ANNUITY

1. A man paid 10% down payment of P200,000 for a house and lot and agreed to pay the 90% balance on
monthly installments for 60 months at an interest rate of 15% compounded monthly. Compute the amount
of the monthly payment.
2. What is the present worth of a 3 year annuity paying P3,000.00 at the end of each year, with interest at 8%
compounded annually?
3. How much must be deposited at 6% each year beginning on January 1, year 1, in order to accumulate
P5,000,000 on the date of the last deposit, January 1, year 6?
4. Engr. Sison borrows P100,000 at 10% interest compounded monthly. He must pay back the loan over 30
years with uniform monthly payments due on the first day of each month. How much does Engr. Sison pay
each month? (Ans. 879)
5. A man wishes to have P35,000 when he retires 15 years from now. If he can expect to receive 4% annual
interest, how much should he set aside in each of 15 equal annual beginning of year deposits? (Ans.
P1680.71)
6. A man owes P10,000 with interest at 6% payable semi-annually. What equal payments at the beginning of
each 6 months for 8 years will discharge his debt? (Ans. 772.92)
7. Under a factory savings plan, a workman deposits P25 at the beginning of each month for 4 years, and the
management guarantees accumulation at 6% compounded monthly. How much stands to the workman’s
credit at the end of 4 years. (Ans. P1359.21)
8. A man deposits P200 with a savings and loan association at the beginning of each 3 months for 9 years. If the
association pays interest at the rate of 5.5 % quarterly, find the sum to his credit just after the last deposit.
(Ans. P9363)
9. A man loans P187,400 from a bank with interest at 5% compounded annually. He agrees to pay his
obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual
payments. (Ans. P44,982.04)
10. A house and lot can be acquired a down payment of P500,000 and a yearly payment of P100,000 at the end
of each year for a period of 10 years, starting at the end of 5 years from the date of purchase. If money is
worth 14% compounded annually, what is the cash price of the property? (Ans. P808,835)
11. A man paid 10% down payment of P200,000 for a house and lot and agreed to pay the balance on the
monthly installments for “x” years at an interest rate of 15% compounded monthly. If the monthly
installment was P42,821.87, find the value of “x”? (Ans. 5)

GRADIENT

1. Find the present worth of all the cash disbursements using the gradient interest formulas if money is worth
15% per annum. Annual cash disbursements increases by P1,000 every year thereafter, until the end of the
fourth year. The first cash disbursements amounts to P5,000. (Ans. P6,622.51)
2. A firm considering the installation of an automatic data processing unit to handle some of its accounting
operations. Machines for that purpose may be purchased for P20,000, or maybe leased for P8,000 for the
first year and P1,000 less every year now and then until the end of the fourth year. If money is worth 15%, is
it advisable to rent or buy the machine?
3. The maintenance on a machine is expected to be P155 at the end of the first year and it is expected to
increase P35 each year for the following 7 years. What sum of money should be set aside now to pay the
maintenance for the eight year period? Assume 6% interest (Ans. P1656.98)
4. The maintenance of a room air conditioner is expected to be P2,000 at the end of the first year and is
expected to increase by P100 each year for the following 7 years. Assuming rate of interest is 6%, compute
the equivalent uniform annual maintenance cost. (Ans. P2319.52)
5. An investment, consisting of P1,000, P1,500 and P2,000 are made at the end of the 2nd, 3rd, and 4th year,
respectively. If money is worth 10%, what is the equivalent present worth of the investment? (Ans.
P3319.45)