PROBLEM SET
1. How many whole years will it take money to be four time its value if invested at 10% compounded
quarterly?
A. 10 B. 15 C. 20 D. 25.
2. The interest earned from ₱ 1,000.00 invested from Sept. 28, 1990, to Nov. 20 of the same year at 20%
exact simple interest rate is
A. ₱ 20.354 B. ₱ 28.961 C. ₱ 29.041 D. ₱ 30.034
3. At the end of 9 months, the amount of ₱ 6000 was paid as interest for a loan at 8%. How much was the
original amount borrowed?
A. ₱80,000 B. ₱90,000 C. ₱100,000 D. ₱120,000
4. At what rate must a ₱ 45,000 be invested in order to have ₱ 46,800 in six months?
A. 2% B. 4% C. 6% D. 8%
5. A newlywed couple wants to accumulate ₱ 50,000 by saving equal amount in a bank for an interest
rate of 14% compounded monthly. How long should the couple save ₱ 200 every end of the month to
get the amount?
A. 112 months B. 114 months C. 116 months D. 118 months
6. A new boiler was installed by a manufacturing plant at a cost of ₱ 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 ₱ 30,000.
Determine the capitalized cost if the interest is 18% compounded annually.
A. ₱ 322,604 B. ₱ 324,604 C. ₱ 326,604 D. ₱ 328,604
7. What is the present value of ₱ 5,000.00 due in 8 years if money is worth 12% compounded semi-
annually?
A. ₱ 1,896.23 B. ₱ 1,869.23 C. ₱ 1,698.23 D. ₱ 1,968.23
8. Compute the accumulated amount at the end of 10 years if ₱ 1000 is invested at the rate of 15%
compounded continuously.
A. ₱ 4482 B. ₱ 6734.89 C. ₱ 6846.88 D. ₱ 7000
9. What payment x, 20 years from now is equivalent to a payment of ₱ 15,000 eight years from now, if
interest is 15% compounded monthly?
A. ₱ 86,737.89 B. ₱ 87,737.89 C. ₱ 88,737.89 D. ₱ 89,737.89
10. A man wishes his son to receive P 500,000 ten years from now. What amount should he invest now if
it will earn interest of 12% compounded annually during the first 5 years and 15% compounded
quarterly during the next 5 years?
A. ₱ 135,868.19 B. ₱ 138,897.98 C. ₱ 165,908.04 D. ₱ 300,000
11. A man wants to start saving for his 10-yr old son's college education. If he were guaranteed 6% interest
compounded quarterly, how much would the man have to save per month to amount ₱ 240,000 by the
time his son is 18?
A. ₱ 982 B. ₱ 1,482 C. ₱ 1,964 D. ₱ 2,564
12. A young. engineer brought a secondhand car worth ₱ 150,000 if paid in cash. On the installment basis,
he paid a down payment of ₱ 50,000; ₱ 30,000 at the end of one year; ₱ 40,000 at the end of 2 years
and a final payment at the end of 4 years. What will be the final payment if money worth 15% per
annum?
A. ₱ 67,374.38 B. ₱ 77,437.83 C. ₱ 67,473.83 D. ₱ 76,374.38
13. A man borrowed ₱ 10,000 from a friend under the following conditions. The principal is to be paid in 10
years with interest compounded annually at 10%. To repay the loan systematically, the borrower
intends to make a quarterly deposit in a savings bank where compound interest is compounded
quarterly at an annual rate of 6%. Find the quarterly deposit.
A. ₱ 477.95 per quarter C. ₱ 747.59 per quarter
B. ₱ 479.75 per quarter D. ₱ 457.79 per quarter
14. A man is left with an inheritance from his father. He has an option to receive ₱ 2M at the end of 10
years, however he wishes to receive the money at the end of each year for 5 years. If interest rate is
8%, how much would he receive every year?
A. ₱ 132,000.00 B. ₱ 352.533.00 C. ₱ 232,020.00 D. ₱ 200,000.00
15. It is estimated that a mine will yield an annual net income of ₱ 300,000 for 20 years at the end of which
time it will have a salvage value of ₱ 40,000. Assuming that the recovery capital can be reinvested at
5%, what is the purchase price required to yield an investment rate of 15%.
A. ₱ 1,761,153 B. ₱ 1,671,135 C. ₱ 1,716,315 D. ₱ 1,617,135
16. Find the present value, in pesos, of a perpetuity of ₱ 15,000 payable semi-annually if money is worth
8% compounded quarterly.
A. ₱ 380,000 B. ₱ 376,258 C. ₱ 375,000 D. ₱371,287
17. A ₱ 1,000 face value bond pays dividend of ₱ 110 at the end of each year. If the bond matures in 20
years, what is the approximate bond value at an interest of 12% per year compounded annually?
