1.

A firm has an option to buy an equipment for P110,000 at any time between
now and 4 years from now. If the firm plans to purchase the equipment 4
years from now, the equivalent present amount that the firm is paying for the
equipment at 12% interest is closest to _________.
a. P69,900
b. P75,400
c. P89,500
d. P94,500
2. The present worth of a decreasing geometric gradient is P96,157. The
interest rate is 8% per annum and the rate of change is 10% per year. If the
cash flow amount in year 1 is P20,000, the year in which the gradient ends is
closed to ___________.
a. 9 years
b. 10 years
c. 11 years
d. 12 years
3. A company invests P18,000,000 in asset and equipments. If the company
uses an interest rate of 12% per year, how much money would it have to earn
each year if it wanted to recover this investment in 10 years?
a. P1.15M
b. P1.92M
c. P3.19M
d. P4.22M
4. The future worth of P16,000 in year 2, P12,000 in year 4, and P12,000 in year
6 at an interest rate of 10% per year is __________.
a. P41,890
b. 43,151
c. P47,512
d. P65,520
5. For the cash flow below at 12% interest per year, solve for the equivalent
annual worth that starts at year 1.
YEAR AMOUNT
a. P1,384 0 1000
b. P1,476 1-5 2000
c. P1,651 6 900
7 800
d. P1,969 8 700
9 600
10 500
11 400
6. At age 30, you invest P5,000 into a mutual fund. If the
fund averages an 8% annual return, how much is your investment at age 55?
a. P30,671
b. P43,240
c. P37,812
d. P39,500
7. Andrews retirement account in a company currently totals P416,384. What
perpetual income is can Andrew and his heirs received per year if he retired
today and the money is invested in an annuity earning 6% interest?
a. P23,651
b. P24,980
 c. P25,660
d. P28,510
8. You are considering investing in a 4-year certificate of deposit with a annual
yield of 6.5% and monthly compounding. If you invest P5,000, your effective
interest rate is __________.
a. 6.6%
b. 6.7%
c. 6.8%
d. 6.9%
9. An equipment initially costs P20,000 annual maintenance is P300. The
salvage value of this equipment is 10% of the initial cost in 20 years. At 4%
interest, what is the annual cost of the equipment to the business?
a. P1,410
b. P1,560
c. P1,643
d. P1,705
10.Jen decides to start an investment account beginning next year with an initial
investment of P500. Her plan is to make annual investments which increases
by P100 each year. If she earns 10% on her investment, what is the account
worth in 15 years?
a. P32,660
b. P35,105
c. P37,950
d. P39,500
11.A tire manufacturer uses 10,000 tons of special additives uniformly
throughout the year. It cost $50 to place each order, with storage costs
running $1.30/ton/year. How many tons should the manufacturer order at a
time?
a. 777
b. 877
c. 977
d. 1077
12.For the tire manufacturer in the previous problem, how frequently should the
orders be placed?
a. 26 days
b. 28 days
c. 30 days
d. 32 days
13.An account that earns 8% interest currently has a balance of P10,000. How
much can be withdrawn from this account at the end of each year for the
next 7 years and have the account depleted at the time of the last
withdrawal?
14.What amount would you need to deposit at 8% interest on January 1, 2017, in
order to be able to draw out P2,000 at the end of each year for the next 8
years, leaving the fund depleted at the end of that time?
a. P 9, 420
b. P 10, 150
c. P 10, 791
 d. P 11, 493
15.Repair costs on a new device are estimated to be P0 at the end of the first
year, P25 at the end of second year, P50 at the end of the third year, P75 at
the end of the fourth year and continuing in this manner until the end of the
tenth year. If interest is 8%, find the present worth equivalent of these
maintenance expenses.
a. P 444
b. P 592
c. P 610
d. P 643
16.How many years must P 2,000 be invested at 8% in order to reach a value of
P 4,000?
a. 8
b. 9
c. 10
d. 11
17.A deposit of P500 is placed in an account that yields 18% compounded
monthly. What is this account worth after half a year?
a. P 514.44
b. P533.12
c. P546,72
d. P589.12
18.Five year-end deposits equal to P 800 are placed in an account that yields
10% compounded continuously. What is this account worth at the end of 5
years, immediately after the last deposit?
a. P 4,935
b. P 5,160
c. P 5,556
d. P 5,891
19.What is the capitalized cost associated with a major repair expense that will
be P100,000 every 5 years, with the first expense occurring at the end of
year 5. Interest is 8%.
a. P 200,325
b. P 205,100
c. P 208,550
d. P 213, 125
20.How much interest was earned through year 15 by P1,000 end-of-year
deposits if the interest rate is 10%?
a. P 67,408
b. P 69,550
c. P 73,509
d. P 74,601