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    Ass 3 Answer Key01

    Uploaded by

    JAN ERWIN LACUESTA
    1. This document provides 10 multiple choice questions and answers regarding calculations involving interest rates, principal amounts, time periods, and compound interest. The questions cover topics such as calculating future values, interest earned, interest rates, and time to double investments. 2. Formulas used include the compound interest formula, future value equals principal times (1 plus interest rate per period) to the power of number of periods. 3. Interest rates given range from 6% to 25%, time periods range from 10 months to 8 years, and compounding is simple, annual, semi-annual, quarterly, or bi-monthly. Principal amounts range from ₱1,842 to ₱100,000.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Ass 3 Answer Key01

    Uploaded by

    JAN ERWIN LACUESTA
    44 views2 pages
    1. This document provides 10 multiple choice questions and answers regarding calculations involving interest rates, principal amounts, time periods, and compound interest. The questions cover topics such as calculating future values, interest earned, interest rates, and time to double investments. 2. Formulas used include the compound interest formula, future value equals principal times (1 plus interest rate per period) to the power of number of periods. 3. Interest rates given range from 6% to 25%, time periods range from 10 months to 8 years, and compounding is simple, annual, semi-annual, quarterly, or bi-monthly. Principal amounts range from ₱1,842 to ₱100,000.

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    Ass-3-Answer-Key01 (2)

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    1. This document provides 10 multiple choice questions and answers regarding calculations involving interest rates, principal amounts, time periods, and compound interest. The questions cover topics such as calculating future values, interest earned, interest rates, and time to double investments. 2. Formulas used include the compound interest formula, future value equals principal times (1 plus interest rate per period) to the power of number of periods. 3. Interest rates given range from 6% to 25%, time periods range from 10 months to 8 years, and compounding is simple, annual, semi-annual, quarterly, or bi-monthly. Principal amounts range from ₱1,842 to ₱100,000.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    44 views2 pages

    Ass 3 Answer Key01

    Uploaded by

    JAN ERWIN LACUESTA
    1. This document provides 10 multiple choice questions and answers regarding calculations involving interest rates, principal amounts, time periods, and compound interest. The questions cover topics such as calculating future values, interest earned, interest rates, and time to double investments. 2. Formulas used include the compound interest formula, future value equals principal times (1 plus interest rate per period) to the power of number of periods. 3. Interest rates given range from 6% to 25%, time periods range from 10 months to 8 years, and compounding is simple, annual, semi-annual, quarterly, or bi-monthly. Principal amounts range from ₱1,842 to ₱100,000.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    EECon 1- ENGINEERING ECONOMY August 24, 2023

    Assessment #3: Answer Key (30 pts @ 3 pts each)

    1. If you borrow ₱3,000 at 14% rate of interest compounded annually for 10 months, how much will
    you owe in 10 months?

    𝑖 𝑚𝑛
    Given: 𝑃 = ₱3,000 Solution: 𝐹 = 𝑃 (1 + 𝑚)
    10
    0.14 (12)(1)
    𝑖 = 14% = 0.14 𝐹 = ₱3,000 (1 + 1 ) = ₱3,346.12
    𝑚=1
    10
    𝑛 = 12

    2. How much money would you need to deposit today at 9% annual interest compounded semi-
    annually to have ₱12,000 in the account after 6 years? How about the interest earned?

    𝑖 𝑚𝑛
    Given: 𝐹 = ₱12,000 Solution: 𝐹 = 𝑃 (1 + )
    𝑚
    0.09 ₱12,000
    𝑖 = 9% = 2
    𝑃 = (1+0.045)12 = ₱7,075.97
    𝑚=2
    𝑛 = 6 𝑦𝑟𝑠. 𝐼 = 𝐹 − 𝑃 = ₱12,000 − ₱7,075.97 = ₱4,924.03

    3. Find the amount of interest on a loan of 1,600.00 at a 17% simple interest rate after 42 months.
    Compute also the amount due end of 42 months.

    Given: 𝑃 = ₱1,600 Solution: 𝐼 = 𝑃𝑖𝑛


    𝑖 = 17% = 0.17 𝐼 = (₱1,600)(0.17)(3.5) = ₱952.00
    42
    𝑛 = 12 = 3.5 𝑦𝑟𝑠
    𝐹 = 𝑃 + 𝐼 = ₱1,600 + ₱952.00 = ₱2,552.00

    4. Determine the ordinary and exact simple interests on ₱14,550 for the period March 28, 1997 to Oct 18,
    1997, if the rate of simple interest is 18.75%.