A. ₱ 925.30 B. ₱ 935.20 C. ₱ 953.30 D. ₱ 935.30
18. A certain interest rate compounded quarterly, ₱ 1,000 will amount to ₱ 4,399.79 in 15 yrs. What is the
amount at the end of 10 years?
A. ₱ 2,490 B. ₱ 2,685 C. ₱ 3,450 D. ₱ 3,540
19. How much money would you have to deposit for five consecutive years starting one year from now if
you want to be able to withdraw ₱ 50,000 ten years from now? Money is worth 14 % that compounded
annually.
A. ₱ 3,928.60 B. ₱ 3,540.50 C. ₱ 4,450.75 D. ₱ 4,750.45
20. You deposit ₱ 1000 into a 9% account today. At the end of two years, you Wiil deposit another ₱ 3000
in five years, you plan a ₱ 4000 purchase, how much is left in the account one year after the purchase?
A. ₱ 1552 B. ₱ 925 C. ₱ 1691 D. ₱ 1424
21. A car was bought on installment basis with monthly installment of ₱ 10,000 for 60 months. If interest
is 12% compounded annually calculate the cash price of the car.
A. ₱ 455,875 B. ₱ 567,539.75 C. ₱ 678,519.75 D. ₱ 345,539.75
22. An asset is purchased for ₱ 9,000. Its estimated life is 10years, after which it will be sold for ₱ 1000.
Find the book value at the end of third year if SYDM is used.
A. ₱ 6,100 B. ₱ 5,072 C. ₱ 4,500 D. ₱ 4,800
23. A machine having a first cost of ₱60,000 will be retired at the end of 8 years. Depreciation cost is
computed using constant percentage method. What is the total cost of depreciation up to the time the
machine is retired if the annual rate of depreciation is 28.72%.
A. ₱ 56,000 B. ₱ 58,000 C. ₱ 57,000 D. ₱ 59,000
24. An asset is purchased for ₱120,000. Its estimated life is 10 years, after which it will be sold for ₱12,000.
Find the depreciation for the first year using the sum-of the- years digit method.
A. ₱ 20,000 B. ₱ 21,080 C. ₱ 18,400 D. ₱ 19,636
25. A VOM has a selling price of ₱ 400. If its selling price is expected to decline at a rate of 10% per
annum due to obsolescence, what will be its selling price after 5 years?
A. ₱ 222.67 B. ₱ 212.90 C. ₱ 236.20 D. ₱ 231.56
26. A machine costs of ₱ 8,000 and an estimated life of 10 years with a salvage value of ₱ 500. What is its
book value after 8 years using straight line method?
A. ₱ 2,000.00 B. ₱ 2,100.00 C. ₱ 2,200.00 D. ₱ 2,300.00
27. ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation
cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length
of service life necessary if the depreciation used is the SYD method.
A. 7 years B. 8 years C. 9 years D. 10 years
28. An asset is purchased for ₱ 9,000.00. Its estimated economic life is 10 years after which it will be
sold for ₱ 1,000.00. Find the depreciation in the first three years using sum-of-years digit method
A. ₱ 3,279.27 B. ₱ 3,927.27 C. ₱ 3,729.27 D. ₱ 3,792.72
29. A machine costs of ₱ 8,000 and an estimated life of 10 years with a salvage value of ₱ 500. What is its
book value after 8 years using straight line method?
A. ₱ 2,000.00 B. ₱ 2,100.00 C. ₱ 2,200.00 D. ₱ 2,300.00
30. A printing equipment costs ₱ 73,500 has a life expectancy of 8 years and has a salvage value of ₱
3,500 at the end of its life. The book value at the end of x years is equal to ₱ 38,500. Using straight line
method of depreciation, solve for the value of x.
A. 5 years B. 6 years C. 4 years D. 3 years
31. The cost of the printing equipment is ₱ 500,000 and the cost of handling and installation is ₱ 30,000. If
the book value of the equipment at the end of the 3rd year is ₱ 242,000 and the life of the equipment is
assumed to be 5 years, determine the salvage value of this equipment at the end of 5 years.
A. 50,000 B. ₱ 53,000 C. ₱ 60,000 D. ₱ 64,000
32. An engineer bought an equipment for ₱ 500,000. He spent an additional amount of ₱ 30,000 for
installation and other expenses. The salvage value is 10% of the first cost. If the book value at the end
of 5 years will be ₱ 291,500 using straight line method of depreciation, compute the useful life of the
equipment in years.
A. 10 years B. 6 years C. 8 years D. 15 years
33. The cost of equipment is ₱ 500,000 and the cost of installation is ₱ 30,000. If the salvage value is 10%
of the cost of equipment at the end of 5 years, determine the book value at the end of the fourth year.
Use straight line method.
A. ₱ 155,000 B. ₱ 146,000 C. ₱ 140,000 D. ₱ 132,600
The first cost of a machine is ₱ 1,800,000 with a salvage value of ₱ 300,000 at the end of its
life of 5 years. Determine the total depreciation after 3 years.
