GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 1

SET 12: DEPRECIATION,

CAPITALIZED COST, BONDS, ETC. Solution:
MODE 3 2
Problem 1: What is the value of an
x y
asset after 8 years of use if it 0 120,000
depreciates from its original value of 12 120,000 (.03)
P120,000.00 to its salvage value of
3% in 12 years?
8ŷ = 42, 400
A. P44,200.00 C. P44,002.00
B. P44,020.00 D. P42,400.00

Solution:
GILLESANIA MODE 3 2
Problem 2: A man bought an
ENGINEERING equipment which cost P524,000.00.
Freight and installation expenses cost
x
0
y
524,000 + 31,000
ECONOMY him P31,000.00. If the life of the
equipment is 15 years with an
15 120,000

PROBLEMS estimated salvage value of

P120,000.00, find its book value after
8ŷ = 323,000

SOLVED USING 8 years.

A. P323,000.00C. P259,000.00
CALCULATOR B. P244,000.00 D. Solution:
P296,000.00 MODE 3 2
TEACHNIQUES Problem 3: An equipment costing
x
0
y
250,000
P250,000 has an estimated life of 15 15 30,000
years with a book value of P30,000 at
W. R., ECE, ECT the end of the period. Compute the 0ŷ – 1ŷ = -14,666.67 (negative siya
depreciation charge and its book kasi nga nagde-depreciate)
value after 10 years using straight line 10ŷ = 103,333.33
Questions taken from Set 12 (page method.
343) and Set 11 (page 318) of A. d = P14,666.67; BV =
Engineering Mathematics Volume 2
by DIT Gillesania
P103,333.30 Solution:
Problem 5: An equipment costing MODE 3 6
P250,000 has an estimated life of 15 x y
DISCLAIMER: The techniques years with a book value of P30,000 at 0 250,000
used in this file was not developed the end of the period. Compute the 15 30,000
by the author. It is based and with depreciation charge and its book
due all credits to Engr. Amado of value after 10 years using declining 10ŷ – 9ŷ = -9,234.53
Smart EDGE ECE Review balance method 10ŷ = 60,822.02
Specialist. C. d = P9,235.93; BV =
P60,832.80

W. R., ECE, ECT

 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 2

Problem 4: An equipment costing Solution: Problem 9 (CE November 1997, Solution:

P250,000 has an estimated life of 15 November 1994): An engineer
MODE 1 MODE 3 2
years with a book value of P30,000 at bought an equipment for P500,000. x y
the end of the period. Compute the Other expenses including installation
d = (220,000) ÷ ∑15−1
x=0 (1 + .08)
x 0 500,000 + 30,000
depreciation charge and its book amounted to P30,000. At the end of 6 530,000 (.01)
= 8,102.49
value after 10 years using sinking 10−1 its estimated useful life of 10 years,
fund method assuming i = 8%. D10 = 8,102.49 ∑ (1 + .08)x the salvage value will be 10% of the
5ŷ = 291,500
D. d = P8,102.50; BV = first cost. Using straight line method of
x=0
P132,622.60 = 117,377.37 depreciation, what is the book value
after 5 years?
BV10 = 250,000 − 117,377.37 A. P281,500.00 C. P301,500.00
= 132,622.63 B. P291,500.00D. P271,500.00

Problem 6: An equipment costing Problem 10 (ECE November Solution:

P250,000 has an estimated life of 15 Solution: 1997):A machine costs P8,000.00 MODE 3 2
years with a book value of P30,000 at MODE 3 3 and an estimated life of 10 years with x y
the end of the period. Compute the x y a salvage value of P500.00. What is 0 8,000
depreciation charge and its book 0 250,000 its book value after 8 years using 10 500
value after 10 years using the sum of 15 30,000 straight line method?
year’s digit method. 16 30,000 A. P2,500.00 C. P3,000.00 8ŷ = 2,000
D. d = P11,000; BV = P57,500 B. P4,000.00 D. P2,000.00
10ŷ – 9ŷ = -11,000
10ŷ = 57,500.00

Problem 7: An asset costing P50,000

Problem 11 (ME October 1997): A Solution:
Solution: factory equipment has an initial cost MODE 3 2
has a life expectancy of 6 years and
MODE 3 6 of P200,000.00. Its salvage value x y
an estimated salvage value of P8,000.
x y after ten years is P20,000.00. As a 0 8,000
Calculate the depreciation charge at
0 50,000 percentage of the initial cost, what is 10 500
the end of the fourth period using
6 8,000 the straight-line depreciation rate of
fixed-percentage method.
the equipment? B÷ A = -0.09
A. P7144.20 C. P3878.40
4ŷ – 3ŷ = -5,263.87 A. 5% C. 9%
B. P5264.00D. P2857.60
B. 6% D. 8%
Problem 8 (CE May 1996): A
Problem 12 (ME October 1997): An
machine costing P45,000 is estimated Solution: Solution:
asset is purchased for P120,000.00.
to have a salvage value of P4,350 MODE 3 6 MODE 3 3
Its estimated economic life is 10
when retired at the end of 6 years. x y x y
years, after which it will be sold for
Depreciation cost is computed using a 0 45,000 0 120,000
P12,000.00. Find the depreciation for
constant percentage of the declining 6 4,350 10 12,000
the first year using the sum-of-the-
book value. What is the annual rate of 1 – B = 0.3235 11 12,000
year’s digit, (SOYD).
depreciation in %?
A. P20,000.00 C. P21,080.00
A. 33.25% C. 35.25% 1ŷ – 0ŷ = -19,636.36
B. P18,400.00 D. P19,636.00
B. 32.25%D. 34.25%

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 3

Problem 13 (ME April 1998): An Solution: Problem 17 (ME April 1998): An Solution:
asset is purchased for P9,000.00. Its MODE 3 3 asset is purchased for P9,000.00. Its MODE 3 3
estimated life is 10 years, after which x y estimated life is 10 years, after which x y
it will be sold for P1,000.00. Find the 0 9,000 it will be sold for P1,000.00. Find the 0 9,000
book value during the third year if 10 1,000 book value during the first year if sum- 10 1,000
sum-of-the-year’s digit (SOYD) 11 1,000 of-the-year’s digit (SOYD) 11 1,000
depreciation is used. depreciation is used. 1ŷ = 7,545.45
A. P6,100.00 C. P4,500.00 A. P8,000.00 C. P6,500.00
3ŷ = 5,072.72
B. P5,072.00D. P4,800.00 B. P7,545.00D. P6,000.00

