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Engineering Economics Problem Solving
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SIMPLE INTEREST & DISCOUNT
1. A man borrowed P 4000 for 75 days at 16% per
annum interest rate. How much will be due at the end
of 75 days ?
A. P 4186.43 C. P4133.33
B. P 5124.64 D.P 5625.43
2. Aman borrowed P 2000 from a bank and promise to
pay the amount for one year. He received only the
amount of P 1920 after the bank collected an
advanced interest of P 80.00. What was the rate of
discount and the rate of interest that the bank
collected in advanced?
A.4%,4.17%
B.3%, 3.17%
C.4% 4.71%
D. 3% , 3.71%
3. Compute how much is the interest on P 3,000.00
from the Jan 15 to June 20, 2007, ifthe rate of.
simple interest is 14%,
A.P179.51
B.P239.51
C. P1d9s1
Da P 154.51
‘COMPOUND INTEREST
4. Compute the present value of P 5,000.00 due in 8
years if money is worth 12% compounded semi-
annually?
A. Php 1896.23
B. Php 1698.23
C. Php 1869.23
D. Php 1986.23
5. Determine how long will it take money to double
itself if invested at 5% compounded annually?
i C.25
_ D. 14
6. A person pays interest on a loan semiannually at a
nominal annual interest rate of 16%, What is the
effective annual interest rate?
A. 15.5% C.16%
B.16.5% D. 16.64%
7. What nominal rate compounded quarterly could be
used instead for 15% compounded semi-
annually?
A. 13.725% C. 14.567%
B. 14.125% D. 14.728 %
MATHEMATICS & BASIC ENGINEERING SCIENCES,
8
u
12,
13,
14.
A.P 109,292 & 3.7%
BP 239.942 & 4.7%
CONTINUOUS COMPOUNDING /CASH FLOW
DIAGRAMS /INFLATION
if the nominal interest rate is 3%, how much is P
5000.00 worth in 10 years in a continuously
compounded account?
A. P.6,750.00
B. P8,750.00
C. P-7,750.00
D. P 5,750.00
A man wishes his son to receive P 500,000 ten years
from now. What amount should he invest now if it
‘ill earn interest of 12% compounded annually
during the first five years and 15% compounded
quarterly during the next 5 years?
A. P 135,868.18
B. P 315,868.28
C. P 532,868.18
You deposit P 1000 into a 9% account today. At the
end of two years, you will deposit another P 3000.
In five years, you plan a P 4000 purchase. How
much is left in the account one year after the
purchase?
A.P1211.83 C. PI,S51.83
B. P1,155.86 D. P2,151.83
‘What is the future worth of my P 100,000 after 5
years if I invest today at a rate of 12% compounded
annually, Inflation rate is 8% per year. What is the
actual effective rate given to the account?
C. P 129,942 & 2.7%
D. P 119,942 & 3.7%
ANNUITY /PERPETUITY
How much money must you invest today in order to
withdraw Php 1000 per year for 10 years if the
interest rate is 12%
‘A. Php4800
B, PhpS808
C. Phps650
D. Php614s
An Electrical Engineer obtained a loan of P50,000.00
at the rate of 6% compounded annually in order to
repair his mistress’ house. Mow much must the
Electrical Engineer pay monthly to amortize the loan
within a period of ten years?
A. P560.90 C. P550.90
B. P505.90 D. P307.90
A house and lot is being sold and the payments are
on installment basis of P 400,000 each year for 5
years. Ifthe payments are to be made at the
beginning of each year, how much is the cash price
of the property? Assume that money is worth 20%
compounded annually?
A. P1,435,493.83
B. P1,345,943.57
C. PL355,493.54
D. P1,546,439.50 © PRIME REVIEW ONLINE MATHEMATICS & BASIC ENGINEERING SCIENCES.
15. Few
much money must you deposit today in an
account earning 10% compounded annually so that
you can withdraw P 25,000 yearly indefinitely
Starting at the end of the 10th year?
‘A. P106,024.4 C. P160,043.4
B. P180,024.4 D. P176,086.4
ACID TEST RATIO.
16. The balance sheet of Allied Company is as
follows: Assets: (Cash $10,000, Receivable
$12,000, Inventory $7,000, Capital equipment
$20,000, Total : $49,000) Liabilities: (Payables
$17,000 Notes due $6,000 , Long term debt
$3,000 Owner's equity $23,000 Total $49,000)
What is its acid test ratio?
A. 0.385 C.0.846
B. 0.592 D. 1.115
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