ENGINEERING

ECONOMYKinematics
Kinetics
Energy – Work Equation
Momentum and Impulse
Simple Interest
Problem No.1
If a man borrowed money from his girlfriend with simple interest rate of 12%,
determine the present worth of P74, 900.00, which due at the end of seven
months.

Problem No.2
Clara has invested P 10,000.00, part at 5% and the remainder at 10% simple
interest. How much is invested at higher rate if the total annual interest from
this investment is P 950.00?

Problem No.3
Determine the accumulated amount using exact simple interest on P 10,000.00
for the period from January 20, 1990 to November 28 of the same year at 15%
interest rate.
Problem No.1
If a man borrowed money from his girlfriend with simple interest rate of 12%, determine the
present worth of P74, 900.00, which due at the end of seven months.

Solution:

Simple Interest
𝑰 = 𝑷𝒊𝒏 𝑭 = 𝑷(𝟏 + 𝒊𝒏)
𝑭 = 𝑷 + 𝑷𝒊𝒏 𝟕
𝟕𝟒, 𝟗𝟎𝟎 = 𝑷 𝟏 +𝟎. 𝟏𝟐 ×
𝑭 = 𝑷(𝟏 + 𝒊𝒏) 𝟏𝟐
𝑷 = 𝟕𝟎, 𝟎𝟎𝟎
Problem No.2
Clara has invested P 10,000.00, part at 5% and the remainder at 10% simple interest. How much
is invested at higher rate if the total annual interest from this investment is P 950.00?

Solution:
𝒍𝒆𝒕 𝒙 → 𝒊𝒏𝒗𝒆𝒔𝒕𝒆𝒅 𝒊𝒏 𝟏𝟎%
𝒍𝒆𝒕 𝟏𝟎, 𝟎𝟎𝟎 − 𝒙 → 𝒊𝒏𝒗𝒆𝒔𝒕𝒆𝒅 𝒊𝒏 𝟓%

𝑰 = 𝑷𝒊𝒏
𝟗𝟓𝟎 = 𝒙 (𝟎. 𝟏𝟎)(𝟏) + 𝟏𝟎𝟎𝟎𝟎 − 𝒙 (𝟎. 𝟎𝟓)(𝟏)
𝒙 = 𝟗𝟎𝟎𝟎
Problem No.3
Determine the accumulated amount using exact simple interest on P 10,000.00 for the period
from January 20, 1990 to November 28 of the same year at 15% interest rate.

Solution:

𝑱𝒂𝒏. 𝟐𝟎 → 𝟑𝟏 = 𝟏𝟏 𝒅𝒂𝒚𝒔
𝑭𝒆𝒃. 𝟏 → 𝟐𝟖 = 𝟐𝟖 𝒅𝒂𝒚𝒔 𝑭 = 𝑷(𝟏 + 𝒊𝒏)
𝑴𝒂𝒓𝒄𝒉. 𝟏 → 𝟑𝟏 = 𝟑𝟏 𝒅𝒂𝒚𝒔 𝟑𝟏𝟐
𝑭 = 𝟏𝟎, 𝟎𝟎𝟎 𝟏+𝟎. 𝟏𝟓 ×
𝑨𝒑𝒓𝒊𝒍. 𝟏 → 𝟑𝟎 = 𝟑𝟎 𝒅𝒂𝒚𝒔 𝟑𝟔𝟓
𝑴𝒂𝒚 𝟏 → 𝟑𝟏 = 𝟑𝟏 𝒅𝒂𝒚𝒔 𝑭 = 𝟏𝟏𝟐𝟖𝟐. 𝟏𝟗
𝑱𝒖𝒏𝒆 𝟏 → 𝟑𝟎 = 𝟑𝟎 𝒅𝒂𝒚𝒔
𝑱𝒖𝒍𝒚 𝟏 → 𝟑𝟏 = 𝟑𝟏 𝒅𝒂𝒚𝒔
𝑨𝒖𝒈. 𝟏 → 𝟑𝟏 = 𝟑𝟏 𝒅𝒂𝒚𝒔
𝑺𝒆𝒑𝒕. 𝟏 → 𝟑𝟎 = 𝟑𝟎 𝒅𝒂𝒚𝒔
𝑶𝒄𝒕. 𝟏 → 𝟑𝟏 = 𝟑𝟏 𝒅𝒂𝒚𝒔
𝑵𝒐𝒗. 𝟏 → 𝟐𝟖 = 𝟐𝟖 𝒅𝒂𝒚𝒔
𝑵𝒐𝒕𝒆: 𝑳𝒆𝒂𝒑 𝒚𝒆𝒂𝒓 𝒄𝒐𝒏𝒔𝒊𝒔𝒕𝒔 𝒐𝒇 𝟑𝟔𝟔 𝒅𝒂𝒚𝒔
𝒕𝒐𝒕𝒂𝒍 = 𝟑𝟏𝟐 𝒅𝒂𝒚𝒔 𝑳𝒆𝒂𝒑 𝒚𝒆𝒂𝒓 𝒊𝒔 𝒅𝒊𝒗𝒊𝒔𝒊𝒃𝒍𝒆 𝒃𝒚 𝟒
Compound Interest
Problem No.4
If the sum of P 12,000 is deposited in an account earning interest rate of 9%
compounded quarterly, what will it become after 1 year?