Problem 14 (ME April 1998): An

asset is purchased for P500,000.00. Solution: Problem 18 (CE November 1998): A Solution:
The salvage value in 25 years is MODE 3 2 machine having a first cost of MODE 3 6
P100,000.00. What is the total x y P60,000.00 will be retired at the end x y
depreciation in the first three years 0 500,000 of 8 years. Depreciation cost is 0 60,000
using straight line method? 25 100,000 computed using a constant 1 60,000 – 60,000(.2872)
A. P48,000.00C. P24,000.00 percentage of the declining book 60,000 - 8ŷ = 56,001.54
B. P32,000.00 D. P16,000.00 500,000 - 3ŷ = 48,000 value. What is the total cost of
depreciation, in pesos, up to the time
the machine is retired if the annual
Problem 15 (ME April 1998): A Solution:
machine has an initial cost of rate of depreciation is 28.72%?
MODE 3 2
P50,000.00 and a salvage value of A. 56,000C. 58,000
x y
P10,000.00 after 10 years. What is B. 57,000 D. 59,000
0 50,000
the book value after five years using 10 10,000
straight-line depreciation? Problem 19 (ECE November 1998):
A. P35,000.00 C. P25,000.00 5ŷ = 30,000 XYZ Corporation makes it a policy
B. P15,500.00 D. P30,000.00 that for any new equipment
purchased; the annual depreciation
Problem 16 (ME April 1998): A cost should not exceed 20% of the
company purchased an asset for Solution: first cost at any time with no salvage
P10,000.00 and plans to keep it for 20 MODE 3 3 value. Determine the length of service
years. If the salvage value is zero at x y life necessary if the depreciation used
the end of the 20th year, what is the 0 10,000 is the sum-of-the-year’s digit (SOYD)
depreciation in the third year? Use 20 0 method.
sum-of-the-years digits depreciation. 21 0 A. 7 years C. 9 years
A. P1000.00 C. P857.00 3ŷ - 2ŷ = -857.14 B. 8 years D. 6 years
B. P937.00 D. P747.00

W. R., ECE, ECT

 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 4

Problem 20: A large profitable Solution: Problem 24 (CE May 1997): A Solution:
corporation has purchased a luxury MODE 3 3 company uses a type of truck which 2M − 320,000 X − 400,000
van for use by its executives. The cost costs P2M, with life of 3 years and a 2M + = X+
x y (1 + .04)3 − 1 (1 + .04)4 − 1
of the plane is P5M. It has a useful life 0 2M final salvage value of P320,000. How SHIFT SOLVE X
of 5 years. The estimated resale value 5 1M much could the company afford to pay X = 2,585,870.44
at the end of 5 years is P1M. Using 6 1M for another type of truck for the same
SOYD what is the book value at the 3ŷ = 1.8M purpose, whose life is 4 years with a
end of 3 years? final salvage value of P400,000, if
A. P2.2M C. P3.6M money is worth 4%?
B. P1.2M D. P1.8M C. P2,585,964.73

Problem 21: Determine the Solution:

capitalized cost of an equipment Solution: Problem 25: A P100,000, 6% bond, END

A FC − SV pays dividend semi-annually and will BV = FV (r) ∑ (1 + i)−x + C(1 + i)−end

costing P 2M with and annual CC = FC + + +
i (1 + i)n − 1 be redeemed at 110% on July 1, START
maintenance of P200,000.00 if money
1999. Find its price if bought on July
is worth 20% per annum. Where:
200,000 1, 1996, to yield an investor 4%,
A. P 2.5M C. P 3M CC = 2,000,000 + = 𝟑𝐌 FV = Face Value = 100,000
.2 compounded semi-annually.
B. P 2.75M D. P 3.5M A. P100,000.00 C. P113,456.98 r = bond rate = .06 / 2
i = investor’s rate of return = .04 / 2
B. P112,786.65 D. P114,481.14
C=Redemption value=110%
(100,000)
Problem 22 (CE November 1996): At Solution:
6%, find the capitalized cost of a 100M − 0
6

bridge whose cost is P200M and life CC = 200M + BV = 3,000 ∑(1 + .02)−x + (110,000)(1 + .02)−6
(1 + .06)20 − 1 1
is 20 years, if the bridge must be CC = 𝟐𝟒𝟓. 𝟑𝐌 BV = 114, 481.14
partially rebuilt at a cost of P100M at
the end of each 20 years. Problem 26: A community wishes to
A. 245.3C. 210 purchase an existing utility valued at
Solution:
B. 215 D. 220 P500,000 by selling 5% bonds that
Annual Cost = D + A
will mature in 30 years. The money to
Problem 23 (ME October 1997): An Solution: = 25,000 + 8,915.05
retire the bond will be raised by
18,000 = 33,915.05
item is purchased for P100,000.00. CC = 100,000 + = 𝟑𝟐𝟓, 𝟎𝟎𝟎 paying equal annual amounts into a
Annual costs are P18,000.00. Using . 08 Where: D = FV x r
sinking fund that will earn 4%. What
8%, what is the capitalized cost of = 500,000 x .05 = 25,000
will be the total annual cost of the
perpetual service? bonds until they mature?
A. P350,000.00 C. P320,000.00 A = 8,915.05
A. P44,667.98 C. P34,515.05 30−1
B. P335,000.00 D. P325,000.00 B. P37,345.78 D. P33,915.05
500,000 = A ∑ (1 + .04)x
x=0

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 5

Problem 27: A man paid P110,000 Solution: Solution:

for a P100,000 bond that pays P4000 Problem 29: A company issued 50
END
“Redeemable at par” means FV = C
per year. In 20 years, the bond will be BV = FV (r) ∑ (1 + i)−x + C(1 + i)−end bonds of Php1,000 face value each, C = 50 (1,000) = 50,000
redeemed for P105,000. What net START redeemable at par at the ends of 15
rate of interest will the man obtain on years to accumulate the funds
his investment? Where: required for redemption, the firm end−1
A. 3.37% C. 3.56% BV = Bond Value = 110,00 established a sinking fund consisting F = A ∑ (1 + i)x
B. 3.47%D. 3.40% FV = Face Value = 100,000 of annual deposits, the interest rate of x=0
r = bond rate = .04
the fund being 4%. What was the
i = investor’s rate of return = ? 15−1
C=Redemption value=105,000 principal in the fund at the end of the
12th year? 50,000 = A ∑ (1 + .04)x
D= FV x r A. P35,983.00 x=0
B. P41,453.00 A = 2,497.05 STORE TO A
4,000 = 100,000 x r
.04 = r C. P38,378.00 12−1
20
D. P37,519.00  F = A ∑ (1 + .04)x
100k ∑(1 + A)−x + (105k)(1 + A)−20
1 x=0

