Cordero, Kristian Charles L.

BSHM-4
BUSINESS FINANCE
Activity 1: Find My Future Value!
Direction: Using the given situations, compute for the future
value at the end of term of each scenario.
1. Your mother invested Php18 000 in government securities that
yields 6% annually for two years.
ANS:
FV=PHP 18,000 ( 1 + 0.06 )2
FV=PH[ 18,000 ( 1.06) 2
FV=PHP 18,000 × 1.1236
FV= Php 20, 224.80
2. Your father obtained a car loan for Php800 000 with an annual
rate of 15% for 5 years.
ANS:
FV=PHP 800,000 ( 1 + 0.15 ) 5
FV= PHP 800,000 ( 1.15)5
FV=PHP 800,000 × 2.01136
FV= Php1,609,088
3. Your sister placed her graduation gifts amounting to Php25 000
in a special savings account that provides an interest of 2% for
8 months.
ANS:
FV= PHP 25,000 ( 1+ 0.02) 2/3
FV= PHP 25,000(1.02)2/3
FV=PHP 25,338.35
4. Your brother borrowed from your neighbor Php7 000 to buy a new
mobile phone. The neighbor charged 11% for the borrowed amount
payable after three years.
ANS:
FV= PHP 7,000 ( 1 + 0.11) 3
FV= PHP 7,000(1.11)3
FV= PHP 8,411.63
5. You deposited Php5 000 from the savings of your daily
allowance in a time deposit account with your savings bank at a
rate of 1.5% per annum. This will mature in 6 months.
ANS:
FV=PHP 5,000(1+0.015)0.5
FV=PHP 5,000(1.015)0.5
FV= PHP 5,037.19

Activity 2: Find My Present Value!

Direction: Using the situations provided in Activity 1, compute
the present value of each scenario.
1. Your mother is expecting to get Php18 000 in two years’ time
after investing in government securities that yield 6% annually.
ANSWER:
PV= PHP 18,000 / ( 1 + 0.06 ) 2
PV= PHP 18,000 / ( 1.06) 2
PV=PHP 18,000 / 1.236
PV= Php16,007.13

2. Your father obtained a car loan in lump-sum in 5 years at a

total amount of Php800 000 with an annual rate of 15%.
ANSWER:
PV= PHP 800,000 / ( 1+ 0.15 ) 5
PV= PHP 800,000 / ( 1.15) 5
PV= Php435,308.76
3. Your sister placed her graduation gifts in a special savings
account that provides an interest of 2% for 8 months. She expects
to get Php25 000 after 8 months.
ANSWER:
PV= PHP 25,000 /( 1 + 0.02) 2/3
PV= PHP 25,000 /( 1.02) 2/3
PV= Php24,574.56

4. Your brother borrowed from your neighbor to buy a new mobile

phone. The neighbor charged 11% for the borrowed amount payable
after three years at a total amount of Php7 000.
SOLUTION:
PV= PHP 7,000 / ( 1 + 0.11)3
PV= PHP 7,000 / (1.11) 3
PV =Php5,530.58

5. You deposited your savings from your daily allowance in a time

deposit account with your savings bank at a rate of 1.5% per
annum. This will mature in 6 months and you expect to get Php5
000 at the end of the term.
ANSWER:
PV= PHP 5,000 / ( 1 + 0.015) 6
PV= PHP 5,000 / ( 1.015) 6
PV= Php4,975.31

Activity 3: Amortized Me!

Direction: Prepare a loan amortization table for each scenario
and compute for its interest expense.
1. CM Company borrowed Php2 000 000 from a bank on June 30, 2015.
The loan has an annual interest rate of 10% and the principal is
payable at the end of every quarter amounting to Php250 000. The
first quarterly payment will be on September 30, 2015. Prepare an
amortization schedule for 2015 until the loan is fully paid on
June 30, 2017. How much interest expense is incurred in 2015,
2016 and 2017 with respect to this loan?
Amortization Payment Interest Principal Ending
Date Payment Payment Balance
09/30/15 Php250,000 Php50,000 Php200,000 Php1,800,000
12/31/15 Php250,000 Php45,000 Php205,000 Php1,595,000
03/31/16 Php250,000 Php39,875 Php210,125 Php1,384,875
06/30/17 Php250,000 Php1,250 Php248,750 Php0
2015: The total amount of interest payments paid in 2015, or
Php50,000, constitutes the interest expenditure for 2015.
The total of the interest payments paid in 2016 represents the
interest expenditure for that year.
2017: The total of the interest payments paid in 2017 is the
interest expenditure year 2017.

