Pampanga State Agricultural University

PAC, Magalang, Pampanga

College of Engineering and Computer Studies (CoECS)

Instruction. Answer the following problems with your complete solution. If done, please attach it
to the google classroom. Follow the format of the submission of requirement.

1. Marwin wishes to earn 7% on his capital after payment of taxes. If the income from an available
investment will be taxed at an average rate of 42%, what minimum rate of return, before payment
of taxes, must the investment offer to be justified.

2. Mika buys a television set from a merchant who asks P1,250.00 at the end of 60 days (cash in
60 days). Mika wishes to pay immediately and the merchant offers to compute the cash price on
the assumption that money is worth 8% simple interest. What is the cash price today?

3. Eugene is offered a 5% discount for immediate payment of a bill which is due in 90 days. What
is the largest simple interest rate at which he could afford to borrow in order to pay cash?

4. A sum of P1,000.00 is invested now and left for eight years, at which time the principal is
withdrawn. The interest has accrued for another eight years. If the effective annual interest rate is
5%, what will be the withdrawal amount at the end of the 16th year.

5. How much must be invested on January 1, 1998 in order to accumulate P2,000 on January 1,
2003? Money worth 6%.
6. Jharold need P4,000 per year for four years to go to college. His father invested P5,000 in 7%
account for his education when he was born. If he withdraw P4,000 at the end of year 17th, 18th,
19th and 20th birthday, how much money will be left in the account at the end of the 21st year.

7. If P10,000.00 is deposited each year for 9 years, how much annuity can a person get annually
from a bank every year for 8 years starting 1 year after the 9th deposit is made. Cost of money is
14%.

8. Because of the peso devaluation, a car costing P150,000 is to be purchased through a finance
company instead of paying cash. If the buyer is required to pay P40,000 as down payment and
P4,000 each month for four years, what is the rate on the diminishing balance?

9. Engr. Russel Clarete loan an amount of P200,000 at a local commercial bank at 12%
compounded quarterly. How much is his monthly payment if he is required to pay at the beginning
of the first of the month for a period of 30 years?

10. Gerein wishes to have P35,000 when he retires 15 years from now. If he can expect to receive
4% annual interest, how much he set aside in each of 15 equal annual beginning of year deposits?