Problem No.5
If the sum of P 12,000 is deposited in an account earning interest rate of 9%
compounded quarterly, what is the effective rate?

Problem No.6
If the sum of P 12,000 is deposited in an account earning interest rate of 9%
compounded quarterly, what is the equivalent nominal rate of compounded
monthly?
Problem No.4
If the sum of P 12,000 is deposited in an account earning interest rate of 9% compounded
quarterly, what will it become after 1 year?

Solution:
𝒏
𝑭=𝑷 𝟏+𝒊
𝒓 𝒎(𝒕)
𝑭=𝑷 𝟏+
𝒎

𝟗% 𝟒 (𝟏)
𝑭 = 𝟏𝟐, 𝟎𝟎𝟎 𝟏 +
𝟒
𝒗𝒂𝒍𝒖𝒆𝒔 𝒐𝒇 "𝒎"
𝑭 = 𝟏𝟑, 𝟏𝟏𝟕
𝒎𝒐𝒏𝒕𝒉𝒍𝒚 → 𝟏𝟐
𝒃𝒊𝒎𝒐𝒏𝒕𝒉𝒍𝒚 → 𝟔
𝒒𝒖𝒂𝒓𝒕𝒆𝒓𝒍𝒚 → 𝟒
𝒔𝒆𝒎𝒊 − 𝒂𝒏𝒏𝒖𝒂𝒍𝒍𝒚 → 𝟐
𝒒𝒖𝒂𝒓𝒕𝒆𝒓𝒍𝒚 → 𝟏
Problem No.5
If the sum of P 12,000 is deposited in an account earning interest rate of 9% compounded
quarterly, what is the effective rate?

Solution:
𝑭 = 𝟏𝟑, 𝟏𝟏𝟕

𝟏𝟑𝟏𝟏𝟕 − 𝟏𝟐𝟎𝟎𝟎 𝒓 𝒎
𝑬. 𝑹 = 𝑬. 𝑹 = 𝟏 + −𝟏
𝟏𝟐𝟎𝟎𝟎 𝒎
𝟒
𝑬. 𝑹 = 𝟗. 𝟑𝟏% 𝟗%
𝑬. 𝑹 = 𝟏 + −𝟏
𝟒
𝑬. 𝑹 = 𝟗. 𝟑𝟏% 𝒗𝒂𝒍𝒖𝒆𝒔 𝒐𝒇 "𝒎"
𝒎𝒐𝒏𝒕𝒉𝒍𝒚 → 𝟏𝟐
𝒃𝒊𝒎𝒐𝒏𝒕𝒉𝒍𝒚 → 𝟔
𝒒𝒖𝒂𝒓𝒕𝒆𝒓𝒍𝒚 → 𝟒
𝒔𝒆𝒎𝒊 − 𝒂𝒏𝒏𝒖𝒂𝒍𝒍𝒚 → 𝟐
𝒒𝒖𝒂𝒓𝒕𝒆𝒓𝒍𝒚 → 𝟏
Problem No.6
If the sum of P 12,000 is deposited in an account earning interest rate of 9% compounded
quarterly, what is the equivalent nominal rate of compounded monthly?

