SHORT PROBLEMS

Applying the Concepts of Time Value of Money in Multiple Choice Format. Identify the choice that best
answers the short-problem. You are NOT required to show your solutions to each of the problems. For present
or future value factors, use until the 9th decimal place.

1. If you invest P8,000 at 6.6% interest, compounding monthly, how much will you
have in 3½ years? *
2 points

P8,155.09
P10,072.50
P10,010.64
P29,848.00

2. How much must you invest at 12% interest, compounding quarterly, in order to see
your investment grow to P5,000 in 27 months? *
2 points

P2,250.95
P1,803.05
P3,832.08
P234.47

3. If you invest P5,000 in a mutual fund extending a total annual return of 8% and you
re-invest the proceeds each year, what will be the value of your investment after five
years? *
2 points

P4,629.63
P7,346.64
P3,402.92
P5,400.00

4. You deposited P1,000 in a savings account that pays 8% interest, compounded

quarterly, planning to use it to finish your last year in college. Eighteen months later,
you decide to go to Quezon City to become a call center agent rather than continue in
school, so you close out your account. How much money will you receive? *
2 points

P1,439.45
P250.25
P1,126.16
P1,999.00
5. What is the future value of a 5-year ordinary annuity with annual payments of P200,
evaluated at a 7.5% semi-annual interest rate? *
2 points

P287.13
P1,348.48
P3,828.34
P1,161.68

6. If P100 is placed in an account that requires a rate of return of 4%, compounded

quarterly, what will it be worth in 5 years? *
2 points

P525.51
P486.66
P122.02
P121.67

7. An investor puts P200 in a money market account TODAY that returns 3% with
monthly compounding. The investor plans to keep his money in the account for 2
years. What is the future value of his investment when he closes the account two
years from today? *
2 points

P212.35
P406.56
P201.00
P212.18

8. Assume that you can invest to earn a stated annual rate of return of 12%, but where
interest is compounded semiannually. If you make consecutive semi-annual deposits
of P500 each, with the first deposit being made today, what will your balance be at the
end of Year 5? *
2 points

P881.17
P1,762.34
P440.59
P6,590.40

9. You expect to receive P1,000 at the end of each of the next 3 years. You will
deposit these payments into an account which pays 10%, compounded semiannually.
What is the future value of these payments, that is, the value at the end of the third
year? *
2 points
P3,318.01
P665.50
P7,986.00
P3,993.00

10. You inherit P150,000 from your aunt. You decide to invest the money in a three-
year certificate of Deposit (CD) that pays 4% interest, compounding quarterly, to use
as a down payment on a house. How much money will you have when the CD
matures? *
2 points

P168,729.60
P506,188.80
P169,023.75
P674,918.40

11. You plan to invest an amount of money in a certificate of deposit (CD) at your
bank. The stated interest rate applied to the CD is 12%, compounded monthly. How
much must you invest if you want the balance in the CD account to be P8,500 in 2½
years? *
2 points

P11,302.14
P143,302.66
P6,306.34
P11,941.89

12. Justine is thinking about purchasing an investment from RCBC Capital. If she buys
the investment, Justine will receive P1,000 every three months for two years. The first
P1,000 payment will be made as soon as she purchases the investment. If Justine's
required rate of return is 16%, how much should she be willing to pay for this
investment? *
2 points

P7,002.05
P1,345.60
P1,368.57
P10,764.80
13. If you need P350,000 for a down payment on a house in 3 years, how much
money must you invest today at 8% interest, compounded quarterly, to achieve your
goal? *
2 points

P277,841.28
P275,972.61
P128,694.27
P44,388.46

14. Your firm rents office space for P250,000 per year, due at the BEGINNING of each
year. If your firm's hurdle rate is 10%, what is the present value of five years' worth of
rent? *
2 points

P402,627.50
P1,042,466.36
P155,230.33
P170,753.36

15. You expect to receive P1,000 at the END of each of the next 3 years. You will
deposit these payments into an account which pays 10 percent, compounded
semiannually. What is the future value of these payments, that is, the value at the end
of the third year? *
2 points

P1,157.63
P1,340.10
P1,331.00
P3,318.01
LONG PROBLEMS
For present or future value factors, use until the 9th decimal place.

Your answer in this google for this question is 1, 2 or 3. If more than one answer,
indicate the two e.g. 1, 3 *
5 points

Your answer

*
5 points

Your answer

*
5 points

Your answer

*
5 points

Your answer

*
5 points

Your answer

*
5 points

Your answer