ASSIGNMENT 3 ( PART 1-7.

Due January 6, 2015) b) semi-annually

PART I COMPUTING THE COMPOUND AMOUNT AND c) quarterly
INTEREST
2. Find the sum of P32,100 invested for 4 years and 3 months
Find the interest rate per conversion period (i) and the total
at 18% compounded
number of conversion periods (n) at the end of the indicated
time. a) quarterly

1. 8 years at 10% compounder quarterly b) monthly

2. 4 years at 12% every two months 3. Accumulate P18,700 invested for 1 1⁄2 yrs at 8%
compounded
3. 71⁄2 yrs at 9% compounded semi-annually
a) semi-annually
4. 3 years and 3 months at 18% compounded quarterly
b) quarterly
5. 8 years and 6 months at 12% compounded monthly
4. Determine the maturity value of a note having a face value
6. 96 months at 5% compounded annually
of P26,700 with interest at 11% m = 2 for 8 yrs.
7. 33 months at 18% compounded monthly
5. Mrs. Dela Cruz invested P70,000 at 12% m =4 for 5 yrs.
8. 1 1⁄2 yrs at 5% compounded semi-annually And another P70,000 at 18%, m = 6 for the same length of
time. Find the total amount of two investments.
9. 11 years at 16% compounded quarterly
6. Four friends deposited P15,000 each in a trust fund that
10. From April 24, 2008 to July 24, 2012 at 18% compounded gives 15% interest quarterly. Find their total money in 8 years.
quarterly
7. Mrs. Dimayuga deposits p12,000 in a savings account on
PART II March 30, 2006. Six months later she deposited P6,000. If the
bank credits at 12% m = 4, and no withdrawal has been made,
Solve for the value of the unknown: how much is her money on Dec. 30, 2012?
1. Find the amount and interest of P18,600 invested for 5 years 8. Mrs. Delos Santos has P75,000. One third of it was invested
and 6 months at the rate of 18% compounded at 18% m = 2. One fourth of the remaining amount was
invested at 12% m = 4 and the remaining amount was invested
a) monthly
at 12% m =12. Find her total investment in 6 years.
9. Accumulate P26,000 for 90 months (a) at 6% m = 2; (b) at 2. P27,500 12% Monthly 3
3% simple interest. years and 7 months

10. Accumulate P26,900 invested at 12% m =4 in a savings 3. P83,900 10% Quarterly 6

account on May 10, 2010 to Nov. 10, 2012. years and 9 months

11. Mr. Marquez owes me P50,800 due now. He offers to pay 4. P71,520 7% Semi-annually 12
the principal plus the accumulated simple interest at rate of 6% years
at the end of 4 years. I insist on changing 6% compounded
semi-annually. How much more do I receive at the end of 4 5. P68,900 6% annually 15
years? years

12. Find the compound amount and interest of P29,700 if

invested for 8 years and 9 months at 18% compounded B. Solve the following problems:
monthly.
6. Discount P28,500 in 5 years if money is worth 8%
13. Find the amount of P56,500 invested for 7 years and 9 compound quarterly
months at 12% compounded quarterly.
7. What amount must be invested today at 12%
14. Accumulate P16,800 at 12%; m=12 for 8 1⁄4years. compound monthly in order to accumulate P150,000 in 6
years?
15. Find the amount of P42,600 at the end of 5 years and 6
months at 10% compounded semi-annually. 8. A non-interest bearing note whose face value is
P200,000 may be sold 22 months before maturity. Mr.
COMPUTING THE PRESENT VALUE Santos is interested to buy the note at 18% m = 4 while
PART III Mr. Bautista. Mr. Santos is interested to buy the note at
18% m = 4 while Mr. Bautista is willing to buy it at 18% m
A. Find the present value of each of the ff: amounts: = 12. To whom must the bearer sell the note.

Amount Nominal Frequency of conversion 9. How much must be invested today in a saving
Term account to realize P85,000 in 5 years if money is worth
10% m = 4?
1. P28,300 8% Every two months 5
years
10. How much must a man deposit in a bank that pays 19. If money is worth 10% compounded quarterly find the
7% compounded annually so that after 10 years he will present value of P48,750 due in 5 years and 9 months.
have P3,000,000?
20. If money is worth 7% compounded semi-annually,
11. What sum is needed to accumulate P90,000 in 8 find the present value of P1,350,265 due in 7 1⁄2 years
years if money earns interest of 12% m = 6?
LECTURE: READ AND UNDERSTAND
12. How much must a corporation deposit in a bank COMPoUND AMOUNT AT A FRACTION OF A PERIOD
which credits interest at 12% m = 12 to come up in 8
years with P2,500,000 needed for its expansion In the formula S = P (1+i)n, n is assumed to be an
program? integer. If n is a fraction, one method of finding the
compound amount is to assume compound interest
13. In purchasing a house, a man makes P720,000 down throughout the term. However in practice, simple interest
payment and agrees to pay P1,200,000 5 years later. is assumed over the final fractional part of a period.
Find the cash value of the house is money is worth 14%
compounded semi-annually. The method is done as follows:

