐼
ln1.1275 = 𝐼
𝐼 = 0.12 𝑜𝑟 12%

11. How much is expected to be received by a man that makes a loan of 851.06P, which
is payable at once, if the bank gave him a discount of 6%.

𝑃= 𝑃 851.06
𝑑= 6%=0.06

𝑑 = 𝐷𝐹 𝐷 = 𝐹−𝑃
𝐷 = 𝑑𝐹 𝑃 = 𝐹−𝐷
𝐷 = (0.06)(851.06) 𝑃 = 851.06−51.06

𝐷 = 51.06 𝑃 = 𝑃800
12. Find the cash price of a generator which was bought in installment basis that requires
a down payment of 50,000P and payment of 30,000P after 1 yr., 40,000P after 2 yrs.
and a final payment of 76,374.34P after 4 yrs. at a rate of 15% per annum.

(1.15)^4 = 50,000(1.15)^4 + 30,000(1.15)^3 + 40,000(1.15)^2 + 76,374.34

(1.15)^4 = 262,150.9025

𝑥 = 𝑃 149,885.6293 or 𝑃 150,000

13. A man made a loan of 100,000P at a rate of 15% per annum and promise to pay it
according to the following manner, 30,000P at the end of 1st yr, unknown payment at
the end of 2nd yr. and a final payment of 76,374.38P at the end of 4th yr. Find the
unknown payment made by the man.

100,000(1.15)^4 = 30,000(1.15)^3 + 𝑥(1.15)^2 + 76,374.38

174,900.625 = 122,000.63 + (1.15)^2

52,899.995 = (1.15)^2

𝑥 = 𝑃 39,999.99622 or 𝑃 40,000
14. Find the present worth of the following payments, 5000P after 1 yr., 4000P after 2 yrs.,
8000P after 4 yrs. at a rate of 12% per annum.

(1.12)^4 = 5,000(1.12)^3 + 4,000(1.12)^2 + 8,000

(1.12)^4 = 20,042.24
𝑥 = 𝑃 12,737.20585

15. Find the amount of the following payments at the end of 5th yr., 3000P at the end of
1st yr., 4500P at the end of 2nd yr. and 6000P at the end of 4th yr. if money worth
12% per annum.

𝑥 = 3,000(1.12)^4 + 4,500(1.12)^3 + 6,000(1.12)^1

𝑥 = 𝑃 17,762.73

16. How many yrs. will it take for a certain sum of money to triple its amount when
deposited at a rate of 12% compounded continuously?

𝑗 = 12% = 0.12
𝐹 = 3𝑃

𝐹 = 𝑃𝑒^𝑗𝑛
3𝑃 = 𝑃𝑒^(0.12)𝑛
3= (0.12)
0.12
√3=e n
ln 0.12√ 3 = n
𝑛 = 9.155 𝑦𝑒𝑎𝑟𝑠
 17.A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the
interest compounded?

𝑖𝑒 = 9.84% 𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦
𝑗 = 9.5% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑
𝑛=?

𝑖𝑒 = (1+𝑗/𝑛1)^𝑛1−1
0.0984 = (1+0.095/𝑛1)^𝑛1−1
1.0984 = (1+0.095/𝑛1)^𝑛1
𝑛1 = 3.87 𝑜𝑟 4 𝑡𝑖𝑚𝑒𝑠 𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦 = 𝑄𝑈𝐴𝑅𝑇𝐸𝑅𝐿𝑌

18.A man borrows 2000P for 6 yrs. at 8%. At the end of 6 yrs., he renews the loan for the
amount due plus 2000P more for two yrs. at 8%. What is the lump sum due?

𝑥 = 2,000(1.08)^2 + 2,000(1.08)^8
𝑥 = 𝑃 6,034.66

19. You deposit 1000P into a 9% account today. At the end of two yrs., you will deposit another
3000P. In five yrs., you plan a 4000P purchase. How much is left in the account one year after
the purchase?

4,000(1.09)^1 + 𝑥 = 1,000(1.09)^6 + 3,000(1.09)^4

4,360 + 𝑥 = 5911.844
𝑥 = 𝑃 1,551.84
20. Consider a business which involves the investment of 100,000P now and 100,000P at the
end of one year. Revenue of 150,000P will be generated at the end of years 1 and 2. What is
the net present value of this business if the effective annual interest rate is 10%?

𝑥 + 100,000(1.1)^−1 + 100,000 = 150,000(1.1)^−1 + 150,000(1.1)^−2

𝑥 + 190,909.0909 = 260,330.5785
𝑥=𝑃 69,421.48761