A person buys a property for P100, 000 down payment and ten (10) deffered semi-annual payments of

P8,000 with the 1st payment starting 3 years from now. What is the present value of the investment if
the rate of interest is 12% cpd. semi-annually?

𝐴[(1 + 𝑖)𝑛 − 1] 8000[(1 + 0.06)10 − 1]

𝑃1 = = = 58,880.69
(1 + 𝑖)𝑛 𝑖 (1 + 0.06)10 (0.06)
𝑃1 = 𝑃2 (1 + 𝑖)𝑛

58,880.69 = 𝑃2 (1 + 0.06)5
𝑃2 = 43,999.078
𝑇𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 = 𝑃100,000 + 𝑃2 = 𝑃100,000 + 43,999.078 = 𝑃143,999

A father will give P 1 million to his daughter if she is able to finish her studies in 5 years. What equal
monthly deposits should the father make at the end of every year if the bank gives 12% cpd. Monthly?
𝑖
𝐸𝑞𝑢𝑎𝑙 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠, 𝐴 = 𝐹 ( )
(1 + 𝑖)𝑛 − 1

0.12
𝐴 = 1,000,000 ( 12 )
0.12 12(5)
(1 + ) −1
12
𝐴 = 12,244

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 What series of equal payments are equivalent to the following future amounts?

P 3,000 in 11 years at 8% cpd. s.a. when payments are annual;

0.08
𝑖 2
𝐴 = 𝐹( ) = 3,000 ( ) = 𝑃87.5964
(1 + 𝑖)𝑛 0.08 (2)11
(1 + 2 ) −1

𝑐𝑝𝑑. 𝑠. 𝑎 (2)
𝑃87.5964 ∗ = 𝑃175
𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 (1)

What series of equal payments are equivalent to the following present amounts?
P 12,000 in 8 years at 6% cpd. s.a. with semi-annual payments;

0.06 0.06 2(8)

𝑖(1 + 𝑖)𝑛 (1 + )
𝐴 = 𝑃( ) = 12,000 ( 2 2 ) = 𝑃955.33
(1 + 𝑖)𝑛 − 1 0.06 2(8)
(1 + 2 ) −1

𝑐𝑝𝑑. 𝑠. 𝑎. (2)
𝑃955.33 ∗ = 𝑃955
𝑠𝑒𝑚𝑖 − 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 (2)

A certain company put up a machine shop department for the maintenance of their equipment. The
owner was offered a complete set of machine shop tools and equipment for a price of P 2.8 Million cash.
On installment basis, the down payment is P 280,000 and the balance is payable at the end of each
quarter for 5 years. The interest is at 18% cpd. Quarterly. What should be the quarterly payment.

𝑃2,800,000 − 𝑃280,000 = 𝑃2,520,000

0.18 4(5) 0.18

(1 + 4 ) ( 4 )
𝐴 = 2,520,000 ( ) = 𝑃193,728
0.18 4(5)
(1 + 4 ) −1

A father will give his P 1 million if his son finishes his studies in 5 years. What equal monthly
deposits should the father make at the end of each month if the bank gives 12% cpd. monthly?

0.12
( 12 )
𝐴 = 1,000,000 ( ) = 𝑃12,244
0.12 12(5)
(1 + 12 ) −1

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 The buyer of a certain machine is given 2 options to pay it: 1st option is paying it P495,263 down
payment and P288,785 annually for the next 7 year; 2nd option is to pay it P350,000 down payment and
P200,000 annually for the next 5 years. If the money is worth 20% compounded annually, what is the
present value of the 1st option?

0.20 7
(1 + 1 ) − 1
𝑃 = 288,785 ( ) = 𝑃1,040,952.033
0.20 7 0.20
(1 + 1 ) ( 1 )

𝑃1,040,952.033 + P495,263 = P1,536,215

An Engineer plans to retire on the day he turns 60-year old. To address his retirement, he wants to set
aside the amount of funds each year for the next 20 years – starting next year- so that he will be able
to withdraw $60,829 per year for 20 years once he retires, with the 1st withdrawal on his
61st birthday. The Engineer is 20 years old today. How much must he set aside each year for his
retirement if he can earn 19% on his funds?