Solution:
𝑭=𝑭
𝟒 𝒓 𝟏𝟐
𝟗%
𝑷 𝟏+ = 𝑷 𝟏 + 𝟏𝟐
𝟒

𝒓 = 𝟖. 𝟗𝟑%
Problem No.7
What payment X ten years from now is equivalent to a payment of 1,000 six years from now? If
interest is 15% compound monthly?

Solution 1: Solution 2:
𝑭𝟏𝟎 =? 𝑭𝟔 = 𝟏𝟎𝟎𝟎 𝑭𝟏𝟎 =?
𝑭𝟔 = 𝟏, 𝟎𝟎𝟎
𝒓 𝒎(𝒕) 𝟔 𝟕 𝟖 𝟗 𝟏𝟎
𝑭=𝑷 𝟏+
𝒎 𝟎 𝟏 𝟐 𝟑 𝟒

𝟏𝟓% 𝟏𝟐(𝟔) 𝒓 𝒎(𝒕)

𝟏𝟎𝟎𝟎 = 𝑷 𝟏+ 𝑭=𝑷 𝟏+
𝟏𝟐 𝒎
𝑷 = 𝟒𝟎𝟖. 𝟖𝟒𝟒 𝟏𝟓% 𝟏𝟐(𝟒)
𝑭 = 𝟏𝟎𝟎𝟎 𝟏 +
𝟏𝟓% 𝟏𝟐(𝟏𝟎) 𝟏𝟐
𝑭𝟏𝟎 = 𝟒𝟎𝟖. 𝟖𝟒𝟒 𝟏 +
𝟏𝟐
𝑭 = 𝟏𝟖𝟏𝟓. 𝟑𝟓
𝑭𝟏𝟎 = 𝟏𝟖𝟏𝟓. 𝟑𝟓
Annuity
Problem No.8
If P500.00 is invested at the end of each year for 6 years at an annual interest
rate of 7%, what is the total peso amount upon the deposit of the sixth payment?

Problem No.9
If P500.00 is deposited in an account at the beginning of each year for 6 years at
an annual interest rate of 7%, how much can be withdrawn after 6 years?

Problem No.10
A fund is to provide an annual scholarship at P4,000 for the first 5 years; P6,000
for the next 5 years and P9,000 thereafter. The fund will be established 1 year
before the first scholarship is awarded. If the fund earns 12% interest, what
sum must be deposited?
Problem No.8
If P500.00 is invested at the end of each year for 6 years at an annual interest rate of 7%, what is
the total peso amount upon the deposit of the sixth payment?
𝑭
Solution 1 Solution 2
𝑨𝑵𝑵𝑼𝑰𝑻𝒀 𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝒏
𝑭=𝑷 𝟏+𝒊
𝑷 𝑭 𝒙
𝟓
𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟕%
𝑭 = ෍𝟓𝟎𝟎 𝟏 +
𝟎 𝟏
𝟎
𝒏′
𝑨 𝟏+𝒊 −𝟏 ]
𝑨 𝑨 𝑨 𝑨 𝑨 𝑨 𝑭=
𝒊 𝑭 = 𝟑𝟓𝟕𝟔. 𝟔𝟓

𝒏
𝑨 𝟏+𝒊 −𝟏 ] 𝟕% 𝟔
𝑭= 𝟏+ −𝟏
𝒊 𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏
𝟓𝟎𝟎 𝟏
𝑭=
𝟕%
𝟏
𝑭 = 𝟑𝟓𝟕𝟔. 𝟔𝟓
Problem No.9
If P500.00 is deposited in an account at the beginning of each year for 6 years at an annual
interest rate of 7%, how much can be withdrawn after 6 years?
𝑭𝟓 𝑭𝟔
Solution 1
𝑨𝑵𝑵𝑼𝑰𝑻𝒀 𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔

