Republic of the Philippines
City of Olongapo
GORDON COLLEGE
COLLEGE OF BUSINESS AND ACCOUNTANCY
Olongapo City Sports Complex, Donor St., East Tapinac, Olongapo City
Tel. Nos. (047) 602-7175 loc. 322
Name: ____________________________________________ Score: _______________________
Course/Year: ______________________________________ Class Sched.: _________________
I. Write the letter of your choice on the space provided before the number. Use capital letter.
A. Sinking Fund B. Replacement Cost C. Perpetuities D. Composite Life
E. Capitalized Cost F. Amortization of Debt G. Redemption Fund H. Ore
I. Annuity J. Depreciation Fund K. Depreciation
_______ 1. A debt, whose present value A, is said to be amortized under a given rate of interest, if all
liabilities as to principal and interest are discharged by q sequence of periodic payments.
_______ 2. It is formed in order to pay an obligation falling due at some future date.
_______ 3. Is defined as that part of the loss in value which cannot be remedied by current repairs.
_______ 4. Also known as wearing value; equals the cost of asset when new minus its salvage or scrap value
when worn out.
_______ 5. Is essentially a sinking fund whose amount at the end of the life of the asset equals the
replacement cost.
_______ 6. If the plant of an enterprise consist several parts whose lives are different lengths, it is useful to
have a definition for the average life of the plant as a whole.
_______ 7. Part of the net revenue of the mine should be used to accumulate a depreciation, which will
return the original invested capital when the mine is exhausted.
_______ 8. A mine, or any similar property, is a depreciable asset which becomes valueless when all of this is
removed.
_______ 9. Defined as the first cost plus the present value of all future replacements, when it is assumed will
continue forever.
_______ 10. An annuity whose payments continue forever.
II. Compute for the following problems.
1. A man borrows P25,000, with interest payable annually at the rate 6%. The debt is to be paid, interest
as due and original principal included, by equal installments at the end of each year for 5 years
a. Determine the principal outstanding at the beginning of the third year
Answer: _______________________
b. What is the interest at 6% due at the end of first year?
Answer: _______________________
c. What is the amount of annual payment at the end of fifth year?
Answer: _______________________
2. A trust fund of P100,000 was created to provide a regular income at the end of each month for 20 years.
The trust company uses the interest rate at 4%, converted semi-annually.
a. What is the monthly payment on its 5th month if the fund is to be exhausted by the end of 20 years?
Answer: _______________________
b. Compute for the outstanding principal at the beginning of the second month.
Answer: _______________________
Republic of the Philippines
City of Olongapo
GORDON COLLEGE
COLLEGE OF BUSINESS AND ACCOUNTANCY
Olongapo City Sports Complex, Donor St., East Tapinac, Olongapo City
Tel. Nos. (047) 602-7175 loc. 322
3. A street assessment of P5,000 against a certain piece of real estate is to be amortized, with interest at
6%, by six annual payments, the first due after 1 year. Complete the table below:
OUTSTANDING
FOR REPAYMENT OF
PRINCIPAL AT THE INTEREST AT 6% DUE ANNUAL PAYMENT AT
YEAR/MONTH PRINCIPAL AT THE
BEGINNING OF THE AT THE END OF YEAR THE END OF THE YEAR
NED OF YEAR
YEAR
4. A debt will be discharged, principal and interest at 5% effective, included, by payments of P1,200 at the
end of each year for 12 years. Complete the table below.
OUTSTANDING
FOR REPAYMENT OF
PRINCIPAL AT THE INTEREST AT 6% DUE ANNUAL PAYMENT AT
YEAR/MONTH PRINCIPAL AT THE
BEGINNING OF THE AT THE END OF YEAR THE END OF THE YEAR
NED OF YEAR
YEAR
Republic of the Philippines
City of Olongapo
GORDON COLLEGE
COLLEGE OF BUSINESS AND ACCOUNTANCY
Olongapo City Sports Complex, Donor St., East Tapinac, Olongapo City
Tel. Nos. (047) 602-7175 loc. 322
5. Bebemon has a P195,000 mortgage. She locks into a closed mortgage with 2.2% interest amortized over 25
years, compounded semi-annually. Calculate her 46th month mortgage payment.
6. What is the future value of P50,000 deposited quarterly for 10 years at the rate 2% compounded quarterly?
What is the amount of interest earned on this investment?
7. A building costs P50,000 and has a salvage value of P5,000 when worn out at the end of 15 years. Find the
annual depreciation charge under the sinking fund method, where the fund earns 4% effective
8. Find the composite life for the plant with parts A, B, and C below under the (a) sinking fund method at 3%
effective; and (b) the straight line method
PART LIFE COST (IN PESOS) SCRAP VALUE (IN
PESOS)
A 10 20,500 500
B 20 35,750 750
C 16 19,000 1,000
9. The privileges of a certain patent last for 10 years and the annual royalties from it will be P75,000. If a
redemption fund can be accumulated at 5%, what should an investor pay for the patent right if he demands 6%
on his investment?
10. A bridge must be repainted each 5 years at a cost of P8,000. If money is worth 5%, find the present value of all
future replacements.
11. A bridge must be rebuilt every 50 years at a cost of P45,000. Find the capitalized cost if the first cost is
P75,000, and if money is worth 3%.
FOR BONUS 3 POINTS, make a pick-up line or hugot line related with the topics in Mathematics of Investment
Feel free to drop a message here to the subject and/or instructor:
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Republic of the Philippines
City of Olongapo
GORDON COLLEGE
COLLEGE OF BUSINESS AND ACCOUNTANCY
Olongapo City Sports Complex, Donor St., East Tapinac, Olongapo City
Tel. Nos. (047) 602-7175 loc. 322
Name of Students: _______________________________________
Course & Year: _______________________________________
Class Schedule: _______________________________________
Instruction: Make an appointment with a manager, officer, or an administrator of a company, hotel,
hospital, government and/or other type of organization. The person whom you have chosen can be at any
level of management. Find out him/her the following details:
Name of Business/Organization: __________________________________________
Position in the Business/Organization: __________________________________________
Number of Subordinates under him/her: __________________________________________
1. What are the activities or functions performed by your job?
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2. What are the skills that you think are necessary to be successful in your job?
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3. How do you spend an average day at work?
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Signature Over Printed Name
Republic of the Philippines
City of Olongapo
GORDON COLLEGE
COLLEGE OF BUSINESS AND ACCOUNTANCY
Olongapo City Sports Complex, Donor St., East Tapinac, Olongapo City
Tel. Nos. (047) 602-7175 loc. 322
