Kate McKersie

ABM IHL 12

1. Find the amount of a P5000 ordinary annuity payable annually for 4 years if money
is worth 5% effective.

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

(1+0.05)4 – 1
S = 5,000 [ ]
0.05

= 5,000 (4.31)
= P21,550.63

2. Find the present value of a P5000 ordinary annuity payable annually for 4 years if
money is worth 5% effective.

1−(1+i)−𝑛
A = Ra [ ]
𝑖

1−(1+0.05)−4
A = 5,000[ ]
0.05

= 5,000 (3.55)
= P17,729.75

3. Find the amount and present value of P1,500 payable every three months for 6
years and 6 months if money is worth 6%.

1−(1+i)−𝑛
A = Ra [ ]
𝑖

1−(1+0.06)−6.5
A = 1,500 [ ]
0.06

= 1,500 (5.25)
= P7,882.05
4. Find the amount and present value of a P10,000 ordinary annuity payable
semiannually for 3 years if the money is worth 12% compounded semiannually.

1−(1+i)−𝑛
A = Ra [ ]
𝑖

0.12 −6
1−(1+ )
2
A = 10,000 [ 0.12 ]
2

= P49,173.24

5. Find the amount and present value of an ordinary annuity of P5,400 payable
quarterly for 7 years if the rate of interest is 8% compounded quarterly.

1−(1+i)−𝑛
A = Ra [ ]
𝑖

0.08 −28
1−(1+ 4 )
A = 5,400 [ 0.08 ]
4

= P114,918.87

6. A car was bought with a down payment of P200,000 and P18,000 at the end of
every month for 3 years to discharge all principal and interest at the rate of 12%
compounded monthly. Find the cash value of the car.

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

0.12 36
(1+ 12 ) –1
S = 200,000 [ 0.12 ]
12

= P8,615,375.67
7. Mrs. Alvarez pays P250,000 cash and the balance in 24 quarterly payments of
P45,817 for a house and lot. If money is worth 10% converted quarterly, what is the
cash value of the house and lot?

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

0.10 96
(1+ 4 ) –1
S = 250,000 [ 0.10 ]
4

= P97,026,439.46

8. At the end of each 6 months for 5 years, a father will deposit P10,000 in a trust fund
to provide for his daughter’s education at the end of 5 years. If the money
accumulates at 5.24% compounded semiannually, how much will be in the fund
a.) at the end of 2 years?

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

0.0524 5
(1+ ) –1
2
S = 10,000 [ 0.0524 ]
2

= P52,689.55

b.) after the 7th deposit?

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

0.0524 7
(1+ ) –1
2
S = 10,000 [ 0.0524 ]
2

= P75,748.65

c.) after the last deposit?

0.0524 10
(1+ 2
) –1
S = 10,000 [ 0.0524 ]
2

= P112,652.71

9. A man deposits P12,200 every end of 6 months in an account paying 5 1⁄2%

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

0.055 19
(1+ ) –1
2
S = 12,200 [ 0.055 ]
2

= P299,180.78

10. A home video entertainment set is offered for sale for P18,000 down payment and
P1800 every 3 months for the balance, for 18 months. If interest is to be computed
at 10% converted quarterly, what is the cash price equivalent of the set?

(1+i)𝑛 – 1
S = Rs [ ]
𝑖

0.10 6
(1+ 4 ) – 1
S = 16,200 [ 0.10 ]
4

= P103,481.34

11. How much monthly deposit must be made for 5 years and 5 months in order to
accumulate P 120,000 at 15% compounded monthly?

𝑆𝑖
RS = [(1+𝑖)𝑛−1]
 0.15
(120,000)
12
RS = 0.15 60
[(1+ ) −1]
12

= P1,354.79

12. What amount of money will be paid at the end of each quarter for 6 years and 6
months, if the present value is P 50,500 and interest is paid at 10% compounded
quarterly?

𝐴𝑖
RA = [1− (1+𝑖)−𝑛]

0.10
(50,500)
4
RA = 0.10 −24
[1− (1+ 4 ) ]

= P2,823.60

13. Dino wants to buy a car worth P 740,000. He can pay 40% of the price as down
payment and the balance payable every end of the month for 60 months, how much
must he pay monthly at 15% compounded monthly?

𝐴𝑖
RA = [1− (1+𝑖)−𝑛]

0.15
(740,000) 12
RA = 0.15 −60
[1− (1+ 12 ) ]

= P17,604.55

14. Heart wants to buy a computer set within a year. She decides to make regular
deposits of P3,000 at the start of every month, her money earning 5% compounded
monthly. How much will she have in her savings a year after?