𝑷 𝑭
𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎 𝟓𝟎𝟎
𝟎

𝒏′ 𝒏
𝑨 𝟏+𝒊 −𝟏 ] 𝑭=𝑷 𝟏+𝒊
𝑨 𝑨 𝑨 𝑨 𝑨 𝑨 𝑭=
𝒊

𝒏
𝑨 𝟏+𝒊 −𝟏 ] 𝟕% 𝟔
𝑭= 𝟏+ −𝟏 𝟏
𝒊 𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏
𝟓𝟎𝟎 𝟏 𝟕%
𝑭𝟓= 𝟏+
𝟔 𝟕% 𝟏
𝟏
𝑭𝟔 = 𝟑𝟖𝟐𝟕. 𝟎𝟏
Problem No. 10
A fund is to provide an annual scholarship at P4,000 for the first 5 years; P6,000 for the next 5
years and P9,000 thereafter. The fund will be established 1 year before the first scholarship is
awarded. If the fund earns 12% interest, what sum must be deposited?
Solution:
𝑷𝑻

∞
𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎

𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎

𝑷𝑨 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎
𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎
𝑭𝑨

𝑨 𝟏 + 𝒊 𝒏′ − 𝟏 𝟒, 𝟎𝟎𝟎 𝟏 + 𝟎. 𝟏𝟐 𝟓 − 𝟏
𝑷𝑨 = =
𝒊 𝟏+𝒊 𝒏 𝟎. 𝟏𝟐 𝟏 + 𝟎. 𝟏𝟐 𝟓
𝑷𝑨 = 𝐏𝟏𝟒, 𝟒𝟏𝟗. 𝟏𝟎
Problem No. 10
A fund is to provide an annual scholarship at P4,000 for the first 5 years; P6,000 for the next 5
years and P9,000 thereafter. The fund will be established 1 year before the first scholarship is
awarded. If the fund earns 12% interest, what sum must be deposited?
Solution:
𝑨 𝟏 + 𝒊 𝒏′ − 𝟏
𝑷𝑻 𝑷=
𝒊 𝟏+𝒊 𝒏

𝒏
𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎

𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎

𝑷𝑨 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎
𝑷𝑨 = 𝐏𝟏𝟒, 𝟒𝟏𝟗. 𝟏𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎
𝑭𝑨
𝑷𝑩
𝟔, 𝟎𝟎𝟎 𝟏 + 𝟎. 𝟏𝟐 𝟓 − 𝟏
𝑷𝑩 =
𝑭𝑩 𝟎. 𝟏𝟐 𝟏 + 𝟎. 𝟏𝟐 𝟏𝟎
𝑷𝑩 = 𝐏𝟏𝟐, 𝟐𝟕𝟐. 𝟔𝟖
Problem No. 10
A fund is to provide an annual scholarship at P4,000 for the first 5 years; P6,000 for the next 5
years and P9,000 thereafter. The fund will be established 1 year before the first scholarship is
awarded. If the fund earns 12% interest, what sum must be deposited?
Solution:
𝑨 𝟏 + 𝒊 𝒏′ − 𝟏
𝑷𝑻 𝑷= 𝑷𝒆𝒓𝒑𝒆𝒕𝒖𝒊𝒕𝒚
𝒊 𝟏+𝒊 𝒏

𝒏
𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎

𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎

𝑷𝑨 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎
𝑷𝑨 = 𝐏𝟏𝟒, 𝟒𝟏𝟗. 𝟏𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎
𝑭𝑨
𝑷𝑩 𝑨 𝟗𝟎𝟎𝟎
𝑷= = = 𝟕𝟓, 𝟎𝟎𝟎
𝑷𝑩 = 𝐏𝟏𝟐, 𝟐𝟕𝟐. 𝟔𝟖 𝒊 𝟎. 𝟏𝟐
𝑭𝑩
𝑷𝑪 𝟕𝟓, 𝟎𝟎𝟎
𝑷𝑪 = 𝟏𝟎
= 𝟐𝟒, 𝟏𝟒𝟕. 𝟗𝟗
𝟏 + 𝟎. 𝟏𝟐
𝑷
Problem No. 10
A fund is to provide an annual scholarship at P4,000 for the first 5 years; P6,000 for the next 5
years and P9,000 thereafter. The fund will be established 1 year before the first scholarship is
awarded. If the fund earns 12% interest, what sum must be deposited?
Solution:
𝑨 𝟏 + 𝒊 𝒏′ − 𝟏
𝑷𝑻 𝑷= 𝑷𝒆𝒓𝒑𝒆𝒕𝒖𝒊𝒕𝒚
𝒊 𝟏+𝒊 𝒏

