CE INTEGRATION

ECONOMY
Second Semester, SY 2018-2019

INSTRUCTION: Select the correct answer for each of the following questions. Mark only one answer
for each item by shading the box corresponding to the letter of your choice on the answer sheet
provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 1 only.

1. Amounts A and B, with a total of One Million Pesos were invested in two banks, better and best bank
respectively. The better bank offers 4% interest rate and the best bank with 4.2% interest rate. If the
gained interest for one year is P41,200, how much was invested in the better tank?

a. 480,000 b. 330,000 c. 600,000 d. 400,000

2. Sanji puts P20, 000 per year in a mutual fund that earns 6% per year. How long will it take for the amount
in the fund to become P2M?

a. 33.4yrs b. 21.7yrs c. 26.5yrs d. 18.7yrs

Situation (3-5): A printing machine is bought at P1.5M and is estimated to have a salvage value of P100, 000
after 500,000 copies. The annual cost of renting the space for the business is P80, 000, power cost per copy is
P1.50, and maintenance and paper cost per copy is P4.00. The expected annual production of the machine is
100,000 copies. Annual interest is 15%.

3. Determine the annual operation and maintenance cost of the machine.

a. P680,000 b. P630,000 c. P560,000 d. P720,000
4. Determine the annual depreciation of the machine.
a. P207,642 b. P256,325 c. P321,478 d. P187,445
5. Determine the production cost per copy.
a. P15.68 b. P21.54 c. P10.63 d. P12.89
6. A man buys an electric fan from a merchant that charges P1,500 at the end of the 90days. The man
wishes to pay cash. What is the cash price if money is worth 10% simple interest?

a. 1,512.54 b. 1,463.41 c. 1,614.22 d. 1,452.33

7. P20,000 was invested at simple interest, part at 11% for 2 years, and the rest at 8% for 3 years. The total
interest earned was P4,690. How much was invested at 11%?

a. P4,500 b. P2,500 c. P5,500 d. P6,500

8. The present value of an annuity of R pesos payable annually for 10yrs, with the first payment at the end
of 10yrs is P100, 701.30. If the money is worth 8%, what is the value of R?

a. P15,000 b. P25,000 c. P20,000 d. P30,000

9. A heavy-duty copying machine was procured for P100,000 with an estimated salvage value of P10,000
after 10yrs. What is the book value after five years. Using straight-line method.

a. P45,000 b. P35,000 c. P55,000 d. P65,000

10. Based on its purchase price, a machine is expected to depreciate at uniform rate of 18% annually until it
has zero salvage value. What is the useful life of the machine using SLD method?

a. 8 b. 7 c. 6 d. 4
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 11. A local firm is establishing a sinking fund for the purpose of accumulating sufficient capital to retire its
outstanding bonds at maturity. The funds are redeemable in 10yrs, and their maturity value is P150,000.
How much should be deposited each year if the fund pays interest at the rate of 3%.

a. P14,125.32 b. P13,084.57 c. P16,478.52 d. P12,564.76

12. A shoes factory has a production capacity of 9,000 units per month. The fixed and variable cost are as
follows: Fixed monthly operating cost = P800,000. Material and labor cost = P200 per unit. Selling price
per unit = P500. What is the profit per month if the factory has an efficiency of 80%?

a. P1,450,000 b. P1,360,000 c. 1,280,000 d. P1,540,000

13. What amount should be deposited at 6% in order to withdraw P20, 000 at the end of each year for seven
years, and leave nothing in the fund at the end?

a. P111,141 b. 112,256 c. P110,872 d. 111,648

Situation (14-16): An ordinary annuity has nominal interest rate of 6% compounded semi-quarterly for 8 years.
14. What is the present worth factor?
a. 50.68 b. 45.36 c. 48.72 d. 40.54
15. What is the sinking fund factor?
a. 0.01102 b. 0.01962 c. 0.01223 d. 0.01536
16. What is the capital-recovery factor?
a. 0.01973 b. 0.02563 c. 0.02833 d. 0.02179

Situation (17-19): Five hundred pesos is deposited monthly to an account earning 7% compounded monthly.

17. What is the amount of the deposit after five years?

a. P35,796 b. P23,876.56 c. P45,983.12 d. P31,854.14
18. If the monthly deposit after two years is increased to P1,000, what is the amount of the deposit after five
years?
a. P55,761.50 b. P67,983.34 c. P48,127.43 d. P58,556.16
19. Repeat part 2 of this question if the interest rate is 18% compounded monthly.
a. P68,984.56 b. P68,623.24 c. P71,745.31 d. P73,456.23
20. An equipment costing P60,000 have book value of P4,000 after 8yrs. Find the constant percentage of the
declining value.
a. 22.36% b. 21.87% c. 28.72% d. 25.36%
21. An equipment costing P500,000 has a life expectancy of 5yrs. Using the sum of the years digit method of
depreciation, what must be its salvage value such that its depreciation charge in for the first year is
P100,000?
a. P150,000 b. P200,000 c. P100,000 d. P250,000
Situation (22-24): An equipment have a salvage value of P1,000,000 at the end of 50yrs. The Straight line
depreciation charge is P2M.