F = 37, 520.36
Reverse engineering, substitute A to
choices, dapatangmakukuhang bond
value malapetsa 110k
a. 111,636.85 Solution:
b. 110,080.50  Problem 30: It is estimated that a (FC − SV)i
D = FC (r) +
c. 108,703.51 timber tract will yield an annual profit (1 + i)n − 1
d. 111,167.00 of P100,000 for 6 years, at the end of
which time the timber will be Where:
exhausted. The land itself will then D = Annual Dividend = 100k
have an anticipated value of P40,000. r = investor’s rate of return = .08
Problem 28 (ECE November 1996): Solution: i = reinvestment rate = .04
A man wants to make 14% nominal END
If a prospective purchaser desires a
FC = price of investment = ?
interest compounded semi-annually BV = FV (r) ∑ (1 + i)−x + C(1 + i)−end return of 8% on his investment and
SV = salvage value = 40k
on a bond investment. How much START
can deposit money in a sinking fund
should the man be willing to pay now at 4%, what is the maximum price he (FC − 40k)(.04)
for a 12%, P10,000 bond that will
Where: should pay for the tract? 100k = FC (. 08) +
FV = Face Value = 10,000 (1 + .04)6 − 1
mature in 10 years and pays interest A. P459,480.00 C. P578,987.00
r = bond rate = .12 / 2 = .06 459, 479.98 = FC
semi-annually? B. P467,456.00 D. P589,908.00
i = investor’s rate of return =
A. P2,584.19 C. P8,940.50 .14/2=.07
Problem 31: A mine is purchased for Solution:
B. P3,118.05 D. P867.82 C=Redemption value=. 10,000
P1,000,000.00 and it is anticipated (FC − SV)i
D = FC (r) +
20 that it will be exhausted at the end of (1 + i)n − 1
BV = 10k(.06) ∑(1 + .07)−x + 10𝑘(1 + .07)−20 20 years. If the sinking-fund rate is
1
4%, what must be the annual return (1M)(.04)
BV = 8,940.59 D = 1M (. 07) +
from the mine to realize a return of (1 + .04)20 − 1
7% on the investment? D = 𝟏𝟎𝟑, 𝟓𝟖𝟏. 𝟕𝟓
A. P108,350 C. P130,850
B. P150,832 D. P103,582

W. R., ECE, ECT

 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 6

Problem 32: A syndicate wishes to Solution: Problem 35: The purchase of a motor Solution:
purchase an oil well which, estimates (FC − SV)i for P6,000 and a generator for P4,000 FC = 6k + 4k + 500 = 10,500
indicate, will produce a net income of D = FC (r) + will allow a company to produce its
(1 + i)n − 1 SV = 400
P2M per year for 30 years. What own energy. The configuration can be
should the syndicate pay for the well assembled for P500. The service will
(FC)(.03) Solving for annual depreciation (AD):
if, out of this net income, a return of 2M = FC (. 1) + operate for 1,600 hours per year for MODE 3 2
10% of the investment is desired and (1 + .03)30 − 1 10 years. The maintenance cost is
x y
a sinking fund is to be established at P300 per year and the cost to operate
P𝟏𝟔, 𝟓𝟐𝟔, 𝟐𝟗𝟓. 𝟏𝟔 = FC 0 10,500
3% interest to recover this is P0.85 per hour for fuel and other
10 400
investment? related cost. Using straight line
3ŷ - 2ŷ= -1,010
A. P16,526,295C. P12,566,295 depreciation, what is the annual cost
B. P15,626,245 D. P16,652,245 for the operation? There is P400 in
Annual maintenance (AM) = P300
salvage value for the system at the
Op. cost (OC)= 1,600(0.85)= P1,360
Solution: end of 10 years.
Problem 33 (CE May 1995): An (FC − SV)i A. P2,670.00 C. P2,567.00
D = FC (r) + Annual cost of op. = AM + OC + AD
investor pays P1,100,000 for a mine (1 + i)n − 1 B. P2,760.00 D. P2,657.00 = 300 + 1,360 + 1,010
which will yield a net income of = 2,670
P200,000 at the end of each year for (1.1M)(.045)
10 years and then will become 200k = 1.1M (r) + Problem 36: A company purchases
(1 + .045)10 − 1
useless. He accumulates a P200,000 of equipment in year zero. It Solution:
replacement fund to recover his decides to use a straight line Solving for depreciation:
𝟏𝟎. 𝟎𝟒% = r
capital by annual investments at depreciation over the expected 20- MODE 3 2
4.5%. At what rate (%) does he year life of the equipment. The x y
receive interest on his investment at interest rate is 14%. If its overall tax 0 200,000
the end of each year? rate is 40%, what is the present worth 20 0
A. 10.04C. 11.5 of the depreciation tax shield? 3ŷ - 2ŷ= -10,000
B. 8.5 D. 17.5 A. P27,678.78 C. P26,492.52
end
B. P26,876.45 D. P26,098.78
Solution: P = A ∑(1 + i)−x
Problem 34 (CE May 1997): Machine
(FC − SV)i
cost = $15,000; Life = 8 years; D = FC (r) + x=w
(1 + i)n − 1 14
Salvage Value = $3,000. What
minimum cash return would the P = 10,000 ∑(1 + .14)−x
(15k − 3k)(.05) x=1
investor demand annually from the D = 15k (. 08) +
operation of this machine if he desires (1 + .05)8 − 1
interest annually at the rate of 8% on P = 66,231.30
his investment and accumulates a D = 2,456.66
capital replacement fund by investing Depreciation tax shield:
annual deposits at 5%? P = 66,231.30 (.4)
A. $5246.66 C. $2456.66 P = 26,492.52
B. $2546.66 D. $4256.66

W. R., ECE, ECT

 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 7

Problem 37 (ME Oct.1996): A Solution: Problem 40 (CE May 1998, May Solution:
company must relocate one of its (FC − SV)i 1999): Determine the break-even
factories in three years. Equipment for D = FC (r) + point in terms of number of units
(1 + i)n − 1 Cost = Revenue
the loading duck is being considered produced per month using the 428,000 + 115x + 76x + 2.32x = 600x
for purchase. The original cost is following data: (the costs are in pesos
(20k − 8k)(.1) 1,052.42 = x
P20,000, the salvage value after three D = 20k (. 1) + per unit)
years is P8,000. The company’s rate (1 + .1)3 − 1 Selling price per unit………..P600
of return (i) on money is 10%. D = 𝟓, 𝟔𝟐𝟓. 𝟑𝟕 Total monthly
Determine the capital recovery rate overhead…….P428,000
per year. Labor cost……………………P115
A. P5,987.67 C. P5,625.38 Cost of materials……………P76
B. P5,897.56 D. P5,578.35 Other variable cost…………P2.32
A. 1036 C. 1044
Problem 38 (ME April 1998): XYZ Solution: B. 1053 D. 1025
Corporation manufactures bookcases
Problem 41 (ME Oct.1997): A fixture
that it sells P65.00 each. It costs XYZ Cost = Revenue Solution:
P35,000.00 per year to operate its 35,000 + 50x = 65x that costs P700.00 will save P0.06 per
Payback period = period where the
plant. This sum includes rent, 2,333.33 = x item produced. Maintenance will be
future worth of the investment equals
depreciation charges on equipment, P40.00 annually, 3,500 units are
the future worth of annual savings.
and salary payments. If the cost to produced annually. What is the
A = (.06 x 3500) – 40 = 170
produce one bookcase is P50.00, how payback period at 10%? end−1
much cases must be sold each year A. 4.12 years C. 5.57 years
for XYZ to avoid taking a loss? B. 4.65 years D. 4.85 years
P(1 + i) = A ∑ (1 + i)x
n

