*A firm has the capacity to produce 1,000,000 units of a product per year.

At present, it is able to produce and sell only

600,000 units yearly at a total revenue of Php720,000. Annual fixed costs are Php250,000 and the variable costs per unit
are Php0.70.
a) Calculate the firm’s annual profit for this production.
b) How many units should be sold annually to break-even?
c) If the firm can increase its sales to 80% of full capacity, what will its profit or loss be, assuming that its selling
price and variable cost per unit remain constant?

Determine the ordinary simple interest on P700 for 8 months and 15 days if the rate of interest is 15%.

Determine the ordinary simple interest on P10,000 for 9 months and 15 days if the rate of interest is 6%.

Determine the exact simple interest on P500 for the period from January 10 to October 28, 2012 at 16% interest
Determine the exact simple interest on P20,000 for the period from January 15 to November 15, 2012 if the rate of simple
interest is 5%.

Determine the ordinary and exact simple interests on P5,000 for the period from January 15 to June 20, 1993, if the rate of
simple interest is 14%.

A loan of P10, 000 for 3 years at 10% simple interest per year. Determine the interest earned and the accumulated amount.

A loan of P10,000 for 3 years at 10% per year

Supposed that you have just borrowed P75,000 at 12% nominal interest compounded quarterly for ten years

A student plans to deposit P1,500 in a bank now and another P3,000 for the next two years. He plans to withdraw P5,000
three years after his last deposit for the purpose of buying shoes. Effective rate is 10%.
Determine the effective rates of interest for the following nominal rates of interest:
a. 9% compounded annually
b. 9% compounded semi-annually
c. 9% compounded quarterly
d. 9% compounded monthly
e. 9% compounded daily

If the sum of P12,000 is deposited in an account earning interest at the rate of 9% compounded quarterly, what will it
become at the end of 8 years?

At a certain interest rate compounded quarterly, P1,000 will amount to P4,500 in 15 years. What is the amount at the end
of 10 years?

How long will it take money to triple itself if invested at 12% per year?
Supposed that you have just borrowed P75,000 at 12% nominal interest compounded quarterly. What is the total lump-
sum, compounded amount to be paid by you at the end of a 10-year loan period?

The accumulated value at the end of 10 years if P100 is invested at the rate of 12% per year compounded continuously.

How many years are required for P1,000 to be P2,000 if invested at 9% per year compounded continuously?

A man borrowed P2,000 from a bank and promise to pay the amount for one year. He received only the amount of P1,920
after the bank collected an advance interest of P80. What was the rate of discount and rate of interest for one year?

An item presently costs P1,000. if inflation is at rate of 8% per year, what will be the cost of the item in two years?

An economy is experiencing inflation at an annual rate of 8%. If this continues, what will P1,000 be worth two years from
now in terms of today’s pesos?

A man invested P10,000 at an interest rate of 10% compounded annually. What will be the final amount of his investment
in terms of today’s pesos, after five years, if inflation remains the same rate of 8% per year?
Determine the present equivalent value of P5,000 paid every 3 months for a period of seven years and rate of interest is
12% compounded quarterly?

If P25,000 is deposited now into savings account that earns 6% per year, what uniform annual amount could be withdrawn
at the end of each year for ten years so that nothing would be left in the account after the 10th withdrawal?

How much money would you have deposit for five consecutive years starting one year from now if you want to be able to
withdraw P50,000 ten years from now? Assume i= 14 % compounded annually.

If you're planning to franchise a certain food cart business worth P150,000, two years from now but your current capital
does not meet the requirement. Instead, you’ll make twenty-four monthly deposits into an account paying 8% nominal
interest rate compounded monthly, how much should the deposit be so that after two years you will be able to avail the
franchise?
A corporation will make the following disbursements: a. P50,000 on December 31, 1991 b. P100,000 on December 31,
1992 c. P200,000 on December 31, 1993. To accumulate these sums, a sinking fund is established by making equal year-
end deposits starting December 31, 1986 up to the end of 1993. If the fund earns 9% interest compounded annually, what
is the required amount of the annual deposits?