14. On the birth of a child, a father wished to invest in a 1. Find the compound amount at the end of the largest
trust fund which gives 12% compounded quarterly. How number of whole periods in the given term.
much must he invest if he wants to accumulate P650,000
2. Accumulate the result in step 1 for the remaining time
by the time the child reaches his 21st birthday?
(which is less than a period) at simple interest nominal
15. Find the present value of P58,790 due in 4 1⁄2 years rate.
if money is invested at 9% m = 2?
Example 1. Find the compound amount if P7200 is
16. To provide for a purchase of a car worth P950,000 as invested for 3 years and 9 months at 8% compounded
a gift to his mother five years from now, how much semi-annually, assuming simple interest over the final
should Benjamin invest today at 18% compounded fractional part.
quarterly?
Solution:
17. If money is worth 8% compounded semi-annually,
P = 7,200 i = 4% m=2 j = 8%
find the discount if P38,775 is discounted 4 years.
t = 3 years & 9 months
18. Discount P178,532 for 10 years at 6% compound
annually. Find the discount. n = (33⁄4) (2)
 n = ( 15/4 )(2) 2. Find the compound amount and interest if P10,500 is
invested for 2 years and 8 months at 6% compounded
n = 7 1⁄2 periods semi-annually.
1. Find S ; the largest number of whole periods is 7 ( 3 3. Accumulate P18,500 for 5 years and 10 months at
years and 6 months), thus the compound amount is 12% compounded very two months.
S = P(1+i)n 4. A man borrowed P500,000 from a bank charging 7%
= 7,200(1.04)7 compounded semi-annually on June 20, 2009. How
much must he pay on Aug 20, 2012, to settle his loan.
= 7,200(1.315932)
5. Find the amount of P392,400 at the end of 5 1⁄2 years
S = P9,474.71 if money is worth 6% compounded annually.

2. The remaining time is 3 months, hence accumulate S 7. Find the compound amount of P22,600 invested at 8%
for the remaining 3 months compounded annually from February 6, 2009 to May 6,
2012.
At 8% simple interest.
8. Find the amount of P210,000 if invested at 9%
S = S (1 + rt)
compounded semi-annually for 8 3⁄4 years
= 9474.71 [1 + (.08)(3/12)]
9. On March 15, 2008, Jose borrowed P12,000 from a
= 9474.71 (1 + .02) bank charging 6% compounded annually. If he paid the
accumulated sum on May 15, 2012, how much did he
S = P9664.20 pay?
PART IV 10. Accumulate P98,975 for 8 years and 8 months if it is
invested at 16% compounded quarterly
Solve the following problems assuming simple
interest over the final fractional part. LECTURE: READ AND UNDERSTAND
1. Find the compound amount and interest if P92,000 is PRESENT VALUE AT A FRACTION OF A PERIOD
invested at 12% compound quarterly for 5 years and 4
months. The practice of computing the present value at a
fraction of a period can be done by the following steps:
1. Increase the number of whole periods by one; and 2. Accumulate P1 for 1 month at 12% simple interest to
using the new period discount S. this means we have to find the actual present value.
add a few months to complete the fractional part to one
period. P = P1 (1+rt)

2. Accumulate the result in Step 1 at simple interest, at = (1,565.68 [1+(.12)(1/12)]

the given nominal rate, for the number of months added = 1,565.68(1=.01)
in the first step.
Using a calculator,
Example 1. Find the present value of P3000 due in 5
years and 5 month at 12% compounded quarterly. P = 3,000(1.03)-21 2/3

Solution: = 3,000(0.527060089)

S = P3,000 i = 3% = P1,581.18

j = 12% t = 5 5/12 years PART V Solve each problem completely:

m=4 n = (5 5/12)(4) 1. Find the present value of P29,650 due i 3 years and 7
months at 8% compounded semi-annually.
n = (65/12)(4)
2. Discount P1,085,351 due in 2 years and 5 months at
n = 21 2/3 12% compounded quarterly.
1. The given term consist of 21 whole period. Adding one 3. How much must a man deposit in a bank from June
period it becomes 22 period (or add one month to the 20, 2010 to Aug. 20, 2012 to come up with half a million
given term). Discount P3000 for 22 periods (or for 5 pesos? The bank credits interest at 10% compounded
years and 6 months) and obtain the value of P1. quarterly.
P1 = S (1+i)-n 4. Find the present value of P18,000 due in 4 years and 2
= 3,000 (1.03)-22 months at 9% compound annually.