34. Using Straight Line Method
A. ₱ 800,000 B. ₱ 900,000 C. ₱ 600,000 D. ₱ 700,000
35. Using Sum of Years Digit Method
A. ₱ 1,150,000 B. ₱ 1,300,000 C. ₱ 1,200,000 D. ₱ 1,350,600
36. Using Constant Percentage Method
A. ₱ 1,355,024.24 B. ₱ 1,246,422.53 C. ₱ 1,185,769.76 D. ₱ 1,432,624.84
37. The purchase of a motor for ₱ 6000 and a generator for ₱ 4000 will allow the company to produce its
own energy. The configuration can be assembled for ₱ 500. The service will operate for 1600 hours per
year for 10 years. The maintenance cost is ₱ 300 per year, and cost to operate is ₱ 0.85 per hour for
fuel and related cost. Using straight line depreciation, what is the annual cost for the operation? There
is a ₱ 400 salvage value for the system at the end of 10 year.
A. ₱2,710 B. ₱2,630 C. ₱2,480 D. ₱2,670
38. A machine having a certain first cost has a life of 10 years and a salvage value of 6.633% of the first
cost at the end of 10 years. If it has a book value of ₱ 58,914 at the end of the 6thyear, how much is the
first cost of the machine if the constant percentage of declining value is used in the computation for
its depreciation. (Matheson’s Method)
A. ₱ 600,000 B. ₱ 100,000 C. ₱ 300,000 D. ₱ 900,000
39. A machine costing ₱ 720,000 is estimated to have a life of 10 years. If the annual rate of depreciation
is 25%, determine the total depreciation using a constant percentage of the declining balance
method.
A. ₱ 679,454.27 B. ₱ 532,825.73 C. ₱ 432,725.45 D. ₱ 764,243.33
40. An earth moving equipment that cost ₱ 90,000 will have an estimated salvage value of ₱ 18,000 at the
end of 8 years. Using double-declining balance method, compute the book value and the total
depreciation at the end of the 5th year.
A. ₱ 21,357.42 ; ₱ 68,642.58 B. ₱ 24,362.48 ; ₱ 65,637.52
C. ₱ 15,830.34 ; ₱ 74,169.66 D. ₱ 19,442.78 ; ₱ 70,557.22
41. The original cost of a certain machine is ₱ 150,000 and has an economic life of 8 years with a salvage
value of ₱ 9,000 at that time. If the depreciation of the first year is equal to ₱ 44,475, what method is
used in the calculation of the depreciation?
A. Straight Line B. Declining Balance C. Sinking Fund D. Sum of Years Digit
42. A hydraulic machine cost ₱ 180,000 and has a salvage value of ₱ 15,000 at the end of its useful life
which is 12 years. If the depreciation at the first year is ₱ 9,780.71, what method is used in computing
the depreciation. Assume money is worth 6% annually.
A. Straight Line B. Declining Balance C. Sinking Fund D. Sum of Years Digit
43. How many months will it take for an investment to double at an annual interest rate of 18%
compounded monthly?
A. 36 months B. 47 months C. 54 months D. 50 months
44. The amount of ₱ 3000 was deposited in a bank account 10 years ago, and today it is worth ₱ 9786. The
bank pays interest quarterly. What was the annual Interest rate compounded annually paid on this
account?
a. 12% B. 14% C. 13.5% D. 18.2%
45. An asset is purchased for ₱ 9,000. Its estimated life is 10 years after which it will be sold for ₱ 1000.
Find the book value during the first year if sum of the years digit method is used?
A. ₱ 8,000 B. ₱ 6,500 C. ₱ 7,545 D. ₱ 6,000
46. The amount of ₱ 50 000.00 is deposited in a bank. How much money are you going to withdraw after 8
years at 8% compounded annually?
A. ₱ 82,546.00 B. ₱ 83,456.00 C. ₱ 92,546.00 D. ₱ 102,000.00.
47. A machine has an initial cost of ₱ 300,000.00. Its salvage value after 5 years is ₱ 30, 000.00. What is
the depreciation rate?
A. 18 % B. 25% C. 37% D. 42.58%.
48. An asset is purchased for ₱ 120,000.00 and it can be sold for ₱ 12,000.00. Its estimated life is 10 years.
Find the depreciation charge for the second year using the sum of the years digit method.
A. ₱ 17,672.00 B. ₱ 17,850.00 C. ₱ 18,276.00 D. ₱ 19,636.00
49. A bank offers 2% effective monthly interest. What is the effective annual interest rate?
A. 24.45 % B. 24.65% C. 25.28% D. 26.82 %
50. An asset is purchased for ₱120,000. Its estimated life is 10 years, after which it will be sold for ₱12,000.
Find the depreciation for the first year using the sum-of the- years digit method.
B. ₱ 20,000 B. ₱ 21,080 C. ₱ 18,400 D. ₱ 19,636