An engineer wants to start a business which requires purchase of a P100,000 worth machine which will produce a net
income of P11,000 per year after deducing operating expenses. The engineer plans to put the machine on sale after 4
years, what must be the resale price to justify the investment if the engineer should make 12% annual return on the
investment.
**What lump sum of money must be deposited in a bank account at present time so that Php 500 per month can be
withdrawn for five years with the first withdrawal scheduled six years from today? Interest rate is 9% compounded
monthly.

A man invested Php 10,000 now for the college education of his three-year-old son. If the fund earns 14% effective, how
much will the so n get each year starting from 19th to 22nd birthday?

During the first ten years of the life of a certain machine, the following were spent for its maintenance: During the first 5
years, Php 3,000 was spent each year; during the second five years, Php 5,000 each year was spent. In addition, Php 8,000
was spent for overhauling at the end of the fourth year and Php 10,000 also for overhauling at end of the ninth year. If the
money is worth 9% compounded annually, what was the equivalent uniform annual cost for the ten-year period?

A farmer bought a tractor costing Php 25,000 payable in ten semi-annually payments, each instalment payable at the
beginning of each period. If the rate of interest is 26% compounded semi-annually, determine the amount of each
instalment.
A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers.
The first bid offered to pay Php 200,000 each year for five years, each payment being made at the beginning of each year.
The second bidder offer to pay Php 120,00 for the first year, Php 180,000 for the second year and Php 270,000 each year
for the next 3 years, all payments being made at the beginning of each year. If the money is 12% compounded annually,
which bid should the owner consider?

As rental for building, the owner received two offers: a. Php 50,000 a year for eight years, the rental for each year being
paid at the start of each year. b. Php 30,000 the first year, Php 40,000 the second year. Php 50,000 the third year and Php
60,000 for the next five years with rentals paid at the beginning of each year. If money is worth 12% effective, which is
better offer?

A present loan of P12,000 is to repaid by equal payments semi-annually over the next 8 years. If the interest rate is 7%
compounded continuously, what is the amount of each payment?

What is the future worth of an equal-payment series of $5,000 per year for five years if the interest rate is 8%
compounded continuously?
Determine the capitalized cost of a structure that requires an initial investment of Php 1,500,000 and an annual
maintenance of Php 150,000. Interest is 15%.

To maintain a bridge, Php 5,000 will be required at the end of 3rd year and annually thereafter. If money is worth 8%,
determine the capitalized cost of all future maintenance.

A manufacturing plant installed a new boiler at a total cost of Php 150,000 and is estimated to have a useful life of 10
years. It is estimated to have a scrap value at the end of the useful life Php 5,000. If the interest is 12% compounded
annually, determine its capitalized cost.

A new engine was installed by a textile plant at a cost of Php 300,000 and projected to have a useful life of 15 years. At
the end of its useful life, it is estimated to have a salvage value of Php 30,000. Determine its capitalized cost if interest
rate is 18% compounded annually.

Determine the capitalized cost of a research laboratory which requires Php 5,000,000 for original construction, Php
100,000 at the end of every year for the first 6 years and then Php 120,000 each year thereafter for operating expenses and
Php 500,000 every 5 years replacement of equipment with interest at 12% per annum?
***The year-end operating and maintenance cost of a certain machine are estimated to be Php 12,000 the first year to
increase by Php 2,500 each year during its 4-year life. If capital is worth 12%, determine uniform year-end costs.

A loan has to amortized by a group of four-year end payments forming and ascending arithmetic progression. The initial
payments are Php 5,000 and difference between successive payments is Php 400. but the loan was renegotiated to provide
for the payment of equal rather than uniformly varying sums. If the interest rate of the loan is 15%, what was the annual
payment?

Find the equivalent annual payment of the following obligations at 20% interest.

A contract has been signed to lease a building at P20,000 per year with an annual increase of P1,500 for 8 years. Payments
are to be made at the end of each year, starting on year from now. The prevailing interest rate is 7%. What lump sum paid
today would be equivalent to the 8-year lease payment plan?
Annual maintenance costs for a machine are Php 1,500 this year and are estimated to increase 10% each year every year.
What is the present worth of the maintenance cost for six years if interest (i) is:
a. 8%
b. 10%
c. 12%