𝒏
𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎

𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎 𝟒𝟎𝟎𝟎

𝑷𝑨 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎 𝟔𝟎𝟎𝟎
𝑷𝑨 = 𝐏𝟏𝟒, 𝟒𝟏𝟗. 𝟏𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎 𝟗𝟎𝟎𝟎
𝑭𝑨
𝑷𝑩 𝑷𝑻 = 𝑷𝑨 + 𝑷𝑩 + 𝑷𝑪
𝑷𝑩 = 𝐏𝟏𝟐, 𝟐𝟕𝟐. 𝟔𝟖
𝑭𝑩 = 𝟏𝟒, 𝟒𝟏𝟗. 𝟏𝟎 + 𝟏𝟐, 𝟐𝟕𝟐. 𝟔𝟖
𝑷𝑪 +𝟐𝟒, 𝟏𝟒𝟕. 𝟗𝟗
𝑷𝑪 = 𝟐𝟒, 𝟏𝟒𝟕. 𝟗𝟗 𝑷𝑻 = 𝐏𝟓𝟎, 𝟖𝟑𝟗. 𝟕𝟖
𝑷
Gradient Series
Problem No. 11
A certain machine purchased today shall be paid in 3 annual unequal payments with no down
payment. If the company agrees that the first payment is P120,000 at the end of the first year
and you have to increase that by P30,000 per year for the next remaining years until the end of
the 3rd year, how much is the present worth of the machine if the company charges 12% annual
interest?

Solution:
𝑭
𝑷 𝑷= 𝒏
𝟏+𝒊
𝟑
𝟏𝟐𝟎, 𝟎𝟎𝟎 +𝟑𝟎𝟎𝟎𝟎 (𝒙 −𝟏)
=෍
𝒙
𝟎 𝟏 𝟐 𝟑 𝟏
𝟏 + 𝟎. 𝟏𝟐

𝑷 = 𝐏𝟑𝟓𝟒, 𝟖𝟒𝟐. 𝟑𝟖
𝟏𝟐𝟎, 𝟎𝟎𝟎
𝟏𝟐𝟎, 𝟎𝟎𝟎 + 𝟑𝟎, 𝟎𝟎𝟎
𝟏𝟐𝟎, 𝟎𝟎𝟎 + 𝟐(𝟑𝟎, 𝟎𝟎𝟎)
Problem No. 12
Annual maintenance costs for a machine are P1,500 this year and estimated to increase 10%
each year every year. What is the present worth of the maintenance costs for 4 years if i = 8%?

Solution:
𝑷
𝑭
𝑷= 𝒏
𝟏+𝒊
𝟒 𝒙 −𝟏
𝟎 𝟏 𝟐 𝟑 𝟒 𝟏𝟓𝟎𝟎 (𝟏 + 𝟎. 𝟏𝟎)
=෍
𝟏𝟓𝟎𝟎 𝒙
𝟏
𝟏 + 𝟎. 𝟎𝟖

𝑷 = 𝐏𝟓, 𝟕𝟏𝟏. 𝟕𝟗
𝟏𝟓𝟎𝟎(𝟏 + 𝟎. 𝟏𝟎)
𝟏𝟓𝟎𝟎 𝟏 + 𝟎. 𝟏𝟎 𝟐

𝟏𝟓𝟎𝟎 𝟏 + 𝟎. 𝟏𝟎 𝟑
Capitalized Cost, K
Annual Cost, AC
Problem No.13
A machine cost P300,000.00 new, and must be replaced at the end of each 15 years. If the annual
maintenance required is P5,000.00, find the capitalized cost, if money is worth 5% and the final
salvage value is P50,000.

Solution:
Capitalized Cost
𝑶𝑴 𝑹𝑪 − 𝑺𝑽
𝑲 = 𝑭𝑪 + +
𝒊 𝟏+𝒊 𝒏−𝟏
𝟓, 𝟎𝟎𝟎 𝟑𝟎𝟎, 𝟎𝟎𝟎 − 𝟓𝟎, 𝟎𝟎𝟎
= 𝟑𝟎𝟎, 𝟎𝟎𝟎 + +
𝟓% 𝟏 + 𝟓% 𝟏𝟓 − 𝟏
𝑲 = 𝐏𝟔𝟑𝟏, 𝟕𝟏𝟏. 𝟒𝟒
Depreciation
Depreciation
Problem No. 14
An engineer bought an equipment for P500,000.00. Other expenses including installation
amounted to P30,000.00. At the end of its estimated useful life of 10 years, the salvage value will
be 10% of the first cost. Using straight line method of depreciation, what is the book value after
five years?
Solution 1:
Straight Line Method of Depreciation 𝑫𝟏𝟎 = 𝑭𝑪 − 𝑺𝑽