22. What is the first cost of the machine?

a. P105M b. P101M c. P103M d. P110M
23. What is its book value after 25yrs?
a. P51M b. P55M c. P49M d. P45M
24. At what year will its total depreciation be P30M?
a. 14yrs b. 10yrs c. 18yrs d. 15yrs
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25. Given the following data for two equipment A and B;
A B
First Cost P50,000 P150,000
Salvage Value P2,000 P6,000
Annual Maintenance P6,000 P3,000
Economic Life 5 15
The maximum rate of return for both equipment is 12% per annum. Use sinking fund method of
depreciation. Determine the annual cost of A.

a. P23,878.00 b. P19,556.00 c. P21,456.00 d. P169,336.00

26. Determine the present worth of B.
a. P176,389 b. P123,873 c. P189,345 d. P169,336
27. What is the rate of return for the additional initial investment on equipment B?
a. 6.69% b. 8.65% c. 10.23% d. 12.89%
28. Zoro buys a television set from a merchant who offers P25,000 at the end of 60days. He wishes to pay
immediately and the merchant offers to compute the required amount on the assumption that money is
worth 14% simple interest. What is the required amount?

a. P20,234.87 b. P19,222.67 c. P24,429.97 d. 28,456.23

29. What is the principal amount if the amount of interest at the end of 2.5yrs is P4500 for a simple interest of
6% PER ANNUM?
a. P35,000 b. P30,000 c. P40,000 d. P45,000
30. How long must a P40,000 note bearing 4% simple interest run to amount to P41,350.00?
a. 340days b. 403days c. 304days d. 430days
31. If P16,000 earns P480 in 9months, what is the annual rate of interest?
a. 1% b. 2% c. 3% d. 4%
32. Accumulate P5,000 for 10yrs at 8% compounded quarterly.
a. P12,456.20 b. P13,876.50 c. P10,345.80 d. P11,040.20
33. Accumulate P5,000 for 10yrs at 8% compounded semi-quarterly.
a. P10,955.61 b. P10,223.67 c. P9,455.67 d. P11,876.34
34. Accumulate P5,000 for 10yrs at 8% compounded monthly.
a. P15,456.75 b. P11,101.61 c. P14,768.34 d. P12,867.75
35. Accumulate P5,000 for 10yrs at 8% compounded annually.
a. P10,794.62 b. 10,987.90 c. 8,567.98 d. 7,876.87
36. The tag price of a certain commodity is for 100days. If paid in 31days, there is a 3% discount. What is the
simple interest paid?
a. 12.15% b. 6.25% c. 22.32% d. 16.14%
37. To maintain its newly acquired equipment, the company needs P40, 000 per year for the first five years
and P60, 000 per year for the next five years. In addition, an amount of P140, 000 would also be needed
at the end of the fifth and the eight years. At 6%, what is the present worth of this cost?

a. P689,214 b. P512,453 c. P549,812 d. P586,425

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38. Which of the following has the least effective annual interest rate?
a. 12% compounded quarterly c. 11.7% compounded semi-annually
b. 11.5% compounded monthly d. 12.2 compounded annually
39. The amount of P2,825 in 8yrs at 5% compounded continuously is:
a. P4,166.77 b. P4,188.56 c. P4,397.86 d. P4,214.40
40. The amount of P12,800 in 4yrs at 5% compounded quarterly is:
a. P15,614.59 b. P14,785.34 c. P16,311.26 d. P15,847.33
41. A bank offers 1.2% effectively monthly interest. What is the effective annual rate with monthly
compounding?
a. 15.4% b. 8.9% c. 14.4% d. 7.9%
42. What is the present worth of P27, 000 due in 6yrs if money is worth 13% and is compounded semi-
annually?
a. P12,681 b. P13,500 c. P15,250 d. P21,931
43. If money is worth 10% yearly, compounded quarterly, what monthly savings is required monthly in order
to have P200,000 at the end of 10 years?

a. P918.82 b. P878.98 c. P866.99 d. P981.28

44. Franky borrowed P150,000 two years ago. The terms of the loan are 10% interest for 10 years with
uniform payments. He just made his second annual payment. How much principle does he still owe?

a. P130,235.20 b. P134,567.30 c. P132,456.20 d. P129,456.78

45. A mining property is offered for sale for P5.7M. On the basis of estimated production, an annual return of
P800,000 is foreseen for a period of 10yrs. After 10yrs, the property will be worthless. What annual rate of
return is in prospect?
a. 6.7% b. 6.1% c. 5.6% d. 5.2%
46. A machine costing P45,000 is estimated to have a salvage value of P4,350 when retired at the end of
6yrs. Depreciation cost is computed using a constant percentage of the declining book value. What is the
annual rate of depreciation?

a. 32.35% b. 32.25% c. 35.25% d. 34.25%

47. An Engineer bought equipment for P500, 000. Other expenses including installation amounted to P30,
000. At the end of its estimated useful life of 10yrs, the salvage value will be 10% of the first cost. Using
Straight line method of depreciation, what is the book value after 5yrs?
a. P281,500 b. P291,000 c. P301,500 d. P271,500

48. A machine cost P8,000 and an estimated life of 10yrs with a salvage value of P500. What is the book
value after 8yrs using straight line method?

a. P2,500 b. P4,000 c. P3,000 d. P2,000

49. A certain company expects the cost of maintenance for a particular piece of heavy equipment to be
15,000 in year 1, 25,000 in year 2, and amounts increasing by 10,000 through year 8. At an interest rate
of 9.2% per year, determine the present worth of the maintenance cost.

a. P240,310.61 b. 420,130.34 c. 250,123.43 d. 430,127.87

50. A mechanical contractor is trying to calculate the present worth of personnel salaries over the next five
years. He has four employees whose combined salaries thru the end of this year are 900,000php. If he
expects to give each employee a raise of 4.5% each year, compute the present worth of his employees’
salaries at an interest rate of 12% per year.
a. P 3,546,045.85 c. P 3,456,678.81
b. P 3,645,540.58 d. P 2,234,333.89

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