Content/Topics: Money-Time Relationships and Equivalence Directions: Solve the following problems on a clean sheet of paper. Show a complete solution and write legibly. Use ballpens only. 1. Determine the ordinary and exact simple interest on P5,000 for the period from January 15 to June 20,1993, if the rate of simple interest is 14%. 2. Determine the exact and ordinary simple interest on P1,200 for the period from January 16 to November 26, 1992, if the rate of interest is 24%. 3. A man borrows P10,000 from a loan firm. The rate of simple interest is 15%, but the interest is to be deducted from the loan at the time the money is borrowed. At the end of one (1) year he has to pay back P10,000. What is the actual rate of interest? 4. A man borrows P6,400 from a loan association. In repaying this debt he has to pay P400 at the end of every 3 months on the principal and a simple interest of 16% on the principal outstanding that time. Determine the total amount he has paid after paying all his debt. 5. 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? 6. A man possesses a promissory note, due 3 years hence, whose maturity value is P6,700.48. If the rate of interest is 10% compounded semi-annually, what is the value of this note now? 7. If you are investing your money which is better: 12% compounded monthly or 12.5% compounded annually? 8. How many years are required for P1,000 to increase to P2,000 if invested at 9% per year compounded annually, semi-annually, quarterly, monthly and continuously? 9. A man wishes to bequeath to his daughter P20,000 ten years from now. What amount should he invest now if it will earn interest of 8% compounded annually during the first 5 years and 12% compounded quarterly during the next 5 years?
Content/Topics: Money-Time Relationships and Equivalence Directions: Solve the following problems on a clean sheet of paper. Show a complete solution and write legibly. Use ballpens only. 1. Determine the ordinary and exact simple interest on P5,000 for the period from January 15 to June 20,1993, if the rate of simple interest is 14%. 2. Determine the exact and ordinary simple interest on P1,200 for the period from January 16 to November 26, 1992, if the rate of interest is 24%. 3. A man borrows P10,000 from a loan firm. The rate of simple interest is 15%, but the interest is to be deducted from the loan at the time the money is borrowed. At the end of one (1) year he has to pay back P10,000. What is the actual rate of interest? 4. A man borrows P6,400 from a loan association. In repaying this debt he has to pay P400 at the end of every 3 months on the principal and a simple interest of 16% on the principal outstanding that time. Determine the total amount he has paid after paying all his debt. 5. 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? 6. A man possesses a promissory note, due 3 years hence, whose maturity value is P6,700.48. If the rate of interest is 10% compounded semi-annually, what is the value of this note now? 7. If you are investing your money which is better: 12% compounded monthly or 12.5% compounded annually? 8. How many years are required for P1,000 to increase to P2,000 if invested at 9% per year compounded annually, semi-annually, quarterly, monthly and continuously? 9. A man wishes to bequeath to his daughter P20,000 ten years from now. What amount should he invest now if it will earn interest of 8% compounded annually during the first 5 years and 12% compounded quarterly during the next 5 years?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA3: Time Value Of Money
Section: Chapter Questions
Problem 11E
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Apply the concept of money-time equivalence on problem solving.
Transcribed Image Text:Content/Topics: Money-Time Relationships and Equivalence
Directions: Solve the following problems on a clean sheet of paper. Show a complete solution and write
legibly. Use ballpens only.
1. Determine the ordinary and exact simple interest on P5,000 for the period from January 15
to June 20,1993, if the rate of simple interest is 14%.
2. Determine the exact and ordinary simple interest on P1,200 for the period from January 16
to November 26, 1992, if the rate of interest is 24%.
3. A man borrows P10,000 from a loan firm. The rate of simple interest is 15%, but the interest
is to be deducted from the loan at the time the money is borrowed. At the end of one (1)
year he has to pay back P10,000. What is the actual rate of interest?
4. A man borrows P6,400 from a loan association. In repaying this debt he has to pay P400 at
the end of every 3 months on the principal and a simple interest of 16% on the principal
outstanding that time. Determine the total amount he has paid after paying all his debt.
5. 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?
6. A man possesses a promissory note, due 3 years hence, whose maturity value is
P6,700.48. If the rate of interest is 10% compounded semi-annually, what is the value of
this note now?
7. If you are investing your money which is better: 12% compounded monthly or 12.5%
compounded annually?
8. How many years are required for P1,000 to increase to P2,000 if invested at 9% per year
compounded annually, semi-annually, quarterly, monthly and continuously?
9. A man wishes to bequeath to his daughter P20,000 ten years from now. What amount
should he invest now if it will earn interest of 8% compounded annually during the first 5
years and 12% compounded quarterly during the next 5 years?
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