A. 2334 cases C. 539 cases x=0

B. 750 cases D. 2333 cases end−1

700(1 + .1)n = 170 ∑ (1 + .1)x

Problem 39 (ME April 1998): A
Solution: x=0
Company that manufactures electric
motors has a production capacity of Problem 42 (ME Oct. 1997): A
200 motors a month. The variable
Cost = Revenue
company puts P25,000.00 down and Solution:
20,000 + 150x = 275x 10
costs are P150 per motor. The will pay P5,000.00 every year for the
160 = x P = 5,000 ∑(1 + .1)−x
average selling price of the motors is life of the machine for 10 years. If the
P275.00. Fixed costs of the company salvage value is zero and the interest x=1
amount to P20,000.00 per month rate is 10% compounded annually,
which includes taxes. The number of what is the present value of the P = 30,722.83 + 25,000
motors that must be sold each month machine? P = 55, 722.83
to break even is closest to: A. P56,200.00 C. P55,100.00
A. 40 C. 150 B. P55,723.00 D. P55,300.00
B. 80 D. 160

W. R., ECE, ECT

 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 8

Problem 43 (ME Oct. 1997): The Solution: Which of the given comparative
balance sheet of Oriental Services Quick Assets figures give the closest evaluation for
Inc. is as follows: Acid Test Ratio = the best investment?
Current Liabilities
Assets B.P1,553,403.94 – P1,614,676.61
Cash……………….....P10,000.00 10k
Receivables………….P12,000.00 Acid Test Ratio = = 𝟎. 𝟑𝟖𝟓 Problem 45 (ME April 1998): A
26k
Inventory………..……P 7,000.00 manufacturing firm wishes to give Solution:
end−1
Capital Equip…...……P20,000.00 Where: each 80 employee a holiday bonus.
Total……………….....P49,000.00 Quick Assets = Cash = 10,000 How much is needed to invest F = A ∑ (1 + i)x
Current Liabilities = Payables + Notes monthly for a year at 12% nominal x=0
Liabilities due + Long term debt = 26,000 interest rate, compounded monthly,
12−1
Payables……………..P17,000.00 so that each employee will receive a . 12 x
Notes due…………....P6,000.00 P2,000.00 bonus? 2,000 = A ∑ (1 + )
Long term debt………P 3,000.00 A. P12,608.00 C. P12,610.00
12
x=0
Owner’s equity………P23,000.00 B. P12,600.00 D. P12,300.00
Total………………..…P49,000.00 A = 157.69 x 80 = 12,615.81
SET 11: COMPOUND INTEREST,
What is the acid test ratio ANNUITY
A. 0.846 C. 0.592 Solution:
B. 1.115 D. 0.385 Problem 1 (ECE November 1996) m
NR m NR
Find the nominal rate that if converted (1 + ) = (1 + )
m m
Problem 44 (ME Oct. 1997): A plastic Solution: quarterly could be used instead for
manufacturing company produces a 15% compounded semi-annually? 2
For Batch Process: X 4 . 25
product from polystyrene. Two mixing A. 14.93% C. 15.56% (1 + ) = (1 + )
4 2
processes, batch and continuous are Annual income = B. 14.73%D. 15.90%
available with the following data for SHIFT SOLVE X? = 14.73%
each process:
Batch Con’t Problem 2 (CE November 1999)
Initial Cost P50k Which of the following has the least
Solution:
P100k effective annual interest rate?
Maintenance Cost/yr P10k A.12.55%
A. 12% compounded quarterly
P36k B. 12.12%
B. 11.5% compounded monthly
Salvage value P6k P12k C. 12.04%
C. 11.7% compounded semi- D. 12.20%
Life time 5yr 5yr annually
Capacity(units/yr) P1M P2M D. 12.2% compounded annually
Depreciation P8,800
P17,600

The company uses SLM, pays 48% of

its net income as income tax, and has
an after-tax minimum attractive rate of
return of 15%. The company has an
infinite market and can sell all the
products it produces at P0.50 per unit.

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 9

Problem 3 (CE November 1998) Solution: Problem 8 Fifteen percent (15%) Solution:
One hundred thousand pesos was MODE 3 6 when compounded semi-annually is NR m
placed in a time deposit that earns 9% x y what effective rate? ER = (1 + ) −1
m
compounded quarterly, tax free. After A. 17.34% C. 16.02%
0 100,000 . 15 2
how many years would it be able to 1 100,000 (1 + (.09/4)) B. 18.78% D. 15.56% ER = (1 + ) − 1 = 𝟏𝟓. 𝟓𝟔%
earn a total interest of fifty thousand 2
150,000 x̂ = 18.22
pesos?
18.22 / 4 = 4.56
A. 4.56C. 4.32 Problem 9 (ECE November 1997)
B. 4.47 D. 4.63 What rate of interest compounded Solution:
annually is the same as the rate of m
NR m NR
Problem 4 (ECE November 1996) Solution: interest of 8% compounded quarterly? (1 + ) = (1 + )
m m
The amount of P2,825.00 in 8 years MODE 3 6 A. 8.24%C. 6.88% 4
X 1 . 08
at 5% compounded quarterly is: x y B. 8.42% D. 7.90% (1 + ) = (1 + )
A. P4,166.77 C. P4,188.56 1 4
0 2,825
B. P4,397.86 D. P4,203.97 1 2,825 (1 + (.05/4)) SHIFT SOLVE X? = 8.24%
32ŷ = 4,203.97
Problem 10 (ECE November 1997)
Solution:
Problem 5 The amount of P2,825.00 Solution: How long will it take the money to
MODE 3 6
in 8 years at 5% compounded MODE 3 6 triple itself if invested at 10%
x y
continuously is: x y compounded semi-annually?
0 10
A. P4,166.77 C. P4,397.86 0 2,825 A. 13.3 years C. 11.9 years
1 10 (1 + (.1/2))
B. P4,188.56 D. P4,214.97 1 2,825 (e^(.05)) B. 11.3 yearsD. 12.5 years
30x̂ = 22.51
8ŷ = 4,214.40 22.51 /2 = 11.25 years