𝟓𝟑𝟎, 𝟎𝟎𝟎 𝟑𝟎, 𝟎𝟎𝟎 = 𝟓𝟑𝟎, 𝟎𝟎𝟎 − 𝟏𝟎%(𝟓𝟑𝟎, 𝟎𝟎𝟎)

𝑫𝟏𝟎 = 𝐏𝟒𝟕𝟕, 𝟎𝟎𝟎
𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎
𝟒𝟕𝟕, 𝟎𝟎𝟎
𝒅= = 𝟒𝟕, 𝟎𝟎𝟎
𝟏𝟎
𝑩𝑽𝟏 𝑩𝑽𝟐 𝑩𝑽𝟑 𝑩𝑽𝟒 𝑩𝑽𝟓 𝑩𝑽𝟔 𝑩𝑽𝟕 𝑩𝑽𝟖 𝑩𝑽𝟗 𝑩𝑽𝟏𝟎
𝑩𝑽 = 𝑭𝑪 − 𝒅𝒎

𝟒𝟕𝟕, 𝟎𝟎𝟎
Problem No. 14
An engineer bought an equipment for P500,000.00. Other expenses including installation
amounted to P30,000.00. At the end of its estimated useful life of 10 years, the salvage value will
be 10% of the first cost. Using straight line method of depreciation, what is the book value after
five years?
Solution 1:
Straight Line Method of Depreciation 𝑫𝟏𝟎 = 𝑭𝑪 − 𝑺𝑽

𝟓𝟑𝟎, 𝟎𝟎𝟎 𝟑𝟎, 𝟎𝟎𝟎 = 𝟓𝟑𝟎, 𝟎𝟎𝟎 − 𝟏𝟎%(𝟓𝟑𝟎, 𝟎𝟎𝟎)

𝑫𝟏𝟎 = 𝐏𝟒𝟕𝟕, 𝟎𝟎𝟎
𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎
𝟒𝟕𝟕, 𝟎𝟎𝟎
𝒅= = 𝟒𝟕, 𝟎𝟎𝟎
𝟏𝟎
𝟒𝟖𝟐, 𝟑𝟎𝟎 𝑩𝑽𝟔 𝑩𝑽𝟕 𝑩𝑽𝟖 𝑩𝑽𝟗 𝑩𝑽𝟏𝟎
𝑩𝑽 = 𝑭𝑪 − 𝒅𝒎
𝟒𝟑𝟒, 𝟔𝟎𝟎
𝟑𝟖𝟔, 𝟗𝟎𝟎 𝑩𝑽𝟓 = 𝐏𝟐𝟗𝟏, 𝟓𝟎𝟎. 𝟎𝟎
𝟒𝟕𝟕, 𝟎𝟎𝟎
𝟑𝟑𝟗, 𝟐𝟎𝟎
𝟐𝟗𝟏, 𝟓𝟎𝟎𝟎
Problem No. 14
An engineer bought an equipment for P500,000.00. Other expenses including installation
amounted to P30,000.00. At the end of its estimated useful life of 10 years, the salvage value will
be 10% of the first cost. Using straight line method of depreciation, what is the book value after
five years?
Solution 2:
Straight Line Method of Depreciation
𝑴𝒐𝒅𝒆 𝟑 − 𝟐

x (years) y (BV) 𝑩𝑽𝟓 = 𝟓ෝ

𝒚
0 530,000 𝑩𝑽𝟓 = 𝐏𝟐𝟗𝟏, 𝟓𝟎𝟎. 𝟎𝟎
10 53,000
Problem No. 15
A pick – up truck costs P960,000.00 and is expected to be used for 10 years after which it will
have a salvage value of P160,000.00. Find the book value at the end of the third year using 8%
sinking fund method.
Solution: 𝑨 𝟏+𝒊 𝒏−𝟏
𝑭=
𝒊
Book Value
𝒅 𝟏 + 𝟎. 𝟎𝟖 𝟏𝟎 − 𝟏
𝟗𝟔𝟎, 𝟎𝟎𝟎 𝟏𝟔𝟎, 𝟎𝟎𝟎 𝟖𝟎𝟎, 𝟎𝟎𝟎 =
𝟎. 𝟎𝟖