= 3.000(0.521893) 5. what amount must be invested today at 18%

compound quarterly in order to accumulate P72,500 in 10
P1 = P1,565.68 years and 8 months?
6. Discount P96,70 due in 4 years and 8 months at 12%
m = 2.
B. Solve the following problems.
7. If the bank credits interest at 8% converted semi-
annually, find the present value of P150,000 which is due 6. At what nominal rate compounded semi-annually, will
in P7800 accumulate to P10,200 for 2 yrs. and 6 months?

a. 5 years and 3 months 7. At what nominal rate converted quarterly is P55,000

the present value of P97,083 which is due in 5 years?
b. 12 years and 2 months
8. If an investment accumulates from P68,000 to P83,000
8. What sum is needed to accumulate P496,530 in 5 in 4 years, what is the nominal rate compounded
years and 2 months if money is worth 8% compound quarterly allowed?
quarterly.
9. At what nominal rate converted quarterly will money
9. To provide for a purchase of a car worth P778,000 as triple itself in 5 years?
a gift to his child when he graduates five years and 3
months from now, how much should a father invest today 10. If P25,000 earned interest of P18,000 in 2 years, at
at 12% compounded semi-annually? what nominal rate compounded annually was the money
invested?
10. Discount P150,000 for 8 years and 3 months at 6% m
= 2. 11. A sister plans to invest p60,000 on the 7th birthday of
her younger sister. If she wishes to double the money at
PART VI Finding the UNKNOWN RATE the end of 5 years for the high school education of her
sister, at what nominal rate converted monthly should
A. Find the value of i and j in each of the following she invest the money?
P S m Term 12. At what nominal rate converted semi-annually will
1. P500 P620 Quarterly 3 years P201,500 accumulate to P320,000 in 12 years.

2. P6,500 P9,000 Semi-annually 5 years 13. At what nominal rate converted quarterly will P65,000
ve four times as much in 9 years?
3. P6,850 P10,400 Monthly 21⁄2 yrs.
14. A debtor borrows p380,000 and agrees to pay
4. P920 P1,670 Annually 10 yrs. p687,316 in 6 years. At what nominal rate compounded
quarterly will he be paying the interest?
5. P9,500 P14,200 quarterly 7 years
15. Marie wants to invest P10,000 in a bank for 8 years (1.04)n = 1.25
and 9 months. At what nominal rate converted quarterly
should the money be deposited to eran P8,000 interest. Taking the logarithm of both sides,

Lecture: READ AND UNDERSTAND log_((1.04))⁡n = log⁡1.25

FINDING THE UNKNOWN TERM n log⁡1.04 = log⁡1.25

Problem on investment oftentimes require the n = log⁡1.25/log⁡1.04 t=

solution of the term of the transaction, it is necessary to n/m
determine how long a given investment will accumulate
n = 0.096910/0.017033 t=
to a desired amount. Solving by the use of linear
5.68/2
interpolation gives sufficient accuracy.
n = 5.689544 t = 2.84 years or
approximately
Example 1: At 8% m = 2, how long with it take for p4800
2 years
to accumulate to P6000?
and 10 months
Solution:
From the formula S = P(1+i)n+, n = mt. So to solve for t,
a) 4,800(1+i)n = 6000 (1+i)mt = S/P

(1+i)n = 6,000/4,800 log⁡〖(1+i)^mt 〗 = log⁡〖S/P〗

(1 + 4%)n = 1.25
mt log⁡〖(1+i)〗 = log⁡〖S/P〗
b)
Substituting, t = log⁡〖S/P〗/(m log⁡〖(1+i)〗 )

Solution 2: solving for the unknown term using a t = log⁡〖6,000/4,800〗/(2 log⁡〖

calculator
(1.04)〗 )
4,800(1+i)n = 6,000

(1.04)n = 6,000/4,800
 Determine the unknown term (n) in each of the
following:
.PART VIII
P S j m 12. In how many months will P6,000 accumulate to
P9,000 if money is invested at 12% compounded
1. P400 P600 12% 2 quarterly?
2. P4,600 P7,000 10% 4 13. When will P8,0000 accumulate to P10,000 if money
3. P5,800 P10,000 14% 4 is invested at 10% compounded quarterly?

4. P620 P960 8% 2 14. How long will it take P24,000 to yield interest of
P30,000 if money is invested at 18% compounded
5. P1,800 P2,600 6% 1 monthly.

B. Solve the ff. problems: 15. Mr. Santos deposited P50,000 in a bank on June 15,
2008 that gives 18% compounded monthly. If he wants to
6. How long will it take for money to double itself at 10%
withdraw the money once it earns interest of P30,000,
m = 4?
when Mr. Santos withdraw the money?\
7. If P59,800 is invested at 12% m = 2, after how many
months will it accumulate to P71,320?

8. How long will it take P81,700 to earn half the amount if

invested at 12% monthly?

9. How long will it take P400,000 to settle a loan of

P280,000 if interest is computed at 10% m = 4?

10. how long will it take for P95,000 to accumulate to

P164,000 at 9% computed semi-annually?

11. How long will it take P87,684 to earn interest of

P40,000 if invested at 8% compound semi-annually?