Republic of the Philippines

Northwest Samar State University

Rueda St., Calbayog City 6710
Website: http//www.nwssu.edu.ph
Email: main@nwssu.edu.ph
Telefax: (055) 2093657
ISO 9001:2015 Certified

COLLEGE OF ENGINEERING AND ARCHITECTURE

SY: 2022-2023
1. A loan of 10,000.00 with a quarterly interest payment of 8% will be repaid over three
years in equal payments at the conclusion of each three-month period. Make a schedule
for amortization.
Given: Formula/Solution:
𝑛 12
𝑖(1+𝑖) 2%(1+2%)
P= ₱ 10,000 A= P[ 𝑛 ] = 10,000[ 12 ]
(1+𝑖) −1 (1+2%) −1

E= 8%⁄4 = 2% A= ₱945.60
n= 4 (3) = 12

Amortization Schedule.
Year Principal at Interest at 2% Payment at Periodic
beginning of per period end if each payment to
each 3 months period principal
1 ₱ 10,000.00 ₱ 200.00 ₱ 945.60 ₱ 745.60
2 ₱ 9,254.40 ₱ 185.19 ₱ 945.60 ₱ 760.51
3 ₱ 8,493.89 ₱ 169.88 ₱ 945.60 ₱ 775.72
4 ₱ 7,718.17 ₱ 154.36 ₱ 945.60 ₱ 791.24
5 ₱ 6,926.93 ₱ 138.54 ₱ 945.60 ₱ 807.06
6 ₱ 6,119.87 ₱ 122.40 ₱ 945.60 ₱ 823.20
7 ₱ 5,296.67 ₱ 105.93 ₱ 945.60 ₱ 839.67
8 ₱ 4,457.01 ₱ 89.14 ₱ 945.60 ₱ 856.46
9 ₱ 3,600.55 ₱ 72.01 ₱ 945.60 ₱ 873.59
10 ₱ 2,726.96 ₱ 54.54 ₱ 945.60 ₱ 891.06
11 ₱ 1,835.9 ₱ 36.72 ₱ 945.60 ₱ 908.88
12 ₱ 927.02 ₱ 18.54 ₱ 945.60 ₱ 927.06
TOTAL ₱ 67,357.37 ₱ 1,347.25 ₱ 11,347.20 ₱ 10,000.00

2. At the conclusion of eight years, a bond with a par value of 3,500.00 and an annual
interest rate of 10% is due to be redeemed for 4,500.00. If it is sold now in order to
produce 9%, what should the selling price be? .
Given: Formula/Solution:
𝐶 (1+𝑖)𝑛 −1
F= ₱3,500 Vn = (1+𝑖)𝑛 + Fr 𝑖(1+𝑖)𝑛
4,500 (1+9%)8 −1
C= ₱4,500 Vn = (1+9%)8 + 3,500(10%) 9%(1+9%)8
r=10% Vn = 2,258.49 + 1,937.19
i= 9% Vn = ₱4,195.59
n= 8
3. Currently, a bond with a 2,500.00 par value and an annual interest rate of 11% is
being offered for sale for 3,500.00. If the yield is 13%, what should the redemption
price be after 10 years?
Given: Formula/Solution:
𝑛 (1+𝑖)𝑛 −1
F= ₱3,500 C = Vn (1 + 𝑖) − Fr 𝑖
(1+13%)10 −1
𝑉𝑛 = ₱4,500 C = 3,500(1 + 13%)10 − 2,500(4%) 13%
r=11% 𝐶 = 11,880.99 − 5,065.43
i= 13% 𝐶 = ₱6,815.56
n= 10 year

4. Roeve borrows $8,500.00 from his buddy Shaniah with interest at a semi-annual rate
of 7%, which will be repaid in full, including interest, by equal payments at the end of
each six-month period for a period of four years.
Given: Formula/Solution:
𝑛 8
𝑖(1+𝑖) 3.5%(1+3.5%)
P= ₱8,500 A= P[ 𝑛 ] = 8,500[ 8 ]
(1+𝑖) −1 (1+3.5%) −1
7%
i= = 3.5% A= ₱ 1,236.55
2
n= 2(4) = 8

5. Francis, purchased a PlayStation 5. It cost $150,000.00 to purchase from a USA PS5

store, and another $85,000.00 was spent on customized. After 10 years, he plans to
sell it for $50,000.00. Make a straight line formula depreciation schedule.

