MATHEMATICS

ENGINEERING ECONOMY

CE LICENSURE EXAMINATION PROBLEMS 6. Find the effective rate on a nominal rate of 8.5% compounded
ENGINEERING ECONOMY continuously. (M01 M 8)
a. 9.98 % c. 8.57 %
b. 8.87 % d. 10.12 %
SIMPLE INTEREST
7. Which of the following has the greatest effective rate? (M02 M 2)
1. A time deposit of P110,000 for 31 days earns P890.39 on maturity a. 12.31 % compounded quarterly
date after deducting the 20% withholding tax on interest income. b. 12.20 % compounded monthly
Find the rate of interest per annum. (M97 M 26) c. 12.35 % compounded annually
a. 12.5 % c. 11.75 % d. 12.32 % compounded semi-annually
b. 12.25 % d. 11.95 %
8. A nominal annual rate of interest of 7%, compounded
2. The tag price of a certain commodity is for 100 days. If paid in 31 continuously, has an effective annual interest rate of: (N03 M 22)
days, there is a 3% discount. What is the simple interest paid? a. 7.25 % c. 7.47 %
(M99 M 9) b. 7.53 % d. 7.14 %
a. 12.15 % c. 22.32 %
b. 6.25 % d. 16.14 %
PRESENT-FUTURE VALUATION RELATIONSHIPS
3. Terms of sales: P60,000 payable in 60 days or P57,500 payable in
15 days. Find the equivalent annual rate of simple interest if paid 9. Accumulate P5000 for 10 years at 8% compounded quarterly. Find
in 60 days. (M03 M 19) the compounded interest at the end of time. (M94 M 1)
a. 22.5 % c. 24.7 % a. P7040.60 c. P5080.20
b. 34.8 % d. 32.9 % b. P6040.20 d. P4080.20

10. Accumulate P5000 for 10 years at 8% compounded quarterly. Find

EQUIVALENT RATES the compounded interest at the end of time. (M94 M 4)
a. P7040.60 c. P6040.20
4. What rate (%) compounded quarterly is equivalent to 6% b. P4080.20 d. P5080.60
compounded semi-annually? (M98 M 6)
a. 5.93 c. 5.96 11. P500,000 was deposited 20.15 years ago at an interest rate of 7%
b. 5.99 d. 5.90 compounded semi-annually. How much is the sum now? (N94 M
22)
5. Which of the following has the least effective annual interest rate? a. P1.4 million c. P1.8 million
(N99 M 3) b. P1.6 million d. P2.0 million
a. 12 % compounded quarterly
b. 11.7 % compounded semi-annually 12. How long (years) will it take money to quadruple if it earns 7%
c. 11.5 % compounded monthly compounded semi-annually? (M95 M 13)
d. 12.2 % compounded annually a. 26.30 c. 33.15
b. 40.30 d. 20.15

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 MATHEMATICS
ENGINEERING ECONOMY