𝐴 = 𝑃60,829

0.19 20
(1 + 1 ) − 1
𝑃2 = 60,829 ( ) = 𝑃310,280.3429
0.19 20 0.19
(1 + 1 ) ( 1 )

∗ 𝟐𝟎 𝒚𝒓𝒔 𝒐𝒇 𝒘𝒊𝒕𝒉𝒅𝒓𝒂𝒘𝒊𝒏𝒈 𝟔𝟎, 𝟖𝟐𝟗 𝒑𝒆𝒓 𝒚𝒆𝒂𝒓

0.19 −20
𝐹 = 310,280.3429 (1 + ) = 𝑃9567.8649
1
∗ 𝒚𝒖𝒏𝒈 -20 𝒈𝒂𝒍𝒊𝒏𝒈 𝒔𝒂 𝟒𝟎 − 𝟐𝟎, 𝟒𝟎 𝒚𝒓𝒔 𝒃𝒂𝒈𝒐 𝒔𝒊𝒚𝒂 𝒎𝒂𝒈 𝟔𝟎, 𝟐𝟎 𝒚𝒓𝒔 𝒚𝒖𝒏𝒈 𝒎𝒂𝒈
− 𝒔𝒆𝒕 𝒂𝒔𝒊𝒅𝒆 𝒔𝒊𝒚𝒂 𝒏𝒈 𝒑𝒆𝒓𝒂.

0.19
𝐴 = 𝑃9567.8649 ( ) = 𝑃58
0.19 20
(1 + 1 ) − 1

∗ 𝟐𝟎 𝒚𝒓𝒔 𝒚𝒖𝒏𝒈 𝒎𝒂𝒈 − 𝒔𝒆𝒕 𝒂𝒔𝒊𝒅𝒆 𝒔𝒊𝒚𝒂 𝒏𝒈 𝒑𝒆𝒓𝒂.

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 An asphalt road requires a yearly maintenance beginning a year from now. For the 1st five years, it
will be P694,585 per year. For the next five years, it will be P1,284,532 per year. On the succeeding
five years, it will be 1,458,825 per year. If interest is 24% cpd. annually, what is the present value of
the repair cost?

0.24 5
(1 + 1 ) − 1
𝑃1 = 694,585 ( ) = 𝑷𝟏, 𝟗𝟎𝟔, 𝟗𝟎𝟐. 𝟖𝟑𝟓
0.24 5 0.24
(1 + 1 ) ( 1 )

0.24 5
(1 + 1 ) − 1
𝑃 = 1,284,532 ( ) = 𝑃3,526,534.135
0.24 5 0.24
(1 + 1 ) ( 1 )

0.24 −5
𝑃2 = 3,526,534.135 (1 + ) = 𝑷𝟏, 𝟐𝟎𝟐, 𝟗𝟐𝟖. 𝟎𝟖𝟗
1
0.24 5
(1 + 1 ) − 1
𝑃 = 1,458,825 ( ) = 𝑃4,005,035.421
0.24 5 0.24
(1 + 1 ) ( 1 )

0.24 −10
𝑃3 = 𝑃4,005,035.421 (1 + ) = 𝑷𝟒𝟔𝟔, 𝟎𝟎𝟑. 𝟖𝟓𝟓𝟒
1
𝑃 = 𝑃1 + 𝑃2 + 𝑃3 = 𝑃3,575,835

An Engineer borrows P596,095 at 22% cpd. quarterly, agreeing to repay the loan in 15 equal
quarterly payments. How much of the original principal is still unpaid after he has made after
the 8th payment?
15
0.22 4( 4 )
(1 + 4 ) −1
596,095 = 𝐴 15
0.22 4( 4 ) 0.22
(1 + 4 ) ( 4 )
( )
𝐴 = 𝑃59,386.3206
8
0.22 4(4)
(1 + 4 ) −1
𝑃 = 59,386.3206 8 = 𝑃376,186.5666
4( )
0.22 4 0.22
(1 + 4 ) ( 4 )
( )
𝑃596,095 − 𝑃376,186.5666 = 𝑃219,908

