Name: Score:

FINANCIAL MATHEMATICS September 17,2018

FM 02 FUTURE VALUE I 03 PRESENT VALUE DYNNITH F.

SUABERON,CPA,MBM

1. Compute the amount that a P200,000 investment today would accumulate at 10% (compound
interest) by the end of 10 years.

2. Klexa requests a loan of P9000 for 3 months from a bank B charging 5% discount. Find the
amount of the loan he will pay at the end of the term and the interest rate which Klexa is paying.

3. Raven wishes to receive P9000 as the immediate proceeds of a 90-day loan from a bank B which
is charging 5% interest payable in advance. For what sum will Raven draw the note which he will give to
B?

4. Find the compound amount after 9 years and 3 months on a principal P = P3000, if the rate is
6%, compounded quarterly.

5. Find the present value of P5000, due at the end of 4 years and 6 months, if money earns 4%,
converted semi-annually.

6. Find the compound amount on P3,000,000 after 16 years and 3 months, if the rate is 5%
compounded bimonthly.
7. Accumulate a P40,000 principal for 15 years under the annual rate of 6% (m = 4). What
compound interest is earned?

8. Find the interest rate if the present value of P6000, due after 4 years became P8500, if money
can earn interest at interest compounded semiannually?

9. To doubleP40,000 principal for 15 years under the annual rate of 6% . Compounding ofshould be
done every?

10. If P10000 had been invested for 3 years paying 6% compounded quarterly and was transferred
to a bank paying 10% compounded yearly for 5 years. What would be the compound amount now?

11. Which interest rate is the better, 5% compounded monthly or 6.5% compounded semi-annually?

12. What nominal rate compounded quarterly could equitably replace the rate (i=.04, m = 2)?

13. On June 1, 2013, Kent Aeron borrows P2000, from Jason and agrees to pay the amount on
whatever date he settles his account, given two choices - to pay at 8% interest compounded
semiannually or at 9% simple interest. If Kent Aeron can pay it after 2 years, what wouldhe choose?

14. Compute the interest that a P200,000 would accumulate at 10% (compound interest) by the end
of 10 years.

15. Poy Juan Corporation has a contractual debt outstanding. Poy Juan has available two means of
settlement: It can either make immediate payment of P3, 500,000, or it can make payment of P4,
000,000 after 5 years. Which method of payment do you recommend, assuming an expected effective-
interest rate of 8% during the future period?

16. Marryan Grace Inc. has P600,000 to invest. The company is trying to decide between two
alternatives uses of the funds. Invest it @ 8% interest compounded annually or at 7.5% compounded
quarterly. Which alternative should Marryan Grace select? Assume the interest rate is constant over the
entire investment.

17. Jessa MaeInc. wishes to accumulate P1,300,000 at the end of 10 years, to retire bonds
outstanding. How much should the company deposit today if it will earn interest of 10% compounded
quarterly for 5 years and invest the money to another investment paying 12% interest compounded
annually for another 5 years.

18. Rex Jasper owes P250,000 due in four years and P150,000 due in six years both debt are with
10% interest compounded semi-annually . She and her creditor have agreed to settle the debts by two
payments in four and five years, respectively. The first payment is twice of the second payment. Find the
size of each payment if money is worth 12% compounded quarterly.

19. Christian Jay owes P100,000 due in three years and P100,000 due in five years. She and her
creditor have agreed to settle the debts by two payments in three with P100,000 and six years,
respectively. Find the size of its payment in six years if money is worth 12% compounded annually.

20. How long will it take money invested at 10.5%p.a, compounded monthly to double in value?

21. A long lost relative of Monique paid P120 000 for a house a number of years ago. You inherit the
property and sell it for P2 800 000. Inflation is calculated at 17%p.a., calculated annually. How many
years ago was the house purchased?

END OF ACTIVITY