13. P200,000 was deposited at an interest of 24% compounded semi- 19. A house and lot costing P2 million was bought at a down payment
annually. After how many years will the sum be P621,170? (N95 of P500,000 and P1 million after one year. The remaining balance
M 15) will be paid at the end of the third year. If the interest rate is 24%
a. 4 c. 6 compounded semi-annually, what is the required payment? (N01
b. 5 d. 7 M 11)
a. P1,432,876.00 c. P1,274,324.00
14. P200,000 was deposited on Jan. 1, 1988 at an interest rate of 24% b. P1,763,985.00 d. P1,387,215.00
compounded semi-annually. How much would the sum on Jan. 1,
1993? (M96 M 12) 20. At what interest rate, compounded quarterly, will an investment
a. P421,170 c. P401,170 double in five years? (N02 M 22)
b. P521,170 d. P621,170 a. 16.6 % c. 14.1 %
b. 15.1 % d. 13.7 %
15. If P500,000 is deposited at a rate of 11.25% compounded monthly,
determine the compounded interest after 7 years and 9 months.
(N96 M 25) ANNUITIES
a. P660,592 c. P670,258
b. P680,686 d. P690,849 21. A man inherited a regular endowment of P100,000 every end of 3
months for x years. However, he may choose to get a single lump
16. One hundred thousand pesos was placed in a time deposit which sum of P3,702,939.80 at the end of 4 years. If the rate of interest
earned 9% compounded quarterly, tax free. After how many years was 14% compounded quarterly, what is the value of x? (N94 M
would it be able to earn a total interest of fifty thousand pesos? 24)
(N98 M 24) a. 13 c. 12
a. 4.56 c. 4.32 b. 10 d. 11
b. 4.47 d. 4.63
22. A man paid a 10% down payment of P200,000 for a house and lot
17. How long will it take for money to quadruple itself if invested at and agreed to pay the balance of monthly installments for 5 years
20% compounded quarterly? (M00 M 1) at an interest rate of 15% compounded monthly. What was the
a. 10.7 years c. 9.5 years monthly installment in pesos? (M95 M 14)
b. 6.3 years d. 7.1 years a. P44,528.34 c. P43,625.92
b. P42,821.87 d. P45,825.62
18. P1,000,000 was invested to an account earning 8% compounded
continuously. What is the amount after 20 years? (N00 M 14) 23. A service car whose cash price was P540,000 was bought with a
a. P4,452,796.32 c. P5,365,147.25 down payment of P162,000 and monthly of P10,874.29 for 5
b. P4,953,032.42 d. P3,456,254.14 years. What was the rate of interest if compounded monthly? (M96
M 29)
a. 20 % c. 24 %
b. 26 % d. 22 %

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 MATHEMATICS
ENGINEERING ECONOMY

24. A man inherited a regular endowment of P100,000 every end of 3 29. Five thousand pesos is deposited at the end of each year for 15
months for 10 years. However, he may choose to get a single lump years into an account earning 7.5% compounded continuously.
sum payment at the end of 4 years. How much is this lump sum if Find the amount after 15 years. (M00 M 5)
the cost of money is 14% compounded quarterly? (N96 M 24) a. P133,541.3 c. P148,365.9
a. P3,502,546 c. P3,802,862 b. P152,754.2 d. P112,854.1
b. P3,702,939 d. P3,602,431
30. A man made a year-end payment of P100,000 to an account
25. The present value of an annuity of R pesos payable annually for 8 earning 8% annually for 10 years. How much is in the account
years, with the first payment at the end of 10 years, is after 20 years? (N00 M 15)
P187,481.25. Find the value of R if money is worth 5%. (M98 M a. P3,127,540.18 c. P3,327,452.36
12) b. P4,075,458.99 d. P3,247,111.25
a. P45,000 c. P42,000
b. P44,000 d. P43,000 31. Determine the equal payment series future worth factor of an
annuity of P15,000 per year for 25 years at 18% interest annually.
26. A debt of x pesos, with interest rate of 7% compounded annually (M01 M 14)
will be retired at the end of 10 years through the accumulation of a. 0.786 c. 342.6
deposit in the sinking fund invested at 6% compounded semi- b. 1.389 d. 167.21
annually. The deposit in the sinking fund every end of six months
is P21,962.68. What is the value of x? (N98 M 14) 32. A man deposits P6,000.00 every end of three months for his
a. P300,000 c. P350,000 retirement. If the interest rate is 10% annually compounded
b. P250,000 d. P400,000 quarterly, what lump sum value can he expect after 20 years? (M02
M 19)
27. A man paid 10% down payment of P200,000 for a house and lot a. P528,000.00 c. P1,245,278.32
and agreed to pay the balance on monthly installments for 60 b. P785,500.00 d. P1,490,296.28
months at an interest rate of 15% compounded monthly. Determine
the required monthly payment. (M99 M 10) 33. What is the difference between the sums of an annuity due and an
a. P4,282 c. P58,477 ordinary annuity for the following data: (N02 M 21)
b. P42,822 d. P5,848 Periodic payment : P14,000
Term : 16 years
28. To maintain its newly acquired equipment, the company needs Interest rate : 10% compounded quarterly
P40,000 per year for the first five years and P60,000 per year for Payment interval : 3 months
the next five years. In addition, an amount of P140,000 would also a. P58,598 c. P61,763
be needed at the end of the fifth and the eighth years. At 6%, what b. P53,992 d. P67,042
is the present worth of these costs? (N99 M 4)
a. P689,214 c. P549,812 34. Find the present value, in pesos, of an annuity of P20,000 payable
b. P512,453 d. P586,425 annually for 8 years, with the first payment at the end of 10 years,
if money is worth 5%. (M03 M 20)
a. P79,354 c. P83,325
b. P77,451 d. P81,424