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 A generator costs P98,640 if paid in cash. On installment plan, a buyer should pay P22,782
downpayment and 10 semi-annual installments, the 1st installment payment is due at the end
of the 1st year after purchase. If the interest is 17 cpd. semi-annually, find the semi-annual
payment.
𝑃98,640 − 𝑃22,782 = 𝑃75,858
1
0.17 2(2)
𝑃 = 75,858 (1 + ) = 82,305.93
2
10
0.17 2( 2 ) 0.17
(1 + 2 ) ( 2 )
𝐴1 = 82,305.93 10 = 𝑃12,544
2( )
0.17 2
(1 + 2 ) −1
( )

A milling machine can be bought with a downpayment of P141,842 and equal installment of
P18,527 each paid at the end of every six (6) months for 13 semi-annual period. If money is
worth 20% cpd. semi-annually, find the equivalent cash price of the machine.
13
0.20 2( 2 )
(1 + 2 ) −1
𝑃𝑉 = 18,527 13 = 𝑃131,603.8804
2( )
0.20 2 0.20
(1 + 2 ) ( 2 )
( )
𝑃131,603.8804 + P141,842 = P273,446

What series of equal payments are equivalent to this future amount of P95,181 in 5 years at 24% cpd.
qtr. when payments are quarterly?

0.24
𝑖 4
𝐴 = 𝐹( ) = 95,181 ( ) = 𝑃1,781
(1 + 𝑖)𝑛 0.24 (4)5
(1 + ) −1
4
𝑐𝑝𝑑. 𝑞𝑡𝑟. (4)
𝑃1,781 ∗ = 𝑃1781
𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 (4)

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 A father will give P 2,376,505 to his daughter if she is able to finish her studies in 7 years. What equal
annual deposits should the father make at the end of every year if the bank gives 21% cpd. annually?

0.21
( 1 )
𝐴 = 2,376,505 ( ) = 𝑃9,283
0.21 21(1)
(1 + 1 ) −1

The buyer of a certain machine is given 2 options to pay it: 1st option is paying it P475,397 down
payment and P267,002 monthly for the next 6 year, starting a month from now; 2nd option is to pay it
P350,000 down payment and P200,000 annually for the next 5 years. If the money is worth 22%
compounded monthly, what is the present value of the 1st option?

0.22 6∗12
(1 + 12 ) −1
𝑃 = 267,002 ( ) = 𝑃10,626,468.45
0.22 6∗12 0.22
(1 + 12 ) ( 12 )

𝑃10,626,468.45 + 𝑃475,397 = P11,101,865

A milling machine can be bought with a downpayment of 148,837 and equal installment of 12,309 each
paid at the end of every month for the 17 months. If money is worth 22 cpd. monthly, find the
equivalent cash price of the machine.
17
0.22 12(12)
(1 + 12 ) −1
𝑃 = 12,309 17 = 𝑃35,247,336.77
0.22 12(12) 0.22
(1 + 12 ) ( 12 )
( )
𝑃35,247,336.77 + 𝑃475,397 = P35,722,734

An Engineer plans to retire on the day he turns 60-year old. To address his retirement, he wants to set
aside the same amount of funds each year for the next 20 years – starting next year- so that he will be
able to withdraw $93,055 per year for 22 years once he retires, with the 1st withdrawal on his 61st
birthday. The Engineer is 20 years old today. How much must he set aside each year for his retirement if
he can earn 16% on his funds?

0.16 22
(1 + 1 ) − 1
𝑃2 = 93,055 ( ) = 𝑃559,383.9848
0.16 22 0.16
(1 + 1 ) ( 1 )

0.16 −20
𝐹 = 559,383.9848 (1 + ) = 𝑃28,744.2012
1

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 0.16
𝐴 = 28,744.2012 ( ) = 𝑃4,848
0.16 20
(1 + 1 ) − 1

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