a.

Simple Interest

1. Ryan decided to invest ₱20,000.00 in a savings bank account that earned 5% simple interest. If the
amount was kept in the bank for 5 years how much is the interest earned?

P=initial principal balance

r =annualinterest rate

t=time(¿ years)

I =Prt

I =(₱ 20,000.00)(0.05)(5)

I =₱ 5,000.00

2. If a company wants to borrow ₱35,000.00, they pay a simple interest rate of 5% for the loan. What
will the company pay back if the loan is for 4 years?

A=₱ 35,000.00 [ 1+(0.05) ( 4 ) ]

A=₱ 42,000.00

3. A total of ₱5,000.00 is invested for 9 months at a simple interest rate of 6%. How much interest does
this investment earn?

I =Prt

9
I =(₱ 5,000.00)(0.06)( )
12

I =₱ 225.00
 b. Compound Interest

1. A 4.5% savings account that is compounded semiannually will earn you ₱10,500.00 in 7 years. How
much money should you deposit in this account?

A
P=
( )
nt
r
1+
n

A=final amount

P=initial principal balance

r =interest rate

n=number of ×interest applied per time period

t=number of time periods elapsed

₱ 10,500.00
P=
( 1+
0.045 2(7)
2 )
P=₱ 7,689.58

2. For a principal of ₱7,500.00 to grow to ₱10,00.00 in 9 years, how much interest must be paid if it’s
compounded quarterly?

[( ) ]
1
A
r =n nt
−1 ×100 %
P

[( ) ]
1
₱ 10,000.00
r =4 4(9)
−1 × 100 %
₱ 7,500.00

r =3.21%
3. A deposit of ₱25,000.00 yields 10% compounded annually. How much money has been saved in the
bank after 7 years?

( )
nt
r
A=P 1+
n
5
A=₱ 25,000.00 ( 1+0.1 )

A=₱ 40,262.00

c. Credit Cards

1. There is a $5,000.00 balance on your credit card that you want to pay off in 4 years. It adds up to a
rate of 15% a month. During this time, how much will you owe on your debts?

PV
PMT =

[ ( ) ]
1
1−
(1+i )nt
i

PMT =Payment per Time Period

PV =Present Value

i=Interest Rate per Time Period

n=number of ×interest applied per time period

t=number of time periods elapsed

$ 5,000.00

[ ]
PMT =

( )
1
1−
0.15 12 (4 )
(1+ )
12
0.15
12

PMT =$ 139.15

Total amount ¿ be paid =$ 139.15× 48

¿ $ 6,679.2

Total amount of interest =$ 6,679.2−$ 5,000.00

 Total amount of interest =$ 1,679.2

2. Assume your credit card's financing costs are calculated using a 28% annual percentage rate (APR).
The balance on your last statement was $330. You decide to make a $150 payment after seeing this. You
spent $185 on shoes later that day, which you paid for with your credit card. What is the cost of the
charge after the purchase has been made?

APR
Charge= ×( Previous balance−Payments+ Purchases)
12

0.28
Charge= ×(330−150+185)
12

Charge=$ 8.52

3. Domeng has a $8,800.00 credit card bill with a 11% annual interest rate. He chose a 5 years
repayment plan to pay off the debt. If he doesn't make any further transactions with the card, how
much must he pay each month?

PV
PMT =

[ ( ) ]
1
1−
(1+i )nt
i

$ 8,800.00

[ ]
PMT =

( )
1
1− 12(5)
0.11
(1+ )
12
0.11
12

PMT =$ 191.33
 d. Consumer Loans

1. Calculate the mortgage amount if a property is sold for $475,000 and the bank needs a 25% down
payment.

Mortagage=Remaining Balance

Mortagage=$ 475,000 ×.75

Mortagage=$ 118,750

2. A business man sought for a loan of ₱250,000 to help his company grow. The loan has an 8% effective
interest rate and will be paid off in 4 years. After 4 years, how much will be paid?