(1+𝑖) (𝑛+1) −1
𝑆̅ = Rs [ – 1]
𝑖
 0.05
(1+ 12 )(12+1) −1
𝑆̅ = 3,000 [ 0.05 – 1]
12

= P36,990.05

15. Find the cash equivalent of an item that was purchased for P18,000 down payment
and P2,500 at the beginning of each six months for 31⁄2 years if interest is 51⁄2 %
compounded semi-annually.

1−(1+𝑖) −(𝑛−1)
𝐴̅ = Ra [ + 1]
𝑖

0.055 −(7−1)
1−(1+ )
𝐴̅ = 18,000 [ 2
0.055 + 1]
2

= P116,322.60

16. Nette bought a brand new car. What is the cash price of the car if she has to make
36 quarterly payments of P22,000 at the beginning of each quarterly period at 10.5%
compounded quarterly?

1−(1+𝑖) −(𝑛−1)
𝐴̅ = Ra [ + 1]
𝑖

0.105 −(36−1)
1−(1+ )
𝐴̅ = 22,000 [ 4
0.105 + 1]
4

= P521,693.63

17. In purchasing a high quality handy camera, the buyer agreed to pay P9,375 at the
beginning of each 6 months for 8 years, with the first payment due on the date of
purchase. If the interest rate is 19.5% converted semiannually, find the cash price of
the camera.
 1−(1+𝑖) −(𝑛−1)
𝐴̅ = Ra [ + 1]
𝑖

0.195 −(16−1)
1−(1+ )
𝐴̅ = 9,375 [ 2
0.195 + 1]
2

= P81,711.21

18. Find the present value of a deferred annuity of P900 every three months for 5 years
that is deferred for 3 years, if money is worth 10% compounded quarterly.

1−(1+𝑖)−𝑛
Ad = R [ ] (1 + 𝑖)−𝑑
𝑖

0.10 −20
1−(1+ ) 0.10 −12
4
Ad = 900 [ 0.10 ] (1 + )
4
4

= P10,432.27

19. Find the present value of a deferred annuity of P4,800 every six months for 7 years,
if the first payment is made in 4 years, and money is worth 11% compounded semi-
annually.

1−(1+𝑖)−𝑛
Ad = R [ ] (1 + 𝑖)−𝑑
𝑖

0.11
1−(1+ 2 )−14 0.10 −8
Ad = 4,800 [ 0.11 ] (1 + )
4
2

= P37,779.22

20. Find the quarterly payment for 21 quarters to discharge an obligation of P120,000 if
money is worth 4 1/2 % compounded quarterly and the first payment is due at the
end of 3 years and 9 months.

Sd = Ad (1+i) d+n
 0.045 12+3
Sd = 120,000 (1+ )
4

= P141,925.12

21. Find the present value of an annuity of P33,000 payable at the end of each year if
the first payment is made at the end of 3 years and the last payment is made at the
end of 9 years. Assume money is worth 10% effective.

1−(1+𝑖)−𝑛
Ad = R [ ] (1 + 𝑖)−𝑑
𝑖

0.10 −9
1−(1+ ) 0.10 −3
1
Ad = 33,000 [ 0.10 ] (1 + )
1
1

= P142,785.71

22. In a series of quarterly payments of P5,700 each, the first payment is due at the end
of 5 years and the last at the end of 10 years and 9 months. If money is worth 6%
compounded quarterly, find the present value of the deferred annuity.

Sd = Ad (1+i) d+n

0.06 40+20
Sd = 5,700 (1+ 4
)

= P13,926.35

23. Find the present value of 10 semiannual payments of P3,000 each if the first
payment is due at the end of 3 1/2 years and money is worth 12% compounded
semiannually.

1−(1+𝑖)−𝑛
Ad = R [ ] (1 + 𝑖)−𝑑
𝑖
 0.12
1−(1+ 20 )−70 0.12 −3.5
Ad = 3,000 [ 0.12 ] (1 + )
20
20

= P167,519.66

24. Find the present value of a P4,500 annuity payable annually for 7 years and is
deferred for 2 years if money is worth 8% effective.

1−(1+𝑖)−𝑛
Ad = R [ ] (1 + 𝑖)−𝑑
𝑖

0.08
1−(1+ 1 )−7 0.08 −2
Ad = 4,500 [ 0.08 ] (1 + )
1
1

= P20,086.31

25. A house costs P1.3 million cash. A buyer bought it by paying P300,000 down
payment and would pay 48 monthly installments, the first of which is due at the end
of 1 year. If the rate of interest is 20.4% compounded monthly, what is the monthly
installment?

Sd = Ad (1+i) d+n

0.204 1+48
Sd = 1,000,000 (1+ )
12

= P2,284,160.90