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 MATHEMATICS
ENGINEERING ECONOMY

35. What is the difference between the sums of an annuity due and an 39. A machine costing P45,000 is estimated to have a salvage value of
ordinary annuity for the following data: (N03 M 23) P4,350 when retired at the end of 6 years. Depreciation cost is
Periodic payment : P100,000 computed using a constant percentage of the declining book value.
Term : 20 years What is the annual rate of depreciation in %? (M96 M 5)
Payment interval : 1 year a. 33.25 c. 35.25
Interest rate : 12% compounded annually b. 32.25 d. 34.25
a. P965,732 c. P864,629
b. P657,432 d. P753,458 40. An engineer bought an equipment for P500,000. Other expenses,
including installation, amounted to P30,000. At the end of its
estimated useful life of 10 years, the salvage value will be 10% of
PERPETUITY the first cost. Using the straight-line method of depreciation, what
is the book value after 5 years? (N97 M 10)
36. Find the present value in pesos, of a perpetuity of P15,000 payable a. P291,500 c. P271,500
semi-annually if money is worth 8%, compounded quarterly. (N95 b. P281,500 d. P301,500
M 13)
a. P371,287 c. P392,422 41. A machine having a first cost of P60,000.00 will be retired at the
b. P386,227 d. P358,477 end of 8 years. Depreciation cost is computed using a constant
percentage of the declining book value. What is the total cost of
37. What is the present worth of a perpetuity of P10,000 annually if depreciation, in pesos, up to the time the machine is retired if
money is worth 10% compounded monthly? (N01 M 6) annual rate of depreciation is 28.72%? (N98 M 25)
a. P95,499.07 c. P100,000.00 a. P56,000 c. P58,000
b. P96,783.98 d. P105,342.12 b. P57,000 d. P59,000

42. A machine costing P480,000 has a life expectancy of 12 years with

DEPRECIATION a salvage value of 10% of the first cost. What is the book value
after five years using the declining balance method? (M00 M 11)
38. An engineer bought equipment for P500,000. He spent an a. P183,892 c. P196,432
additional amount of P30,000 for installation and other expenses. b. P152,758 d. P214,785
The estimated useful life of the equipment is 10 years. The salvage
value is x% of the first cost. Using the straight-line method of 43. A certain copier machine cost P150,000 with a trade-in value of
depreciation, the book value at the end of 5 years will be P15,000 after making 800,000 copies. Using the declining balance
P291,500. What is the value of x? (N94 M 23) method, what is the book value when the machine had made
a. 10 c. 20 300,000 copies? (M00 M 28)
b. 5 d. 15 a. P68,111 c. P62,531
b. P64,896 d. P63,254

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 MATHEMATICS
ENGINEERING ECONOMY

44. An equipment having a first cost of P450,000 has a life expectancy 49. A contractor can buy trucks for P800,000 each, or rent them for
of 10 years with a final salvage value of P80,000. Using the P1,200 per truck per day. The truck has a salvage value of
double-declining balance method, what is its book value after 6 P100,000 at the end of its useful life of 5 years. The annual
years? (M01 M 7) maintenance cost is P20,000 per truck. Using the annual-cost
a. P117,964.80 c. P184,320.00 method and 14% interest rate, determine the number of days per
b. P147,456.00 d. P230,400.00 year that each truck must be used to warrant its purchase. Use
sinking-fund method of depreciation. (N02 M 20)
45. A machine having a total first cost of P100,000 has a salvage cost a. 187 c. 155
of P10,000 after 10 years. Determine the book value after five b. 177 d. 199
years using the double-declining balance method. (M02 M 15)
a. P32,768.00 c. P40,960.00
b. P26,214.40 d. P34,452.00 DEPLETION

