BUSANA 1 PRACTICE EXERCISE (Finals)

1. What rate compounded every 4 months is equivalent to 19.5% simple interest for a term of 4
years?
2. Jose signs a 4-month bank discount note of P15,000 for John dated Jan 10, 2014. On Feb 15,
2014, John sells the note to a bank at 12% simple discount. Find the proceeds John received
from the sale of the note on Feb 15, 2014.

3. Tintin owes Sheila the following obligations: P25,000 due at the end of 3 years with
accumulated interest at 10% compounded quarterly and P60,000 due at the end of 5 years.
If Tintin wishes to replace both obligations by two equal payments at the end of 6 years and
8 years after paying P15,000 at the end of 4 years, what is the size of each payment if money
is worth 10% compounded annually? Use end of 6 years as comparison date

4. What single payment at the end of 7 years would equivalently pay the following debts:
P24,000 due in 1 year and P50,000 due in 5 years with accumulated interest from today at
15% effective if money is worth 8% compounded semiannually?

5. What is the cash value of a property which is purchased with a down payment of P100,000
and the balance of P350,000 to be paid in 2 years if money is worth 14% converted
quarterly?

6. On Sept 29, 2013, Anita received a P60,000 simple interest note at 11% due in 7 months
from Judy. How much is the future value of the note? What will be the proceeds for Anita if
she sells the note on March 2, 2014 at 10.75% interest deducted in advance?

7. In order to have P110,000 in 33 months, how much should be invested today in a fund that
pays 2% compounded quarterly?

8. Find the rate compounded semiannually that is equivalent to the simple discount rate of
17% for a term of 2 years.

9. How long will it take for money to triple itself if invested at 12% compounded semiannually?

10. On a loan made on July 10, 2013, the amount of P10,300 was paid on Oct 8, 2013 at 8%
simple interest. Find the size of the loan.

11. What is the term of the loan whose proceeds and maturity value are P67,820 and P80,000
respectively, at a simple discount rate of 8.7%?
12. Find the amount due at the end of 8 years if P35,000 is invested at 12% compounded
continuously for the first 4 years and 14% compounded quarterly for the remaining time.

13. Alyssa holds a P7,500, 120-day, 15% simple interest note made on Aug 17, 2013. In need of
cash, she sells this note on Sept 14, 2013 at a rate of 16% discount interest rate. How much
will she receive from the sale of the note?

14. Linda borrows P35,000 and agrees to pay P42,000 to settle her debt after 2 years and 3
months. At what rate compounded monthly is she paying interest?

15. How much should be invested now in order to have P30,000 in 10 years if it is invested at
9 ½ % compounded continuously?

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16. A unit of condominium costs P 1M. Paul’s father bought one with a down payment and 50
semiannual installments of P60,000 each . If interest is charged at 16% compounded
semiannually, how much is the down payment?
17. Annette deposits P30,000 at the end of every 6 months in a bank. At what rate compounded
semiannually will these deposits amount to P800,000 just after the 15th deposit?
18. Judy wants to have P 900,000 in a fund by placing monthly deposits of P10,000. If the fund
earns interest at 14.88% compound monthly,
a. how many monthly deposits of P10,000 are needed?
b. how much (if any) is the final deposit if it is to be made one month after the last monthly
deposit of P10,000 in order to have exactly P900,000 in the fund ?
19. Howard borrowed P152,000 from Derick last Dec 2, 2009. He will pay back the loan by
making quarterly payments of P8000 and a final payment. If the interest rate is 16%, m = 4,
a. how many quarterly payments of P8000 are required?
b. find the size of the final payment if it is to be made
i. at the same time as the last quarterly payment of P8000. On what date is this
payment due?
ii. one year after the last quarterly payment of P8000.
20. A life insurance company pays P500,000 at the death of a man. Instead of taking the cash,
the beneficiary invests it at 16.84% compounded quarterly. What is the size of the quarterly
withdrawal that this investment would provide for the man’s family for the next 10 years if
the withdrawals are to be made
a. at the end of each 3 months?
b. at the beginning of each 3 months?