Problem 6 (CE May 1998) What rate Solution:

Solution:
m
(%) compounded quarterly is NR m NR Problem 11 (ECE November 1997)
(1 + ) = (1 + )
equivalent to 6% compounded semi- m m What is the accumulated amount after MODE 3 6
annually? three (3) years of P6,500.00 invested x y
2
A. 5.93 C. 5.96 X 4 . 06 at the rate of 12% per year 0 6,500
(1 + ) = (1 + ) 1 6,500 (1 + (.12/2))
B. 5.99 D. 5.9 4 2 compounded semi-annually?
A. P9,500.00 C. P9,221.00 6ŷ = 9,220.37
SHIFT SOLVE X? = 5.95% B. P9,321.00 D. P9,248.00

Problem 7 (ECE April 1998) The Solution: Problem 12 (ECE November 1997) Solution:
amount of P12,800 in 4 years at 5% MODE 3 6 What interest rate, compounded NR m
compounded quarterly is: x y monthly is equivalent to 10% effective ER = (1 + ) −1
m
A. P15,614.59C. P16,311.26 0 12,800 rate? x 12
B. P14,785.34 D. P15,847.33 1 12,800 (1+(.05/4)) A. 9.75% C. 9.68% 0.1 = (1 + ) − 1
12
16ŷ = 15,614.59 B. 9.50% D. 9.57%
SHIFT SOLVE X? = 9.57%

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 10

Problem 13 (ECE November 1997) Solution: Problem 17 (ME October 1997) Solution:
A man wishes his son to receive mxn A student deposits P1,500.00 in a 9%
i Balance = 1500(1 + .09)6
P500,000.00 ten years from now. F = P (1 + ) account today. He intends to deposit + 3,000(1 + .09)4
What amount should he invest now if m another P3,000.00 at the end of two
. 12 5 − 5,000(1 + .09)1
it will earn interest of 12% F = P (1 + ) = 1.76P years. He plans to purchase in five = 𝟏, 𝟑𝟎𝟎. 𝟑𝟗
compounded annually during the first 1 years his favorite shoes worth
5 years and 15% compounded P5,000.00. Calculate the money that
quarterly during the next 5 years? . 15 4x5 will be left in his account one year
500k = 1.76P (1 + )
A. P135,868.19 4 after the purchase.
P = 135,868.19 A. P1,280.00 C. P1,300.00
B. P1,250.00 D. P1,260.00
Solution:
Problem 14 (ME October 1997) Solution: Problem 18 If money is worth 4%
m The equivalent quarterly payment is
A savings association pays 4% NR compounded monthly, what payment
EAR = (1 + ) −1 the future worth of 3 monthly
interest quarterly. What is the 1 at the end of each quarter will replace
payments of 500.
effective annual interest rate? .04 4 payments of P500.00 monthly? 3−1
A. 18.045% C. 16.985% EAR = (1 + ) − 1 = 16.98% . 04 x
1 A. P1,500.00 C. P1,505.00
B. 17.155% D. 17.230% F = 500 ∑ (1 + ) = 1,505.00
B. P1,525.000 D. P1,565.00 12
x=0

Problem 15 (ME October 1997) Solution:

A bank offers 1.2% effective monthly NR m Problem 19 What amount would have Solution:
interest. What is the effective annual EAR = (1 + ) −1 to be invested at the end of each year X 1 . 04
2
1
rate with monthly compounding? .012 4 for the next 9 years at 4% (1 + ) = (1 + )
EAR = (1 + ) − 1 = 15.38% 1 2
A. 15.4%C. 14.4% 1 compounded semi-annually in order SHIFT SOLVE X? .0404
B. 8.9% D. 7.9% to have P5,000.00 at the end of the
8−1
time?
A. P541.86C. P542.64 5000 = A ∑(1 + .0404)x
Problem 16 (ME October 1997) Solution: B. P553.82 D. P548.23 x=0
What is the present worth of MODE 3 6 A = 541.86
P27,000.00 due in 6 years if money is x y Problem 20A contractor bought a
worth 13% and is compounded semi- 12 27,000 concrete mixer at P120,000.00 if paid Solution:
annually? 13 27,000 (1 + (.13/2)) in cash. The mixer may also be end
A. P12,681.00C. P15,250.00 0ŷ = 12,681.43 purchased by installment to be paid P = A ∑(1 + i)−x
B. P13,500.00 D. P21,931.00 within 5 years. If money is worth 8%,
x=0
the amount of each annual payment, 4
if all payments are made at the 120,000 = A ∑(1 + .08)−x
beginning of each year, is:
x=0
A. P27,829.00C. P31,005.00
B. P29,568.00 D. P32,555.00 A = 27,828.49

