PRACTICE SET 7

THE MATHEMATICS OF FINANCE (for CBAE, CHE & CAE)

SCORE
Name : Date :

College/Program : Time / Schedule :

Simple Interest
In exercises A-D below, the interest rate is annual simple interest rate.

A. Complete the table by calculating the simple interest due on the loan.

Loan Amount Interest Rate Period Interest

1. Php 8,000 7% 2 months
2. Php 15,000 6% 9 months
3. Php 12,000 5% 2 years
4. Php 50,000 7.5% 3 years
5. Php 20,000 3% 1year and 3 months

B. Complete the table by calculating the simple interest rate.

Loan Amount Interest Rate Period Interest

6. Php 20,000 6 months Php 400
7. Php 60,000 3 months Php 450
8. Php 25,000 3 years Php 3375
9. Php 30,000 2 years Php 4800
10. Php 12,000 2 years and 9 months Php 825

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C. Complete the table by calculating the loan amount.

Loan Amount Interest Rate Period Interest

11. 6% 9 months Php 1575
12. 3.5% 3 months Php 525
13. 5.5% 5 years Php 6875
14. 7% 3 years Php 6300
15. 10% 1 years and 3 months Php 1500

D. Complete the table by calculating duration of the loan.

Loan Amount Interest Rate Period Interest

16. Php 50,000 2.5% Php 2,500
17. Php 25,000 4% Php 3,000
18. Php 10,000 5% Php 750
19. Php 20,000 7.5% Php 1,125
20. Php 40,000 10.8% Php 6,480

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E. Each column in the table below is labeled, complete the table by writing the given data (in figures) , the
word “unknown” for the unknown data, n/a if it is not applicable in the problem.

1. If you borrow Php 20,000 for 2 years at an interest rate of 7%, how much interest will you pay?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

2. In how many years will Php 7,000 double itself at 5% simple interest?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

3. What amount would yield an interest of Php 2,437.5 in 5 years at 3% per annum?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

4. A loan of Php 30,000 on August 2012 has been paid on March 2015 in the amount of P38,000. What
is the duration of the loan?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

5. How long will 8,200 amount to Php 10,500 if the simple interest is the calculated at 13%?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

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6. If you borrow Php 3,500 for 9 months at an interest rate of 8%, what amount will you pay back?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

7. Marco needs Php 10,000 now to buy a computer printer. He has decided to apply for a loan from a
lending company that charges 6% simple interest deducted in advance. How much loan will Marco
apply if he will pay it in 3 years?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

8. A cooperative released Php 5,000 emergency loan to Beth with a simple interest rate of 3.5%. If she
intends to pay it in 150 days, what amount will she pay back to the cooperative?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

9. Brenda wanted to invest in a trust fund. She borrows from a credit cooperative that charges 8%
simple interest to be deducted in advance. How much will she borrow to start investing Php 30, 000?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

10. A couple planned to build a Php 4,000,000 house in 6 years. Since their funds are not yet enough to
finance it now, so they have decided to invest it first in an institution that pays 8% simple interest.
How much should they invest to have such amount in 6 years?

Principal Interest Period/Time Interest Maturity Value Present

Amount Rate Value

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D. Each of the problems below is incomplete. Determine the missing data to solve the problem.

1. Diana received a loan of Php 10,000 at 3% interest rate. Calculate the simple interest?

2. To buy a laptop computer, Anita’s mother borrowed Php 13,000 at an interest rate of 5% per annum.
What is the total amount will she repay?

3. Hannah wants to earn Php 6,500 in interest with her Php 30,000 so she’ll have enough money to buy a
new cellular phone that costs Php 36,500. How long will she need to lend her money?

4. You have deposited in a Savings Bank on June 15, 2015 with an interest rate of 2.5% and have
withdrawn it on June 15, 2016. Calculate the simple interest.

5. Your savings deposit of Php 25,000 earns a simple interest of 3.6%. How much is the interest?

6. Calculate the simple interest due on a 95-day loan if the annual interest rate is 5.5%.

7. Rene paid Php 1,500 interest for his loan from a cooperative that charges simple interest rate of 7.5%.
How much loan did he apply?

8. The interest charged on a Php 5,000 loan is Php 300. Find the simple interest rate?

9. Bell pays Php 18,000 of her 4-year loan. What interest rate is charged to her?

10. Dondi borrowed Php 12,000 from Mike that charges simple interest. After 3 years he cleared the
amount by giving Php16,350 cash and a watch. Find the cost of the watch.