21. Semiannual payments of P25,000 are made from Nov. 8, 2009 to Nov. 8, 2015. If money is
worth 12% compounded semiannually, find the value of these payments on
a. Nov. 8, 2009
b. Nov. 8, 2003

22. Find the present value of a sequence of semiannual payments of P4,000 if the first payment is
due at the end of 4 ½ years and the last payment is due at the end of 10 years. Money is
worth 10%, m = 2.
23. A house and lot costs P1.3M cash. A buyer bought it by making P300,000 down payment and
48 monthly installments, the first of which is due at the end of 1 year. If interest is charged at
20.4% converted monthly, how much is the monthly installment?
24. A man will receive a retirement benefit in the amount of P3,557 at the beginning of each
month for 15 years. If money is worth 14.4% compounded monthly, what is the present
value of his monthly benefits assuming that he will live to receive all the payments?
25. Jasmin will make equal payments at the beginning of each 3 months for 9 years to repay a
loan P150,000. Find her quarterly payment if the interest rate is 16.8% compounded
quarterly.
26. A loan is to be amortized by payments of P11,000 at the end of every 4 months. If the
outstanding balance at the end of 5 years is P21,342.86, find the size of the loan if interest is
charged at 15.9% compounded every 4 months.

27. On Feb 17,2014, Sheryl obtained a loan of P66,780. It is to be repaid by monthly payments of
P1,800 and a final irregular payment one month after the last regular payment. Interest is
charged at 12% compounded monthly.
a. How many regular payment of P1,800 are required?
b. On what date is the final irregular payment due?
c. How much is the final irregular payment?

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 d. What part of the 25th payment goes to payment of principal?
e. How much is total interest paid on the loan?
f. Construct the amortization schedule for the first 6 months.
28. A loan is to be repaid by payments of P3,800 at the end of each month for 30 months.
Interest is at 12%, m = 12.
a. Find the size of the loan.
b. Find the interest paid on the 18th payment date.
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c. Find the principal repaid on the 18 payment date.
d. Find the outstanding liability just after the 10th payment.
e. Find the total interest paid on the loan.

SINKING FUND

29. A man wishes to have P200,000 in 2 years and 4 months in order to start a small business.
He plans to create a sinking fund by depositing an amount every 4 months. If the fund
earns 15% converted every 4 months, find the periodic deposit and construct a sinking fund
schedule.
30. To fund renovation of her condo unit, Leila estimates that P250,000 will be needed in
years. She decides to invest a sum every 3 months with interest earned at 8% converted
quarterly.
a. How much is her quarterly investment?
b. How much will be in the fund after the 14th deposit?
c. How much interest is earned on the 15th deposit date?
d. By how much will the fund increase on the 15th deposit date?
e. How much is the total interest earned by the fund?
31. An employee can save P5000 every month. If he invests this amount in a fund earning 6%
converted monthly, how much money will he have in 5 years? How much increase will be
in the fund in 6 years?
32. How much must Lucy invest every 6 months in the next 10 years in a fund earning 12%
semiannually to accumulate P500,000? Construct a schedule showing the growth of the
sinking fund over the first 3 years.
33. ABC Manufacturing Company expects P300,000 will be needed on June 15, 2012 to buy
additional materials for production. To accumulate this amount, the manager plans to set up
a fund by making annual deposits. The first deposit was made on June 15, 2005 and the last
will be on June 15, 2012. The fund is earning 5.75% effective.
a. Find the annual deposit?
b. How much money will be in the fund by June 15, 2010?
c. What will be the total interest earned by the fund?
34. In order to have P 12000 at the end of 6 years, Annette will deposit each year in a sinking
fund earning 8% effective. Find the annual deposit and construct a sinking fund schedule.

35. Judy is creating a sinking fund through semiannual deposits of P9800 at the end of each 6
months. The fund is earning a rate of 18% converted semiannually.
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a. How much will be in the fund after the 9 deposit?
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b. How much interest is earned on the 10 deposit date?
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c. Find the fund increase after the 10 deposit.
36. Erika wishes to accumulate P150,000 in 5 years by depositing every 2 months a sum in an
account earning 12% converted every 2 months.
a. Find the periodic deposit. P3697.49
b. How much will be in the account in years? P 95333.51
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c. Find the interest earned on her 22 deposit. P1906.67
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d. How much will be the increase in her account on her 29 deposit? P6437.42
e. What is the total interest earned? P39075.35