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 11

Problem 21 A contract calls for Solution: Problem 25 (CE November 1999) Solution:
semiannual payments of P40,000.00 end To maintain its newly acquired 5
for the next 10 years and an F equipment, the company needs
P = A ∑(1 + i)−x + P1 = 40k ∑(1 + .06)−x = 168,494
additional payment of P250,000.00 at (1 + i)n P40,000 per year for the first five
x=0 x=1
the end of that time. Find the 20 years and P60,000 per year for the 140k
equivalent cash value of the contract 250k next five years. In addition, an amount P2 = = 104,616.14
= 40k ∑(1 + .035)−x + (1 + .06)5
at 7% compounded semiannually? (1 + .035)20 of P140,000 would also be needed at
x=1 10
A. P444,526.25 C. P694,138.00 the end of the fifth and the eighth
B. P598,589.00 D. P752,777.00 P = 694,137.60 years. At 6%, what is the present P3 = 60k ∑(1 + .06)−x = 188,863
worth of these costs? x=6
A. P689,214 C. P549,812 140k
P4 = = 87,837.73
Problem 22 MrRankine bought a B. P512,453 D. P586,425 (1 + .06)8
Solution:
piece of property for end
P100,000.00downpayment and 10 P= P1+ P2+ P3+ P4 = 549,811.82
deferred semiannual payments of P = A ∑(1 + i)−x + 100𝑘 Problem 26 A man receives
x=0
P8,000.00 starting 3 years from now. 15 P125,000.00 credits for his old car Solution:
If the interest rate is 12% when buying a new model costing 18
= 8k ∑(1 + .06)−x + 100k . 06 −x
compounded semiannually, what is P375,000.00. What cash payment will P = 12.5k ∑ (1 + ) = 214,659
x=6
the present worth of the property? be necessary so that the balance can 12
x=1
A. P143,999.08C. P152,444.05 P = 143,999.08 be liquidated by payments of
B. P148,555.02 D. P166,888.01 P12,500.00 at the end of each month Balance = P375k – 125k = 250k
for 18 months when interest is Cash payment = 250k – 214,659.6
charged at the rate of 6% Cash payment = 35,340
Problem 23 (ECE Nov.1996) If
Solution: compounded monthly?
money is worth 8%, determine the 1,000 A. P23,400.00 C. P33,650.00
P′ = = 12,500
present value of a perpetuity of (.08)4 B. P28,750.00 D. P35,340.00
P1,000 payable annually, with the first
payment due at the end of 5 years. P′ 12,500 Problem 27 Determine the present
A. P9,187.87 C. P9,272.64 P= n
= = 𝟗, 𝟏𝟖𝟕 worth of an annual payment of
(1 + i) (1 + .08)4 Solution:
B. P9,178.87 D. P9,272.46 P2500.00 at the end of each year for 12
12 years at 8% compounded
P = 2.5k ∑(1 + .08)−x = 18,840.19
annually.
x=1
A. P18,840.20C. P15,000.00
B. P30,000.00 D. P17,546.04
Problem 24 A man is left with an Solution:
inheritance from his father. He has an 2M
option to receive P2 M at the end of P= = 𝟗𝟐𝟔, 𝟑𝟖𝟔. 𝟗𝟕 Problem 28 A man borrowed
Solution:
10 years; however he wishes to (1 + .08)10 P200,000.00 from a bank at 12%
5 122
receive the money at the end of each compounded monthly, which is . 12 −x
926,386 = A ∑(1 + .08)−x 200k = A ∑ (1 + )
year for 5 years. If interest rate is 8%, payable monthly for 10 years (120 12
x=1 x=3
how much would he receive every payments). If the first payment is to be
year? made after 3 months, how much is the
A = 232,019.59 A = 2,927.09
A. P400,000.00 C. P232,020.00 monthly payment?
B. P352,533.00 D. P200,000.00 A. P2,869.42 C. P3,013.10
B. P2,927.10D. P3,124.12

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 12

Problem 29 Solution: Problem 34 An investment of x pesos Solution:

What is the present worth of a 10 is made at the end of each year for end−1
P1000.00 annuity over a 10-year three years, at an interest rate of 9%
P = 1k ∑(1 + .08)−x = 𝟔, 𝟕𝟏𝟎. 𝟎𝟖 F = A ∑ (1 + i)x
period, if interest rate is 8%? per year compounded annually. What
x=1 x=0
A. P7896.00 C. P6234.80 will be the value of the investment 3−1
B. P8976.00 D. P6710.00 upon the deposit of the third
payment?
F = x ∑(1 + .09)x = 𝟑. 𝟐𝟕𝐱
A. 3.278xC. 3.728x x=0
Problem 30 (ME October 1995)
How much money must you invest
Solution: B. 3.287x D. 3.782x
10
today in order to withdraw P1000 per
year for 10 years if interest rate is P = 1k ∑(1 + .12)−x = 𝟓, 𝟔𝟓𝟎. 𝟐𝟐 Problem 35 (ME October 1995) Solution:
12%? x=1 If P500 is invested at the end of each 6−1
A. P5650.00C. P5560.00 year for 6 years, at an effective F = 500 ∑(1 + .07)x = 𝟑, 𝟓𝟕𝟔. 𝟔𝟒
B. P6550.00 D. P7550.00 annual interest rate of 7%, what is the
x=0
total amount available upon the
Problem 31 A machine is under deposit of the 6th payment?
consideration for investment. The cost A. P3455.00 C. P3577.00
of the machine is P25,000. Each year B. P3544.00 D. P3688.00
it operates, the machine will generate
a savings of P15,000. Given an Problem 36You get a P40,000 per
effective annual interest of 18%, what year for four years to go to college. Solution:
is the discounted payback period, in Your father invested P50,000 in a 7% F1 = 50k(1 + .07)21 = 207,028.11
years, on the investment in the account for your education when you
machine? were born. If you withdraw the 3
A. 1.566 C. 2.155 P40,000 at the end of your 17th, 18th, F = 40k ∑(1 + .07)x = 177,597.7
B. 2.233 D. 2.677 19th and 20th years, how much money
x=0
will be left in the account at the end of F2 = F(1 + .07)1 = 190,029.56
Problem 32 (ME April 1996) What is Solution: your 21st year?
4 A. P16,000 C. P18,000
the present worth of a P100 annuity F1 – F2 = 16,998.56
starting at the end of the third year P = 100 ∑(1 + .08)−x = 𝟏𝟓𝟐. 𝟖𝟗 B. P17,000 D. P19,000
and continuing to the end of the fourth x=3
year, if the annual interest rate is 8%? Problem 37If money is worth 10%
Solution:
A. 153.44 C. 154.99 yearly, compounded quarterly, what
B. 152.89D. 156.33 monthly savings is required monthly in .1 4
(1 + x)12 = (1 +
)
order to have P200,000 at the end of 4
SHIFT SOLVE X? = 0.00826
Problem 33 Consider a project which Solution: 10 years?
involves the investment of P100,000 2 A. P918.82 C. P866.99 119
now and P100,000 at the end of one P1 = 150k ∑(1 + .1)−x = 260,330 B. P878.98 D. P981.28
200k = A ∑(1 + .00826)x
year. Revenues of P150,000 will be x=1
x=0
generated at the end of years 1 and 2. 100k
What is the net present value of this P2 = 100k + = 190,909
(1 + .1)1 A = 981.27
project if the effective annual interest
rate is 10%? P= P1-P2= 69,421.50
A. P67,421.50 D. P69,421.50