𝟎 𝟏 𝟐 𝟑 𝟒 𝟓 𝟔 𝟕 𝟖 𝟗 𝟏𝟎 𝒅 = 𝟓𝟓, 𝟐𝟐𝟑. 𝟓𝟗

𝟑
𝟓𝟓, 𝟐𝟐𝟑. 𝟓𝟗 𝟏 + 𝟎. 𝟎𝟖 −𝟏
𝒅 𝒅 𝒅 𝒅 𝒅 𝒅 𝒅 𝒅 𝒅 𝒅 𝑫𝟑 =
𝟎. 𝟎𝟖
𝑫𝟑 = 𝟏𝟕𝟗, 𝟐𝟕𝟕. 𝟖𝟕
𝑫𝟑 𝟖𝟎𝟎, 𝟎𝟎𝟎
𝑩𝑽𝒎 = 𝑭𝑪 − 𝑫𝒎
𝑫𝟏𝟎 = 𝑭𝑪 − 𝑺𝑽 𝑩𝑽𝟑 = 𝟗𝟔𝟎, 𝟎𝟎𝟎 − 𝟏𝟕𝟗, 𝟐𝟕𝟕. 𝟖𝟕
= 𝟗𝟔𝟎, 𝟎𝟎𝟎 − 𝟏𝟔𝟎, 𝟎𝟎𝟎 𝑩𝑽𝟑 = 𝐏𝟕𝟖𝟎, 𝟕𝟐𝟐. 𝟏𝟒
𝑫𝟏𝟎 = 𝟖𝟎𝟎, 𝟎𝟎𝟎
Problem No. 16
ABC construction bought an equipment for P60,000.00 with a salvage value of P10,000.00. The
equipment is expected to have a life of 10 years. Find its book value after 6 years. Use sum of the
years method.

Sum of the Years Digit Method (Solution 1)

𝟔𝟎𝒌 − 𝟏𝟎𝒌
𝒅𝟏 = 𝟏 𝟏𝟎 𝟓𝟓 = 𝟗𝟎𝟗𝟎. 𝟗𝟎𝟗
𝒅𝟐 = 𝟐 𝟗 " = 𝟖𝟏𝟖𝟏. 𝟖𝟏𝟖 𝑩𝑽𝟔 = 𝑭𝑪 − 𝑫𝟔
𝒅𝟑 = 𝟑 𝟖 " = 𝟕𝟐𝟕𝟐. 𝟕𝟐𝟕 = 𝟔𝟎, 𝟎𝟎𝟎 − 𝟒𝟎, 𝟗𝟎𝟗. 𝟎𝟗
𝑫𝟔 = 𝟒𝟎, 𝟗𝟎𝟗. 𝟎𝟗
𝒅𝟒 = 𝟒 𝟕 " = 𝟔𝟑𝟔𝟑. 𝟔𝟑𝟔 𝑩𝑽𝟔 = 𝐏𝟏𝟗, 𝟎𝟗𝟎. 𝟗𝟏
𝒅𝟓 = 𝟓 𝟔 " = 𝟓𝟒𝟓𝟒. 𝟓𝟒𝟓
𝒅𝟔 = 𝟔 𝟓 " = 𝟒𝟓𝟒𝟓. 𝟒𝟓𝟒
𝒅𝟕 = 𝟕 𝟒 " = 𝟑𝟔𝟑𝟔. 𝟑𝟔𝟑
𝒅𝟖 = 𝟖 𝟑 " = 𝟐𝟕𝟐𝟕. 𝟐𝟕𝟐
𝒅𝟗 = 𝟗 𝟐 " = 𝟏𝟖𝟏𝟖. 𝟏𝟖𝟏
𝒅𝟏𝟎 = 𝟏𝟎 𝟏 " = 𝟗𝟎𝟗. 𝟎𝟗𝟎
𝚺𝒏 = 𝟓𝟓
Problem No. 16
ABC construction bought an equipment for P60,000.00 with a salvage value of P10,000.00. The
equipment is expected to have a life of 10 years. Find its book value after 6 years. Use sum of the
years method.