Given: Solution:
Co −Cn
Co = ₱ 150,000 Co = 150,000 d=
𝑛
₱ 85,000 + 85,000
235,000 − 50,000
Cn = ₱ 50,000 Co = 235,000 d=
10
n= 10 years d= ₱ 18,500

Depreciation Schedule for Straight-Line Formula.

Year Book Value at Depreciation Book Value at end
beginning of year of year
1 ₱ 235,000 ₱ 18,500 ₱ 216,500
2 ₱ 198,000 ₱ 18,500 ₱ 179,500
3 ₱ 179,500 ₱ 18,500 ₱ 161,000
4 ₱ 161,000 ₱ 18,500 ₱ 142,500
5 ₱ 142,500 ₱ 18,500 ₱ 124,000
6 ₱ 124,000 ₱ 18,500 ₱ 105,500
7 ₱ 105,500 ₱ 18,500 ₱ 87,000
8 ₱ 87,000 ₱ 18,500 ₱ 68,500
9 ₱ 68,500 ₱ 18,500 ₱ 50,000
10 ₱ 50,000 ₱ 18,500 ₱ 31,500
6. Missy spent $450,000 on 20 sets of computers for his company, which he hopes to
sell for exactly $100,000 at the end of eight years. Utilize the sinking fund method
when i=10% and create a plan for depreciation.
Given: Formula/Solution:
i
Co = ₱ 450,000 d = co − cn (1+i)n−1
Cn = ₱100,000 0.10
d = (450,000 − 100,000) ((1+0.10) 8 −1)

n = 8 years d = 350,000(0.0874401757)
i = 10% d = 30,605.41

dm = d(F⁄A , 12%, m)
3 −1
d3 = 30,605.41((1+0.10)
0.10
)
1 −1
d1 = 30,605.41((1+0.10)
0.10
) d3 = 101,303.9071
d1 = 30,605.41

1 −1 4 −1
d2 = 30,605.41((1+0.10)
0.10
) d4 = 30,605.41((1+0.10)
0.10
)
𝑑2 = 64,271.361 d4 = 142,039.7078

5 −1 7 −1
d5 = 30,605.41((1+0.10)
0.10
) d7 = 30,605.41((1+0.10)
0.10
)

d5 = 186,849.0886 d7 = 290,358.7582
6 −1 8 −1
d6 = 30,605.41((1+0.10)
0.10
) d8 = 30,605.41((1+0.10)
0.10
)
d6 = 236,169.4075 d8 = 350,000.044

Depreciation Schedule for Sinking Fund

Formula.
Year (m) Book value at Accrued Book value at end
beginning of year ` depreciation of year (𝐶𝑜 − 𝐷𝑚)
1 ₱ 450,000 ₱ 30,605.41 ₱ 419,394.59
2 ₱ 450,000 ₱ 64,271.36 ₱ 385,728.64
3 ₱ 450,000 ₱ 101, 303. 91 ₱ 348,696.09
4 ₱ 450,000 ₱ 142,039.71 ₱ 307,960.29
5 ₱ 450,000 ₱ 186,849.09 ₱ 263,150.91
6 ₱ 450,000.00 ₱ 236,169.41 ₱ 213,830.59
7 ₱ 450,000.00 ₱ 290,358.76 ₱ 159,641.24
8 ₱ 450,000.00 ₱ 350,000.04 ₱ 99,999.96
7. A washer costing $250,000 was purchased by Ansarie, a college student. After nine
years, Ansarie intends to sell this drying machine for $90,000. Create a schedule for
depreciation using the Matheson formula.
Given: Formula/Solution:
n
Co = ₱ 600,000 k = 1 − √CCno = 1 − 10√250,000
600,000
= 0.0838
Cn = ₱250,000
n = 10 years
Year: Depreciation Book value
1 0.0838(₱600,000)=₱50,280 ₱549,720
2 0.838(549,720)=₱46,066.52 ₱503,653.47

Depreciation Schedule for Matheson Formula.

