Module 3: Activity No.

3
Engineering Mechanics and Economics

Name:
Student No.

Problems:

1. A company issued 50 bonds of P1000 face value each, redeemable at par at the
end of 15 years. To accumulate the funds required for redemption, the firm
established a sinking fund consisting of annual deposits the interest rate of the
fund being 4%. What was the principal in the fund at the end of the 12 th yr?
Ans. P37,519

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2. A father wishes to develop a fund for his new born son’s college education. The
fund is to pay P5000 on the 18 th, 19th, 20th, and 21st birthdays of his son. The fund
will be built up of deposit of fixed sum on the son’s 1 st to 17th birthdays. If the fund
earns 4%, what should be the yearly deposit into the fund? Ans. P765.9

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3. Engr. Bautista borrows P100,000 at 10% annual interest. He must pay back the
loan over 30 yrs with uniform monthly payments due on the first day each month.
What does Engr. Bautista pay each month? Ans, P839

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4. A piece of machinery can be bought for P10,000 cash or for P2,000 down and
payments of P750 per yr for 15 yrs. What is the annual interest rate for the
payments? Ans. 4.61%

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5. An asset is purchased for P9000. Its estimated life is 10 yrs after which it can be
sold for P1000. Find the book value during the first year if SYD depreciation is
used. Ans. P7545

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