Sum of the Years Digit Method (Solution 2) Sum of the Years Digit Method (Solution 3)
𝒏
𝒙 𝑭𝑪 − 𝑺𝑽 𝑴𝒐𝒅𝒆 𝟑 − 𝟑
𝑩𝑽𝟔 = 𝑭𝑪 − 𝑫𝟔 = 𝑭𝑪 − ෍
𝑺𝑶𝒀𝑫
𝒎−𝟏 x (years) y (BV)
𝟏𝟎
𝒙 𝟔𝟎𝟎𝟎𝟎 − 𝟏𝟎𝟎𝟎𝟎 0 60,000
= 𝟔𝟎𝟎𝟎𝟎 − ෍
𝟓𝟓
𝟔−𝟏 10 10,000
𝑩𝑽𝟔 = 𝐏𝟏𝟗, 𝟎𝟗𝟎. 𝟗𝟏
11 10,000

𝑩𝑽𝟔 = 𝟔ෝ
𝒚

𝑩𝑽𝟔 = 𝐏𝟏𝟗, 𝟎𝟗𝟎. 𝟗𝟏

Problem No. 17
A power plant purchases a fire tube boiler for P525,000.00. It is estimated to have a scrap value
of P30,000.00 after 12 years. Using the Matheson formula, find the depreciation charge for the
fourth year
Solution:

Declining Balance Method

𝑴𝒐𝒅𝒆 𝟑 − 𝟔 𝒅𝟒 = 𝑩𝑽𝟑 − 𝑩𝑽𝟒

x y 𝒅𝟒 = 𝟑ෝ
𝒚 − 𝟒ෝ
𝒚
0 525,000 𝒅𝟒 = 𝐏𝟓𝟒, 𝟒𝟔𝟗. 𝟔𝟐
12 30,000
Problem No. 18
A power plant purchases a fire tube boiler for P525,000.00. It is estimated to have a scrap value
of P30,000.00 after 12 years. Using the Matheson formula, find the book value at the end of
seven years.
Solution:

Declining Balance Method

𝑴𝒐𝒅𝒆 𝟑 − 𝟔

x y
0 525,000
12 30,000

𝑩𝑽𝟒 = 𝟕ෝ
𝒚

𝑩𝑽𝟒 = 𝐏𝟗𝟖, 𝟖𝟔𝟕. 𝟓𝟓

Problem No. 19
Ice bottling company purchased a filling machine for Php 1M with additional cost for optional
features amounting to Php 120,000.00. For an expected life of five years, determine the
accumulated depreciation after three years using the Double Declining Balance Method.
Solution:

Double Declining Method

𝒎 𝟐 𝟐
𝑩𝑽𝒎 = 𝑭𝑪 𝟏 − 𝒌 𝒌= = = 𝟎. 𝟒
𝒏 𝟓
𝟑
𝑩𝑽𝟑 = 𝟏, 𝟏𝟐𝟎, 𝟎𝟎𝟎 𝟏 − 𝟎. 𝟒
𝑩𝑽𝟑 = 𝐏𝐡𝐩 𝟐𝟒𝟏, 𝟗𝟐𝟎

𝑫𝟑 = 𝑭𝑪 − 𝑩𝑽𝟑

= 𝟏, 𝟏𝟐𝟎, 𝟎𝟎𝟎 − 𝟐𝟒𝟏, 𝟗𝟐𝟎

𝑫𝟑 = 𝐏𝐡𝐩 𝟖𝟕𝟖, 𝟎𝟖𝟎. 𝟎𝟎

Problem No. 20
The cost of producing a computer diskette is as follows: Material cost is P7.00 each, labor cost is
P2.00 each, and other expense is P1.50 each. If the fixed expenses is P69,000.00 per month, how
many diskettes must be produced each month for breakeven if each diskettes is worth P45.00?
Solution:

Cost = Revenue
𝟕𝒙 + 𝟐𝒙 + 𝟏. 𝟓𝒙 + 𝟔𝟗𝟎𝟎𝟎 = 𝟒𝟓𝒙
𝒙 = 𝟐𝟎𝟎𝟎