2. ESD borrowed Php5 million from a bank on September 30, 2015.

The loan principal is payable every six months starting March 31,
2016 at the rate of Php1 000 000. The loan has an annual interest
rate of 10%. Determine the interest expense related to this loan
in 2015, 2016, 2017, and 2018.
Amortization Payment Interest Principal Ending
Date Payment Payment Balance

03/31/16 Php1,000,000 Php125,000 Php875,000 Php4,125,000

09/30/16 Php1,000,000 Php206,250 Php793,750 Php3,331,250
03/31/17 Php1,000,000 Php166,563 Php833,437 Php2,497,813
09/30/18 Php1,000,000 Php93,750 Php906,250 Php0
Since the loan only began in 2016, there are no interest costs in
2015.
The total of the interest payments paid in 2016 represents the
interest expenditure for that year.
2017: The total of the interest payments paid in 2017 is the
interest expenditure year 2017.
POST ACTIVITY EXAMINATION
Directions: Choose the letter of the best answer for each item.
Answer:
1. D. time value of money
2. C. FV = PV (1 + r)^n
3. B. amortized loan
4. C. It is calculated based on the most recent ending balance
of the loan.
5. C. FV = PV (1 + r)^n
6. C. equals the interest rate he/she will earn on the money
7. A. calculations
8. D. equals the number of periods before he needs the money
9.
Payment Payment Interest Principal Ending
Date Payment Payment Balance
03/31/18 Php5,000 Php375 Php4,625 Php20,375
06/30/18 Php5,000 Php304.31 Php4,695.69 Php15,679.31
09/30/18 Php5,000 Php235.45 Php4,764.55 Php10,914.76
12/31/18 Php5,000 Php163.86 Php4,836.14 Php6,078.62
03/31/19 Php5,000 Php91.19 Php4,908.81 Php1,169.81
06/30/19 Php1,169.81 Php7 Php1,162.81 Php7.00
Interest expenditure in 2018: The sum of all interest payments
made in 2018 is Php375 + Php304.31 + Php235.45 + Php163.86; this
is a total interest expenditure of Php1,078.62.
Interest expenditure for 2019: The interest payment received on
03/31/19, which is Php91.19, is the entire interest expenditure
for 2019.
10.

Payment Payment Interest Principal Ending Balance

Date Payment Payment
 06/30/1 Php300,000 Php63,000 Php237,000 Php1,563,000
6
12/31/1 Php300,000 Php54,710.5 Php245,289.5 Php1,317,710.5
6 0 0 0
06/30/1 Php300,000 Php46,241.3 Php253,758.6 Php1,063,951.8
7 6 4 6
12/31/1 Php300,000 Php37,147.0 Php262,852.9 Php801,098.89
7 3 7
06/30/1 Php300,000 Php28,078.1 Php271,921.8 Php529,177.01
8 2 8
12/31/1 Php529,177.0 Php18,513.2 Php286,663.8 Php242,513.20
8 1 0 1
06/30/1 Php242,513.2 Php8,489.16 Php234,024.0 Php8,489.16
9 0 4

Interest expenditure for 2016: The sum of all 2016 interest payments, or Php 63,000, is the
overall 2016 interest expenditure.
Interest expenditure in 2017: The total amount of interest payments paid in 2017—Php54,710.50
—represents the overall interest expenditure for that year.
Interest expenditure for 2018: The sum of all interest payments for 2018 is Php46,241.36, which
is the overall interest expenditure for 2018.
Interest expenditure for 2019: The sum of all interest payments made in 2019 is Php8,489.16,
which is the overall interest expenditure for 2019.