A=P ( 1+rt )

A=₱ 250,000 ( 1+0.08(2) )

A=₱ 290,000.00

3. For the purchase of a fancy vehicle, a guy borrowed $400,000. Calculate the total amount of interest if
his monthly payment is $7,000 over a 6-year period.

A=$ 7,000 × 6 (12 )=$ 504000

I = A−P

I =$ 504,000−$ 400,000

I =$ 104,000
e. Stocks

1. If annual income from 6% stock at 80 is $50 more than 7% stock at 120, then the investment is

Let x be the investment, therefore:

6x 7x
= + 45
80 120

x=$ 3,000

2. A 6% stock yields 8%. The market value of the stock of face value $125 is

6
Market value of the stock= ×125
8

Market value of the stock=$ 93.75

3. The capital stock of a company is $450,000 and is divided into 4,000 shares of common stock. If
the company pays a dividend of $55,000, what amount will an individual receive for his/her 40
shares?

Let x be the amount that will be receiving by an individual for his 50 shares

x= ( $4000
5,500
) × 40
x=$ 550
 f. Bonds

1. Calculate the semi-annual coupon payment on a 5% bond with a face value of $9,000 that matures in
7 years.

Amount of the semi−annualcoupon=$ 9,000 ( 0.052 )

Amount of the semi−annualcoupon=$ 225

2. In regards to question number 2, how many coupons are paid?

Total number of coupons paid=7× 2=1 4

3. If you have a $15,500 bond that pays 5.5% a year, figure out how much each quarter's coupon will be
worth.

Amount of the quarterly coupon=$ 15,500 ( 0.045 5 )

Amount of the quarterly coupon=$ 21 3 .13
 g. Mutual Funds

1. Two mutual funds received a total investment of $3,300 from a man. One fund earned a profit of 5%,
while the other earned a profit of 3%. If the investor earned a total profit of $150, how much money did
he or she invest in each mutual fund?

Assume that x is the amount invested at a 6% rate of return. Thus, ($2,400-x) was invested for a 2%
profit.

0.0 5 x+ 0.03 ( $ 3,300−x ) =$ 110

x=$ 2,550(invested at 5 % profit )

( invested at 3 % profit ) =$ 3,300−$ 2,550

(invested at 3 % profit )=$ 750

2. A high-yield mutual fund provides a basic interest rate of 8% annually to an investor. A second
investment of $4,500 was made into a certificate of deposit yielding a 4% yearly simple interest rate as a
result of the first. Both investments generated $500 in interest over the course of a year. How much
money did the mutual fund receive?

0.0 8 x+ ( x+ $ 4,5 00 )( 0.04 )=$ 500

x=$ 2666.67

3. A guy made a total of $4,400 in mutual funds by investing in two of them. One fund made a 8% profit,
while the other made just a 2% profit, according to the results. What is the difference between the two
mutual funds if the investor made a total profit of $250?

Let x represent the amount of money that was invested at a rate of 5 percent. As a result, the sum of
($3,200-x) was invested on a 1.5 percent profit.

0.0 8 x+ 0.0 2 ( $ 4,400−x )=$ 250

x=$ 2,700(invested at 8 % profit)

( invested at 2 % profit )=$ 4,400−$ 2,700

( invested at 1.5 % profit )=$ 1,700

Difference between the two mutual funds=$ 2,700−$ 1 , 700

 Difference between the two mutual funds=$ 1,000

h. Treasury Bills

1. A man purchased a 1-year treasury bill with a face value of $2,500 with a discount rate of 3.5%.
Find the bank discount.

Bank Discount=$ 2,500(0.035)(1)

Bank Discount=$ 87.5

2. From problem number 1, find the purchase price.

Purchase price=$ 2,500−$ 87.5

Purchase price=$ 2,412.50

3. Mr. Wisconsin purchased a 3-years treasury bill with a face value of $4,500 with a discount rate
of 4.3%. Find the purchase price.

Bank Discount=$ 4,500 (0.043)(3)

Bank Discount=$ 580.50

Purchase price=$ 4,500−$ 580.50

Purchase price=$ 3,919.50