Year Book value at Depreciation Book value at end
beginning of year during year of year

1 ₱ 250,000.00 ₱ 26,825.00 ₱ 223,175.00

2 ₱ 223,175.00 ₱ 23,946.68 ₱ 199,228.32
3 ₱ 199,228.32 ₱ 21,377.20 ₱ 177,851.12
4 ₱ 177,851.12 ₱ 19,083.43 ₱ 158,767.69
5 ₱ 158,767.69 ₱ 17,035.77 ₱ 141,731.92
6 ₱ 141,731.91 ₱ 15,207.83 ₱ 126,524.08
7 ₱ 126,524.08 ₱ 13,576.03 ₱ 112,948.05
8 ₱ 112,948.05 ₱ 12,119.33 ₱ 100,828.72
9 ₱ 100,828.72 ₱ 10,818.92 ₱ 90,009.80

8. A business spent $600,000 on a crane to lift large cargo. After ten years, its anticipated
resale value will be $250,000.00. Find the annual depreciation charge for the first and
second years using the falling balance method?
Given: Formula/Solution:
n
Co = ₱ 250,000 k = 1 − √CCno = 1 − 9√250,000
90,000
= 0.1073
Cn = ₱90,000
n = 9 years

9. For her birthday, Mary Jane got a new phone. The advertised economic life of the
cellphone was 10 years, during which time it would cost 15% of its initial cost. If the
asset cost $45,000 at purchase, calculate the book value of the item after five years.
Given: Solution:
𝐷𝑛 𝐷𝑟
Fc = ₱ 45,000 𝑆𝑣 = 0.10(45,000)
𝑛
= 𝑟
Bvs = Fc- Ds
40,500 𝐷𝑠
n = 9 years 𝑆𝑣 = 4,500
10
= 𝑠
Bvs =45,500 -20,250
i = 15% 𝐷𝑛 = 45,000 − 4,500 𝐷𝑠 = 20250 Bvs = ₱24,750
r =5 𝐷𝑛 = 40,500
Bvs =?
10. Engr. Doroja made the decision to spend 90,000.00 on a washing machine for his
wife. The washing machine is expected to last 13 years and cost $30,000.00 at that
time. If an asset is depreciated using the sinking fund technique at an i=7% rate,
determine the book value of the asset at year eight.
Given: Solution:
(1+i)n −1 (1+i)n −1
Fc = ₱ 90,000 Dn = d [ i
] Dr = d [ i
]
1+0.07)13 −1 (1+0.07)8 −1
Sv = 0.10(45,000) 60,000 = d [ 0.07
] Dr = 2,979 [ 0.07
]
n = 13 years d = 2,979.051 D𝑟 = 30,564.48
r =8
i = 7%
Dn = Fc − Sv Bv7 = Fc − Dr
Dn = 60,000 Bv7 = 90,000 − 30,564.48
Bv7 = 59,435.52

11. The salvage value of the One Pacific Hotel after 50 years is $1,100,000. Depreciation
is $2,500,000.00 per year. How long should you wait before selling the building for
$25,000,000.00, according to the Straight Line Method?
Given: Solution:
(Fc−Sv)
Sv =₱1,100,000 D= n
TD = Fc - Bv
𝐹𝑐−1,100,000
D = ₱2,500,000 2,500,000 = ( ) TD = 126, 100 - 25,000,000
50
Bv = ₱25,000,000 Fc = ₱126,100,000 TD = ₱101,100,000
r=?

TD = D(r)
101,100,000 = 2,500,000(r)
r = 40.5 years
12. Five pieces of mining equipment owned by a group of miners cost respectively
$25,000, 20,000, 28,000, 30,000, and 22,000,000. The projected service life of this
equipment is 14 years. Utilize the group depreciation method to calculate the annual
depreciation.
Given: Solution:
n = 14 years
1
Expenses: Group depreciation rate = Estimated average life of group
1
₱ 25,000 GPR =
14
₱ 20,000 GPR =7.14%
₱ 28,000
₱ 30,000 annual depreciation = 7.14% (25,000+20,000+25,000+30,000+22,000)
₱ 22,000 annual depreciation = 7.14% (125,000)
annual depreciation = ₱8,925

13. Emmanuel spent 1,550,000 on a yacht that he expects to endure 12 years. Find the
yacht's salvage value using the twofold declining balance method.
Given: Solution:
200%
Fc = ₱1,550,000 i= sv = Fc(1-i)
n
200%
n = 12 years i= sv = 1,550,000(1-16.7%)12
12
i = 16.7% i = 16.7% sv = 173,010.20
sv = ?