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 13

Problem 38 How much money must Solution: Problem 42 Given that the discount Solution:
you deposit today to an account 25,000 rate is 15%, what is the equivalent
P1 = 100k
earning 12% so that you can withdraw P′ = = 208,333.33 uniform annual cash flow of the
200k
P25,000 yearly indefinitely starting at . 12 following stream of cash flows? P2 = = 173,913
the end of the 10th year? year0 P100,000.00 (1 + .15)1
208,333 50k
A. P125,000 C. P73,767 P= = 𝟕𝟓, 𝟏𝟐𝟕. 𝟎𝟖 year 1 P200,000.00 P3 = = 37,807.18
B. P89,456 D. P75,127 (1 + .12)9 year2 P50,000.00 (1 + .15)2
year3 P75,000.00 75k
Solution: A. P158,124.60C. P157,345.98 P4 = = 49,313.71
Problem 39 (ME April 1996) (1 + .15)3
In five years, P18,000 will be needed 18,000 B. P158,897.50 D.
to pay for a building renovation. In
P1 = = 8,949.18 P155,789.34 P = P1 + P2 + P3 + P4 = 361,033.94
(1 + .15)5
order to generate this sum, a sinking
fund consisting of three annual 3 3
payments is established now. For tax P2 = A ∑(1 + .15) −x
= 2.28A 361,033 = A ∑(1 + .15)−x
purposes, no further payments will be x=1 x=1
made after three years. What
payment is necessary if money is P1 = P2 158,124.55 = A
worth 15% per annum? A = 3,9191.53
A. P3,345.65 C. P3,919.53
B. P3,789.34 D. P3,878.56 Solution:
Problem 43 Mr. Bean borrowed
Solution: (1 + x)12 = (1 + .1)1
Problem 40 An investment of 2 P100,000 at 10% effective annual SHIFT SOLVE X? = 0.007974
P40,000.00 has revenue of x pesos at interest rate. He must pay back the F = 100k(1 + .007974)359 = 1,731,135
0 = x ∑(1 + .15)−x − 40𝑘 loan over 30 years with uniform
the end of the first and second year. 359
x=1 monthly payments due on the first day
Given a discount rate of 15% F1 = A ∑(1 + .007974)x
compounded annually, find x so that of each month. What does he pay
0 = 1.62x – 40k x=0
the net present worth of the each month?
24, 604.65 = x
investment is zero. A. P768.67 C. P856.30 A=
A. P33,789.54 C. P24,604.65 B. P987.34 D. P839.20
B. P27,789.78 D. P21,879.99

Problem 41 Mr. Jones borrowed Solution:

P150,000 two years ago. The terms of
10
Problem 44 (ECE November 1995) Solution:
the loan are 10% interest for 10 years 150k = A ∑(1 + .1)−x An employee obtained a loan of (1 + x)12 = (1 + .06)1
with uniform payments. He just made x=1 P10,000 at the rate of 6% SHIFT SOLVE X? = 0.00486
A = 24,411.80 120
his second annual payment. How compounded annually in order to
2−1
much principal does he still owe? repair a house. How much must he 10k = A ∑(1 + .00486)−x
A. P130,235.20C. P132,456.20 F1 = A ∑(1 + .1)x = 51,264.8 pay monthly to amortize the loan x=1
B. P134,567.30 D. P129,456.78 x=0 within a period of ten years?
A. P198.20 C. P110.22 A = 110.17
F = 150k(1 + .1)2 − F1 B. P150.55 D. P112.02
𝐅 = 𝟏𝟑𝟎, 𝟐𝟑𝟓. 𝟐𝟎

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 14

Problem 45 What is the accumulated Solution: Problem 50Deposits of P1500 each Solution:
value of a payment of P12,500 at the 8 were made in a sinking fund at the 6
end of each year for 9 years with end of each year. If the fund earned
F = 12,500 ∑(1 + .05)x F = 1,500 ∑(1 + .06)x
interest at 5% compounded annually? interest at the rate of 6% per annum
x=0 x=0
A. P138,738.05 C. P178,338.50 compounded quarterly, what was the
B. P137,832.05D. P187,833.50 F = 137,832.05 principal in the fund immediately after F = 12,590.77
the 7th deposit was made?
A. P16,243.23 C. P14,243.00
Problem 46 What is the accumulated B. P12,591.00 D. P13,643.23
value of a payment of P6,000 every
Solution:
31 Solution:
six months for 16 years with interest . 07 x Problem 51 (CE Nov.1996,
40
at 7% compounded semiannually? F = 6000 ∑ (1 + ) Nov.1999) A man inherited a regular . 14 −x
2 P = 100k ∑ (1 + ) = 2,135,507
A. P312,345.00 C. P347,898.00 x=0 endowment of P100,000 every end of 4
x=1
B. P345,678.00 D. P344,007.00 3 months for 10 years. However, he
F = 344,007.01 may choose to get a single lump sum F
payment at the end of 4 years. How 2.1M = .14 16
Problem 47 A mining property is Solution: much is this lump sum if the cost of (1 +
4
)
offered for sale for P5.7M. On the 10 money is 14% compounded F = 3,702,939.73
basis of estimated production, an P = A ∑(1 + i)−x quarterly?
annual return of P800,000 is foreseen x=1
A. P3,502,546 C. P3,702,939
for a period of 10 years. After 10 10 B. P3,802,862 D. P3,602,431
years, the property will be worthless. 5.7M = 800k ∑(1 + i)−x Solution:
What annual rate of return is in Problem 52 (CE May 1996) A service
x=1 Balance = 540k – 162k = 378k
prospect? By trial and error, using choices, car whose price was P540,000 was 60
A. 6.7%C. 5.6% i = 6.7% brought with a down payment of 𝑖 −x
378k = 10,874.29 ∑ (1 + )
B. 6.1% D. 5.2% P162,000 and monthly of P10,874.29 12
x=1
for 5 years. What was the rate of By trial and error, using choices,
Solution: interest if compounded monthly? i = 24%
Problem 48 If a down payment of 12 A. 20% C. 24%
P600,000 is made on a house and P = 80k ∑(1 + .06)−x B. 26% D. 22%
P80,000 a year for the next 12 years
x=1 Solution:
is required, what was the price of the P = 670,707.51 + 600k Problem 53 (CE May 1998) 7
house if money is worth 6% P = 1,270,707.51 The present value of an annuity of “R” F = R ∑(1 + .05)x = 9.5491R
compounded annually? pesos payable annually for 8 years, x=0
A. P1,270,707C. P1,345,555 with the first payment at the end of 10
B. P1,130,450 D. P1,678,420 years, is P187,481.25. Find the value F
of R if money is worth 5%. 187,481.25 =
Solution: (1 + .05)17
Problem 49 What annuity over a 10- A. P45,000C. P42,000 9.5491R
10
year period at 8% interest is B. P44,000 D. P43,000 187,481.25 =
100k = A ∑(1 + .08)−x (1 + .05)17
equivalent to a present worth of
x=1
R = 45,000.05
P100,000?
A. P14,903C. P13,803 A = 14,902.94
B. P15,003 D. P12,003

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 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 15

