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Engecon Reviewer

This document contains several word problems involving nominal and effective interest rates, compound interest, and simple interest. It asks the reader to calculate present and future values of investment amounts over time at given interest rates that compound annually, quarterly, monthly or continuously. It also includes problems calculating interest earned, principal amounts to invest, and repayment schedules for loans.

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daday el macho
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102 views2 pages

Engecon Reviewer

This document contains several word problems involving nominal and effective interest rates, compound interest, and simple interest. It asks the reader to calculate present and future values of investment amounts over time at given interest rates that compound annually, quarterly, monthly or continuously. It also includes problems calculating interest earned, principal amounts to invest, and repayment schedules for loans.

Uploaded by

daday el macho
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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EngEcon REVIEWER

(NOMINAL & EFFECTIVE RATE)

1. The value of equal annual payment series for paying a series of 7-year end payments

beginning with Rs 20,000 and increasing at the rate of Rs 1,000 a year at 10% interest

rate compounded annually will be?

2. The value of equal annual payment series for paying a series of 5-year end payments

beginning with Rs 40,000 and decreasing at the rate of Rs 5,000 a year at 10% interest

rate compounded annually will be?

3. Find the present value of a payment series with first year end payment of Rs 45,000
increasing by 4% per year up to year 10 at interest rate of 12%.

4. Nominal rate of 8% compounded monthly will result into effective rate of

x% with a time interval of 2 years.

5. For nominal interest rate of …………………. %, effective annual interest rate will be

12% when compounding is continuous.

6. You have taken a loan of Rs 5,00,000 at interest rate of 15% compounded annually and

wish to repay the loan as per following schedule. The amount A will be Rupees

7. You want to withdraw Rs 20,000 at the end of eleventh year from now and increase the

annual withdrawal by Rs 4,000 each year thereafter till end of year 25. If interest rate is 6

% compounded annually, you need to invest for the first 10 years, an equal amount of

Rupees

9. In planning for your retirement, you expect to save Rs. 5,000 in year 1, Rs. 6,000 in year

2, and amounts increasing by Rs. 1,000 each year through year 20. If your investments

earn 10% per year, the amount you will have at the end of year 20 is approximately

10. A person borrowed Rs. 10,000 at 8%, compounded annually. The loan was repaid

according to the following schedule.

n Repayment Amount

1 Rs. 1,000

2 Rs. 3,000

3 Rs. 5,000

4 Rs. X

The amount X that is required to pay off the loan at the end of year 4 will be?
SIMPLE AND COMPOUND INTEREST

Problem
A man wants to invest a sum of P50,000 in two investments. The first investment earns a
rate of interest 4 times that of the second investment. In 3 years the first investment grows
to P37,200. For 10 years, the second investment grows to P24,000.

1. Find the sum invested in each rate of interest.


A. P35,000 and P15,000
B. P35,500 and P14,500
C. P30,000 and P20,000
D. P32,000 and P18,000

2. Find the rate of interest of each.


A. 8% and 2%
B. 6% and 4%
C. 7% and 3%
D. 5% and 1%

COMPOUND INTEREST

1. Problem 1: If you deposit $4500 at 5% annual interest compounded quarterly, how


much money will be in

2. the account after 10 years?

3. Problem 2: If you deposit $4000 into an account paying 9% annual interest


compounded monthly, how

4. long until there is $10000 in the account?

5. Problem 3: If you deposit $2500 into an account paying 11% annual interest
compounded quarterly, how

6. long until there is $4500 in the account?

7. Problem 4: How much money would you need to deposit today at 5% annual interest
compounded monthly

8. to have $20000 in the account after 9 years?

9. Problem 5: If you deposit $6000 into an account paying 6.5% annual interest
compounded quarterly, how

10. long until there is $12600 in the account?

11. Problem 6: If you deposit $5000 into an account paying 8.25% annual interest
compounded semiannually, how long until there is $9350 in the account?

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