14. On December 1, 2018, a production business spent 150,000 on equipment. It is

predicted to last 12 years, have a salvage value of $16,000, and produce 500,000
units. If it produced 550,000, calculate the depreciation in 2009 using the straight line
approach and output method.

Given: Solution:
Co−Cn Co−Cn
Co = ₱150,000 d=
n
d2009 =( n
) r2009
150,000−16,000 150,000−16,000
Cn = ₱16,000 d= =( ) 550,000
12 500,000

n = 12 years d =₱11,166.67 d2009 = ₱147,400

u = 500,000

r2009 = 550,000
15. A television corporation will spend $1,000,000 on a machine that will last 12 years and
have a salvage value of $450,000. Using the straight line formula, calculate the value
after 8 years. 15. A television corporation will spend $1,000,000 on a machine that will
last 12 years and have a salvage value of $450,000. Using the straight line formula,
calculate the value after 8 years.

Given: Solution:
Co−Cn 1,000,000,000−450,000
Co = ₱100,000,000 d= = = ₱ 45,833.33
n 12

Cn = ₱450,000 D8 = 8d = 8(45,833.33) = ₱ 366,666.64

n = 12 years

m = 8 years C8 = CO − CO =1,000,000 - 366,666.64

C8 = 633,333.36
16. A construction business made the decision to purchase a cement mixer truck for
$1,500,000.00 plus an additional $40,000.00. The company believes the cement mixer
will last for 10 years and has a salvage value of $150,000.00. Utilizing the SYD
approach, calculate the value after six years.

Given: Formula/Solution:
10+9+8+7+6+5
Co = ₱100,000,000 Co - Cn D6= (1,390,000)
55
+ ₱40,000 1,540,000 D6= ₱1,137,272.73
Co= ₱1,540,000 - 150,000
Cn = ₱150,000 ₱1,390,000
n = 10 years
10
m=6 years= 1+2+3….+8+9+10= (1+10) = 55
2

𝐶6 = 𝐶0 - 𝐷6 = 1,540,000 - 1,137,272.73
𝐶6 = ₱ 402,727.27

17. If the dividend rate is 10% per year, payable yearly, a computer shop will produce
net annual revenue of 650,000 over the course of 7 years. The sinking fund must also
increase at a 5% annual rate.
Given: Formula/Solution:
𝑅
R = ₱ 650,000 P= 𝑖
𝑟+(1+𝑖)𝑛 −1

650,000
n = 7 years P= 0.05
0.10( )
(1+0.05)7 −1

650,000
r = 10% P=
0.2228198184

i = 5% P= ₱2,917155.236
18. A quarry produces a profit of 1,500,000 over the course of 8 years. When the quarry
is sold for $400,000, the buyer wants to make 10% on his investment and invest money
in a sinking fund at 5%. Determine the highest price he should be ready to pay for the
tract.

Given: Formula/Solution:
𝑅 L
R = ₱1,500,000 P= 𝑖 + (1+𝑖)𝑛 −1
𝑟+(1+𝑖)𝑛 −1 𝑟( )+1
𝑖

1,500,000 300,000
L = 7 years P= 0.05 + (1+0.05)8 −1
0.10( ) 0.10( )+1
(1+0.05)8 −1 0.05

n = 8years P= ₱7,327,015.98 + ₱153, 459.6804

r= 10% P= ₱7,480,475.66
i = 5%

19. An electronics business is bought for $1,000,000 with a projected resale value of
$250,000 after 8 years. Find the annual revenue needed to produce an investment
rate of 9% using a sinking fund rate of 4%.

Given:

r = 9% P = 1,000,000 - 250,000(1+0.04)−8

i = 4% P = ₱817, 327.4487

n=8

Formula/Solution:
i
R = P[r + n ]
(1+i) −1
0.04
R = 817, 327.4487[0.09 + 8 ]
(1+0.04) −1
R = 817, 327.4487(0.198 527 832)
R = ₱162,262.2465
20. Over the course of 9 years, a hostel will generate a net annual income of
$550,000.00. Find the value of the dividend if it is payable annually at a 9% annual
rate. Additionally, there must be a 6% annual growth in the sinking fund.

Given: Formula/Solution:
𝑅
R = ₱550,000 P= 𝑖
𝑟+(1+𝑖)𝑛 −1

550,000
n = 9 years P= 0.06
0.10( )
(1+0.06)9 −1

550,000
r= 9% P=
0.1702235

i = 6% P=₱3,106,954.333