    Given: 𝑃 = ₱14,550 Solution: 𝐼 = 𝑃𝑖𝑛


    𝑖 = 18.75% = 0.1875
    1997 is a normal year For OSI:

    Months ESI 204


    𝐼 = (₱14,550)(0.1875) (360) = ₱1,545.94
    March 3
    April 30
    For ESI:
    May 31
    June 30
    204
    July 31 𝐼 = (₱14,550)(0.1875) (365) = ₱1,524.76
    August 31
    September 30
    October 18
    TOTAL 204 days

    5. A principal of ₱5,500 is placed in a savings account at 6% per compounded bi-monthly. How much is in the
    account after one year, two years, and three years?

    Given: 𝐹 = ₱5,500 @ 𝑛 = 2 𝑦𝑒𝑎𝑟𝑠


    0.06
    𝑖 = 6% = 6 = 0.01 𝐹2 = ₱5,500(1 + 0.01)6(2)
    𝑚=6
    𝐹2 = ₱6,197.54
    𝑖 𝑚𝑛
    Solution: 𝐹 = 𝑃 (1 + )
    𝑚
    @ 𝑛 = 1 𝑦𝑒𝑎𝑟 @ 𝑛 = 3 𝑦𝑒𝑎𝑟𝑠
    𝐹1 = ₱5,500(1 + 0.01)6(1) 𝐹3 = ₱5,500(1 + 0.01)6(3)

    𝐹1 = ₱5,838.36 𝐹3 = ₱6,578.81

    6. Approximately how many years will it take to double an investment at a 6.57% interest rate compounded
    semi-annually?

    Given: 𝑃 𝑙𝑛(2) = 𝑙𝑛 (1 + 0.03285)2(𝑛)


    𝐹 = 2𝑃 𝑙 𝑛(2) = 2𝑛 ln(1 + 0.03285)
    0.0657 ln(2)
    𝑖 = 6.57% = 2
    = 0.03285 2𝑛 = 1.03285 = 21.445

    21.445
    Solution: 𝑛= = 10.72 ≈ 11 𝑦𝑒𝑎𝑟𝑠
    2
    𝑖 𝑚𝑛
    𝐹 = 𝑃 (1 + )
    𝑚
    2𝑃 = 𝑃(1 + 0.03285)2(𝑛)
    2𝑃 = 𝑃(1 + 0.03285)2(𝑛)
    2 = (1 + 0.03285)2(𝑛)

    7. ₱19,500 is borrowed for 65 days at 16% per annum exact simple interest. How much will be due at the end
    of 45 days?

    Given: 𝑃 = ₱19,500 Solution: 𝐹 = 𝑃(1 + 𝑖𝑛)


    65
    𝑖 = 16% = 0.16 𝐹 = ₱19,500 (1 + 0.16 (365)) = ₱20,055.62
    45
    𝑛 = 365

    8. Engr. Trinidad loans from a loan firm an amount of ₱100,000 with a rate of simple interest of 20% but the
    interest was deducted from the loan at the time the money was borrowed. If at the end of one year, she has
    to pay the full amount of ₱100,000 what is the actual rate of interest?

    𝑖 𝑚𝑛
    Given: 𝑃 = ₱100,000 − 20%(100,000) = ₱80,000 Solution: 𝐹 = 𝑃 (1 + 𝑚)
    𝐹 = ₱100,000 ₱100,000 = ₱80,000(1 + 𝑖(1))
    𝑛 = 1 𝑦𝑟 ₱100,000 = ₱80,000 + ₱80,000𝑖
    ₱100,000 − ₱80,000 = ₱80,000𝑖
    ₱20,000
    𝑖 = ₱80,000 = 0.25 𝑥 100% = 25%

    9. Mr. Bacani borrowed money from the bank. He received from the bank ₱1,842.00 and promise to repay
    ₱2,000 at the end of 10 months. Determine the rate of interest compounded bi-monthly?

    𝑖 𝑚𝑛
    Given: 𝑃 = ₱1,842.00 Solution: 𝐹 = 𝑃 (1 + 𝑚)
    10
    𝑖 6(12)
    𝐹 = ₱2,000 ₱2,000 = ₱1,842.00 (1 + )
    6
    10
    𝑛 = 12 𝑖 = 0.0996 𝑥 100% = 9.96%

    10. The sum of ₱26,000 was deposited in a fund earning interest at 8% per annum compounded quarterly.
    Approximately, how much is the fund at the end of 8 years?

    𝑖 𝑚𝑛
    Given: 𝑃 = ₱26,000 Solution: 𝐹 = 𝑃 (1 + 𝑚)
    0.08 8(4)
    𝑖 = 8% 𝐹 = ₱26,000 (1 + )
    4
    𝑛 = 8 𝑦𝑒𝑎𝑟𝑠 𝐹 = ₱48,998.06 ≈ ₱50,000
    𝑚=4

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