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E. Problem Solving. Answer each of the following as indicated.

1. A loan of Php 35,000 with a simple interest rate of 12% will be paid within 9 months. How much
interest will you pay?

2. Anabelle borrowed Php 20,000 that bears simple interest. She has fully paid Php 23,500 after 6
months. How much interest did she pay?

3. A loan of Php 100,000 on April 20, 2011 has been paid on April 2014 in the amount of P109,000.
What is the duration of the loan?

4. Joan borrowed from her friend, Mona, Php 6,500. She repaid Php 7,200 after 9 months. What was
the rate of interest?

5. Jane borrowed Php 15,000 from a cooperative and paid Php 700 interest in a year. What is the rate of
interest?

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6. What is the maturity value of a Php 300,000 loan after 5 years if the rate of interest is 6.5% per
annum?

7. A loan of Php 200,000 for 18 months bears Php 3500 interest. What was the interest rate?

8. How long will it take to double your Php 150,000 if invested at 7% simple interest?

9. A couple planned to build an apartment that cost Php 4,000,000 in 3 years. Since their funds are not
yet enough to finance it now, so they have decided to invest it first in an institution that pays 9%
simple interest. How much should they invest to have such amount in 3 years?

10. Eva wanted to invest in a trust fund for her retirement. She borrows from a cooperative that charges
6% simple interest to be deducted in advance. How much will she borrow if she will start investing
with Php 80,000?

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Compound Interest

F. Determine the value of n and t in each problem below.

1. How much is the interest of an investment at 4% compounded quarterly for 2 years?

1
2. Calculate the compound amount of Php 4,000 compounded monthly for 1 years?
2

1
3. A man deposited Php 20,000 in a savings bank that pays 4 % compounded semi-annually for 2
2
years and 6 months. What is the compound amount at the end of the term?

4. In the coming three years, you will need Php 200,000. What amount will you deposit in a bank at
present to have such amount if the bank pays 7% compounded annually?

5. You deposit Php 20,000 in an account earning 4.5% interest, compounded annually. How much is in
the account after 9 months?

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6. You deposit in an account earning 3% interest, compounded monthly. How much is in the account at
the end of 9 months?

7. Calculate the future value of Php 6,000 earning 3% interest, compounded daily for 2 years.

8. How much money should be invested in an account that earns 7% interest, compounded quarter l, in
order to have Php 200,000 in 3 years?

9. You want to retire in 35 years with Php 2,000,000 in investments. How much money you need to
invest today at 4% interest, compounded daily?

10. A couple plans to save for their child’s college education. What principal amount must be deposited by
the parents when their child turns 5 in order to have Php200,000 when the child reaches the age of 19?
Assume the money earns 6% interest compounded monthly.

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G. Each column in the table below is labeled, complete the table by writing the given data (in figures), the
word “unknown” for the unknown data, n/a if it is not applicable in the problem.

1. Find the interest on Php30,000 invested for 2 years at 9% compounded quarterly.

P A I r n t

1
2. What is the maturity value of Php25,000 at the end of 3 years if the interest rate is 5% compounded
2
semi-annually?

P A I r n t

1
3. A man deposited Php 12,000 in a savings bank that pays 1 % compounded monthly for 1 year and
2
10 months. What is the compound amount at the end of the term?

P A I r n t

4. If Php50,000 is due at the end of 3 years at 7% compounded annually. What is its present value?

P A I r n t

5. How much must be deposited today in a savings bank to accumulate Php 120,000 after 5 years if
money earns 6.5% compounded quarterly?

P A I r n t

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6. A couple planned to build a Php 2,500,000 house after 5 years. How much should be deposited in a
savings account now that pay 2.5% interest compounded monthly to have such amount in 5 years?

P A I r n t

7. Nico borrowed Php 20,000 from Luke. He promised to pay the principal amount plus the interest at
the end of 2 years. If Luke charged him 2% compounded monthly, how much should Nico pay to
Luke?

P A I r n t

8. If you start investing Php 50,000 now in a trust fund that pays 8% compounded semi-annually, how
much money will you have in 10 years?

P A I r n t

9. How much must be invested today at 8.5% compounded quarterly to have Php3,000,000 in 30 years?

P A I r n t

10. Find the present value of Php 150,000, due at the end of 2 years, if money is worth 9% compounded
annually.

P A I r n t

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