46. Cost of machine = P140,000; useful life = 8 years; salvage value 50. An investor pays P1,100,000 for a mine which will yield a net
= P10,000. Determine the 4th year depreciation using the double- income of P200,000 at the end of each year for 10 years and then
declining balance method, in pesos. (M03 M 18) will become useless. He accumulates a replacement fund to
a. P14,765 c. P16,182 recover his capital by annual investments at 4.5%. At what rate (%)
b. P17,312 d. P15,634 does he receive interest on his investment at the end of each year?
(M95 M 15)
47. An equipment is bought at P420,000 with an economic life of 6 a. 10.04 % c. 11.5 %
years and a salvage value of P50,000. The first year depreciation is b. 8.5 % d. 17.5 %
P105,714. The cost of money is 12% per year. What method of
depreciation was used? (N03 M 24)
a. straight-line method CAPITALIZED COST
b. sinking-fund method
c. SOYD method 51. At 6%, find the capitalized cost of a bridge whose cost is P200M
d. declining balance method and life is 20 years, if the bridge must be partially rebuilt at a cost
of P100M at the end of each 20 years. (N96 M 23)
a. P245.3 M c. P215 M
ANNUAL COST b. P210 M d. P220 M

48. Machine cost = $15,000; life = 8 years; salvage value = $3,000. 52. A company uses a type of truck which costs P2M, with life of 3
What minimum cash return would the investor demand annually years and a final salvage value of P320,000. How much could the
from the operation of this machine if he desires interest annually at company afford to pay for another type of truck for the same
the rate of 8% on his investment and accumulates a capital purpose, whose life is 4 years with a final salvage value of
replacement fund by investing annual deposits at 5%? (M97 M 24) P400,000, if money is worth 4%? (M97 M 23)
a. $2,456.66 c. $2,576.60 a. P2,805,120 c. P2,585,870
b. $2,435.38 d. $2,365.30 b. P2,718,480 d. P2,642,320

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 MATHEMATICS
ENGINEERING ECONOMY

53. Determine the capitalized cost of a project that cost P324,000 with 57. The cost of producing a commodity consists of P65.00 per unit for
an anticipated salvage value of P50,000 at the end of four years, if labor and material cost and P25.00 per unit for other variable cost.
money is worth 8%. (M99 M 5) The fixed cost per month amounts to P700,000. If the commodity
a. P1,342,846 c. P1,084,079 is sold at P290.00 each, what is the break-even quantity? (N01 M
b. P1,480,792 d. P1,120,304 17)
a. 3200 c. 3600
b. 3500 d. 3400
BREAK-EVEN ANALYSIS

54. Determine the break-even point in terms of number of units

produced per month using the following data: (the costs are in
pesos per unit) (M98 M 7)
Selling price per unit = P600.00
Total monthly overhead expenses = P428,000.00
Labor cost = P115.00
Cost of materials = P76.00
Other variable cost = P2.32
a. 1036 c. 1053
b. 1044 d. 1025

55. The cost of producing an item is as follows:

Labor cost per unit = P315.00
Material cost per unit = P100.00
Variable cost per unit = P3.00
Monthly overhead cost = P461,600.00
If each unit is sold at P995.00, how many units must be produced
each month to break-even? (M99 M 11)
a. 800 c. 850
b. 750 d. 950

56. The cost of producing a certain commodity consists of P45.00 per

unit for labor and material cost and P15.00 per unit for other
variable cost. The fixed cost per month amounts to P450,000. If
the commodity is sold at P250.00 each, what is the break-even
quantity? (N00 M 16)
a. 2014 c. 2589
b. 2178 d. 2367

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