Problem 54 (ECE April 1998) Solution: Problem 58 (ME April 1998) Solution:
How much money must you invest 10 A house and lot can be acquired at a 14
today in order to withdraw P2,000 P = 2k ∑(1 + .09)−x = 𝟏𝟐, 𝟖𝟑𝟓. 𝟑𝟏 down payment of P500,000.00 and a
P = 100k ∑(1 + .14)−x
annually for 10 years if the interest x=1
yearly payment of P100,000.00 at the
x=5
rate is 9%? end of each year for a period of 10
A. P12,385.32 C. P12,835.32 years, starting at the end of 5 years P = 308,835.92 + 500k = 808,835.92
B. P12,853.32 D. P12,881.37 from the date of purchase. If money is
worth 14% compounded annually,
what is the cash price of the property?
Problem 55 (ECE April 1998) Solution:
Money borrowed today is to be paid in 6 A. P810,100.00 C. P808,836.00
6 equal payments at the end of each . 12 −x B. P801,900.00 D. P805,902.00
P = 2k ∑ (1 + ) = 𝟏𝟎, 𝟖𝟑𝟒. 𝟑𝟖
of 6 quarters. If the interest is 12% 4
compounded quarterly, how much
x=1
Problem 59 (ME April 1998) Solution:
5
was initially borrowed if quarterly How much must be deposited at 6%
payment is P2000.00? each year beginning on January 1, 5000 = A ∑(1 + .06)x
A. P10,382.90 C. P10,834.38 year 1, in order to accumulate x=0
B. P10,200.56 D. P10,586.99 P5,000.00 on the date of the last
deposit, January 1, year 6? A = 716.81
A. P751.00 C. P717.00
Problem 56 (ME October 1997) Solution:
A car was bought on installment basis B. P715.00 D. P725.00
(1 + x)12 = (1 + .12)1
with a monthly installment of SHIFT SOLVE X? = 0.00948
P10,000.00 for 60 months. If interest 60 Problem 60 (ME April 1998) Solution:
is 12% compounded annually, P = 10k ∑(1 + .00948)−x A piece of machinery can be bought Cash Price = Down payment + P
15
calculate the cash price of the car. for P10,000.00 cash, or for P2,000.00
x=1
A. P455,875.00C. P678,519.75 down and payments of P750.00 per 10k = 2k + 750 ∑(1 + i)−x
B. P567,539.75 D. P345,539.75 P = 455,877.95 year for 15 years. What is the annual x=1
interest rate for the time payments?
Problem 57 (ME October 1997) A. 4.61%C. 3.81% By trial and error, using choices,
Solution: i=4.61%
A steel mill estimates that one of its B. 5.71% D. 11.00%
20k
furnaces will require maintenance P1 = = 17,769.74
P20,000.00 at the end of 2 years, (1 + .03)4 Problem 61 (ME April 1998)
P40,000.00 at the end 4 years and 40k An instructor plans to retire in exactly Solution:
P2 = = 31,576.36
P80,000.00 at the end of 8 years. (1 + .03)8 one year and want an account that 15
What uniform semi-annual amounts 80k will pay him P25,000.00 a year for the P = 25k ∑(1 + .06)−x
could it set aside over the next eight P3 = = 49,853.35 next 15 years. Assuming a 6% annual
(1 + .03)16 x=1
years at the end of each period to effective interest rate, what is the
meet these requirements of P = P1 + P2 + P3 = 99,199.5 amount he would need to deposit P = 242,806.00
maintenance cost if all the funds now? (The fund will be depleted after
would earn interest at the rate of 6% 16 15 years.)
compounded semi-annually? 99,199.5 = A ∑(1 + .03)−x A. P249,000.00 C. P242,806.00
A. P7,897.35C. P8,897.35 B. 248,500.00 D. P250,400.00
x=1
B. P9,397.35 D. P6,897.35
7,897.35 = A

W. R., ECE, ECT

 GILLESANIA ENG’G ECONOMY PROBLEMS SOLVED USING CALCULATOR TECHNIQUES 16

Problem 62 A man invested Solution: FORMULAS TO REMEMBER BOND

P1,000.00 per month on a bank that 12
(1 + x) = (1 + .06) 1 END
offers 6% interest. How much can he ANNUITY
SHIFT SOLVE X? = 0.00487 BV = FV (r) ∑ (1 + i)−x + C(1 + i)−end
get after 5 years? 59 end−1 START
A. P60,000.00 C. P72,540.00 x
F = 1,000 ∑(1 + .00487) F = A ∑ (1 + i)x
B. P69,770.00 D. P69,491.00 D = FV (r)
x=0 x=0
F = 69,485.78 Where:
end BV = Bond Falue / Price of Bond
Problem 63 (CE November 1995)
Solution: P = A ∑(1 + i)−x FV = Fave Value
Find the present value in pesos, of 4 r = bond rate
perpetuity of P15,000 payable semi- . 08 x=w
(1 + x)2 = (1 + ) w = 0 kapag annuity due i = investor’s rate of return
annually if money is worth 8%, 4
SHIFT SOLVE X? = 0.0404 w = 1 kapag ordinary annuity C = Redemption value
compounded quarterly. D = dividend
15k
A. P371,287C. P392,422 P1 = = 371,287.13
. 0404 DEPRECIATION
B. P386,227 D. P358,477
DEPLETION/CAPITAL RECOVERY
Straight Line Method MODE 3 2
Problem 64 (CE May 1999, May
1995) Solution: (FC − SV)i
Declining Balance Method / D = FC (r) +
A man paid 10% down payment of Balance = 2M – 200k = 1.8M (1 + i)n − 1
60 Constant/Fixed Percentage
P200,000 for a house and lot and . 15 −x Method/Matheson Formula
agreed to pay the balance on monthly 1.8M = A ∑ (1 + )
12 MODE 3 6 CAPITALIZED COST, ANNUAL
installments for 60 months at an x=1
-pag-input ng values sa MODE 3 COST
interest rate of 15% compounded
A = 42, 821.87 6, gamitinang salvage value
monthly. Determine the required A FC − SV
monthly payment. CC = FC + +
Double Declining Balance i (1 + i)n − 1
A. P4,282.00 C. P58,477.00
Method MODE 3 6 Repair Cost
B. P42,822.00D. P5,848.00 +
-Pag input ng values, wag (1 + i)interval of repair − 1
gamitinang salvage value. AC = (CC) x i
Problem 65 (CE November 1998)
A debt of x pesos, with interest rate of
Solution: Instead, FC(1 −
𝟐
)
19 𝒍𝒊𝒇𝒆
7% compounded annually will be GRADIENT
x(1 + .07)10 = 21,962.68 ∑(1 + .03)x
retired at the end of 10 years through Sum of the YearsMODE 3 3
x=0
the accumulation of deposit in the x = 300,000 Arithmetic Gradient MODE 3 2
END
sinking fund invested at 6% Sinking Fund Method MODE 1 A + Bx
compounded semi-annually. The P= ∑ ( )
(1 + i)x
deposit in the sinking fund every end x=START
of six months is P21,962.68. What is
Geometric Gradient MODE 3 6
the value of x? END
A. P300,000C. P350,000 A (B)x
P= ∑ ( )
B. P250,000 D. P400,000 m−1 (1 + i)x
x=START
Dm = d ∑ (1 + i)x
x=0

BVm = FC − Dm

W. R., ECE, ECT