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Practice Problems

This document contains 8 math word problems involving compound interest calculations: 1) A man invested ₱100,000 annually for 10 years and waited another 10 years, earning 8% interest compounded annually. His total was ₱3,127,540.19 2) An employee took a ₱100,000 loan at 6% interest compounded annually to build a house. His monthly payment to pay it off in 10 years is ₱1101.80. 3) Details are given for calculations involving a ₱2000 payment every 3 months at 8% interest compounded quarterly over 6 years.

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671 views1 page

Practice Problems

This document contains 8 math word problems involving compound interest calculations: 1) A man invested ₱100,000 annually for 10 years and waited another 10 years, earning 8% interest compounded annually. His total was ₱3,127,540.19 2) An employee took a ₱100,000 loan at 6% interest compounded annually to build a house. His monthly payment to pay it off in 10 years is ₱1101.80. 3) Details are given for calculations involving a ₱2000 payment every 3 months at 8% interest compounded quarterly over 6 years.

Uploaded by

Yss Castañeda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

A man invested ₱100,000 every end of the year for ten years, then waited for another 10 years
for his money to grow. If his investments earned 8% after tax, compounded annually, what
would be the sum of his investments and earnings at the end of the 20th year?
Answer: ₱3,127,540.19
2. An employee obtained a loan of ₱100,000 at the rate of 6% compounded annually in order to
build a house. How much must he pay monthly to amortize the loan within a period of 10 years?
₱1101.80
3. A periodic payment of ₱2000 at the beginning of every 3 months is made for a period of 6 years.
If money is 8% compounded quarterly.
a) What is the sum of annuity due? ₱62,060.60
b) What is the present value of the annuity due? ₱38,584.41
c) What is the difference between the sum and present value of annuity due? ₱23,476.19
4. Ten annual instalments of ₱60,000 each starting at the end of the 11th year from now is worth
only ₱186,493.96 now.
a) What is the rate of interest if it is compounded annually? 8%
b) What is its worth at the end of 10th year? ₱402,604.88
c) What is its worth at the end of 10th year? ₱274,006.12
5. A father wishes to provide ₱4000 for his son on his 21st birthday. How much should he deposit
every 6 months in a savings bank which pays 3% compounded semi-annually, if the first deposit
is made when son is 3.5 years old? ₱84.61
6. A man inherited regular endowment of ₱100,000 every end of 3 months for 10 years. However,
he may choose to get a single lump sum payment at the end of 4 years. How much is this lump
sum if the cost of money is 14% compounded quarterly? ₱3,702,939.73
7. A businessman is faced with the prospect of fluctuating future budget for maintenance of the
generator. During the first 5 years, ₱1,000 per year will be budgeted. During the second 5 years,
the annual budget will be ₱1,500 per year. In addition, ₱3,500 will be budgeted for an overhaul
of the machine at the end of the 4th year and another ₱3,500 for an overhaul at the end of 8 th
year. Assuming compound interest at 6% per annum, what is the equivalent annual cost of
maintenance? ₱1,888.87
8. A series of year and payments extending over 8 years are as follows: ₱10,000 for the first year,
₱20,000 for the second year, ₱50,000 for the third year, and ₱40,000 for each year from the
fourth through the eighth year. Find the equivalent annual worth of these payments if the
annual interest is 8%? ₱33,563.85

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