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Practice Problem

The document presents a series of practice problems related to financial calculations, including cash flow diagrams, present worth, interest rates, and future values. It covers scenarios involving deposits, loans, and rental income, requiring the application of financial principles such as simple interest and cash flow analysis. Each problem is designed to enhance understanding of financial concepts in practical contexts.

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1migs.riego
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3 views1 page

Practice Problem

The document presents a series of practice problems related to financial calculations, including cash flow diagrams, present worth, interest rates, and future values. It covers scenarios involving deposits, loans, and rental income, requiring the application of financial principles such as simple interest and cash flow analysis. Each problem is designed to enhance understanding of financial concepts in practical contexts.

Uploaded by

1migs.riego
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

PRACTICE PROBLEM

1. An industrial engineer wants to deposit an amount P now such that she can withdraw an
equal annual amount of A1 = ₱3000 per year for the first 5 years, starting 1 year after the
deposit, and a different annual withdrawal of A2=₱5000 per year for the following 3 years.
How would the cash flow diagram appear if i = 8.5% per year?

2. A rental company spent ₱2500 on a new air compressor 7 years ago. The annual rental
income from the compressor has been ₱750. The ₱100 spent on maintenance the first year
has increased each year by ₱25. The company plans to sell the compressor at the end of
next year for ₱150. Construct the cash flow diagram from the company’s perspective and
indicate where the present worth now is located.

3. What is the annual rate of interest if P265 is earned in four months on an investment of
P15, 000?

4. If you borrow money from your friend with simple interest of 12%, find the present worth
of ₱20,000, which is due at the end of nine months.

5. On October 1, 2019, a team of engineers borrowed ₱150,000 to fund the purchase of robotic
actuators and sensors for a prototype automation project. The loan carries an annual simple
interest rate of 7%. The loan is scheduled to be repaid on March 1, 2020. Determine the
total future value the team must pay.

6. An employee at [Link] borrows ₱10,000 on May 1 and must repay a total of


₱10,700 exactly 1 year later. Determine the interest amount and the interest rate paid.

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