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ANNUITY PROBLEMS

1. Find the amount and present value of a P2000 ordinary annuity payable semi-annually for 4 yea
if money is worth 13.75% converted semi-annually.
R = 2000 A= PHP 12,000.66 PV
j = 0.1375 m = 2 S= PHP 20,427.46 FV
t = 4 years n = 4(2 )= 8

2. In buying a washing machine worth P12000, Aling Nena pays P2000 cash and agrees to make
15 monthly payment. If interest is charged at 16% compounded monthly, find the monthly payam
Cash value = 12000
downpayment = 2000
balance (A) = 10000
monthly payment R = PHP 739.97 PMT

3. In purchasing a digital camera with cash worth of P110,000, a man makes a P10,000 downpaym
and agrees to pay the balance through an annuity of P2000 monthly for 5 years. At what rate
compounded monthly was the interest charged?
Cash value = 110000
downpayment = 10000
balance (A) = 100000 rate per period i = 0.006183413
monthly payment R = 2000 j = i * 12 = 0.07
t = 5 years and m = 12

4. A corporation will invest P88,000 in a fund semi-annually to accumulate to P5,000,000 in 161/2


to initiate a plant overhaul. At what rate compounded sem-annually was the fund earning?
S = P5,000,000
R = 88,000 rate per period i = 0.031713976
t = 16 1/2 years = 33/2 years j=i *2= 0.06
m=2

5. A debt of P50,000 bears interest at 10% compounded semi-annually. It is to be repaid by P4000


at the end of each 6 months for as long as necessary.
a. How many regular payment of P4000 are needed?
A = 50000
R = 4000 n= 20.1 NPER
j = .10
m=2 There should be 20 regular payments of P4000 and a final irregular paym

b. How much is the final payment if it is to be made together with the last regular payment of P
50000 (1+0.05)^20 = 132,664.89 value of the loan on the 20th period
S 20 = 132,263.82 value of the annuity of 20 payments of P4000 on the
x = OB 20 = 401.07 final irregular payment if it is to be made on the 20th
(remaining liability or balance after 20 regular payments of P4000 on
b. How much is the final payment if it is to be made 6 months after the last regular payment of
x = OB 20 (1.05) = 421.12 final irregular payment if it is to be made one period

6. To discharge a loan with interest at 15% compounded every 4 months , John promises to pay
of P5000 each , the first of which is due today , find the sum he borrowed.
R = 5000
j = 0.15 Ä or Ā = 33,931.87 PV type 1
m=3
n=8

7. A trust fund is being formed by depositing P25,000 at the beginning of every 3 months for 10 ye
compounded 12% compounded quarterly, how much will the fund grow
a) in 10 years ?
R = 25000 Ṡ = 1,941,582.44 FV type 1
t = 10 years
m=4
j = 0.12
b) just after the last regular deposit?
S = 1,885,031.49 FV

8. A house and lot is worth P2M. A buyer bought it by sequence of quarterly payments for 10 year
on the date of purchase. Find the size of each payment if interest is charged at 16% converted q

Cash value = Ā = 2,000,000.00 R= 97,160.56


j = 0.16 m = 4
t = 10 years

9. What is the cash value of a car if it was bought for P150,000 cash and 20 quarterly payments of
is due in 2 1/2 years? Money is worth 12% (m = 4).
R = 45000 j = 0.12 m =4 A= 669,486.37
n = 20 i = 0.12 /4 Â = A (1+ 0.03)^ (- 9) =
1st R is due in 2 1/2 years or on the 10th quarter downpayment =
period of deferment d = 9 cash value =

10. Construct an amortization schedule for a P2000 loan to be repaid in 5 semi-annual payments if
is charged at 16 % m =2.
A = 2000 R= 500.9129091337
n=5
j = 0.16 m = 2

Period R I (k) at (0.16/2) RP (k)


0
1 500.9129091337 160.0000000000 340.9129091337
2 500.9129091337 132.7269672693 368.1859418644
3 500.9129091337 103.2720919202 397.6408172135
4 500.9129091337 71.4608265431 429.4520825906
5 500.9129091337 37.1046599358 463.8082491978
total 2,504.5645456684 504.5645456684 2,000.0000000000
total payment TP total interest TI total repayment of
principal TRP = L
TP = n R TI = TP - L
2504.5645456684 504.5645456684

Period R I (k) at (0.16/2) RP (k)

total
total payment TP total interest TI total repayment of
principal TRP = L

11. A woman wishes to have P100,000 at the end of 3 years in order to start a small business. To
create a sinking fund by making equal deposits at the end of each 6 months. If the fund earns
semi-annually
a. how much is the semi-annual deposit?
S = 100000 D= 15,076.19025080 PMT
t = 3 years
m=2
j = 0.08

b. Construct a sinking fund schedule

Period S(k-1) I (k) at (0.08/2) D


1 15076.19025080
2 15076.19025080 603.04761003 15076.19025080
3 30755.42811162 1230.21712446 15076.19025080
4 47061.83548688 1882.47341948 15076.19025080
5 64020.49915715 2560.81996629 15076.19025080
6 81657.50937424 3266.30037497 15076.19025080
9542.85849523 90457.14150477
total interest TI total deposit
TI = Sn - TD TD = n D
9542.858 90457.14

Period S(k-1) I (k) at (0.08/2) D

total interest TI total deposit

COMPOUND INTEREST PROBLEMS

12. The cash value of a TV set is P40272.87. What is the downpayment if the buyer opted to pay thi
P42000 one year later at 12% compounded monthly?
Cash value = 40272.87 F = 42000 j = 0.12 m = 12
down payment = 3,000.00 present value P = 37,272.87

13. Joan deposits P18750 in a saving bank that pays interest at 4.5% compounded semi-annually.
would she have after 3.5 years?
P = 18750 F= 21,910.11 FV
j = 0.045
m=2
t = 3.5 years
n=7

14. If a certain principal double itself in 10 years at what rate compounded quarterly was it investe
Assume P = 1 then F = 2P = 2 i = 0.0175
t= 10 years m = 4 n = 10(4) = 40 j = i *4 0.07

15. Wendy deposited P50,000 in a bank that pays interest at 6.6% converted every 2 months. How
money to earn an interest of P25000?
P= 50,000.00 j = 0.066 m = 6 n= 37.06
I= 25,000.00 t = n/6 = 6.18
emi-annually for 4 years

nd agrees to make
nd the monthly payament.

a P10,000 downpayment
ears. At what rate

RATE
7.42%

P5,000,000 in 161/2 years


e fund earning?

RATE
6.34%

o be repaid by P4000

a final irregular payment x.

regular payment of P4000.


ents of P4000 on the 20th period
o be made on the 20th period
ayments of P4000 on the 20th period)
st regular payment of P4000.
o be made one period after the 20th period

hn promises to pay 8 periodic payment

ery 3 months for 10 years. If the fund earns 12%

payments for 10 years with the first payment due


d at 16% converted quarterly.

PMT type 1

uarterly payments of P45,000 the first of which

PV
513,105.56 PV
150,000.00
663,105.56

mi-annual payments if interest


OB (k)
2000.0000000000
1659.0870908663
1290.9011490020
893.2603317884
463.8082491978
0.0000000000

OB (k)

a small business. To realize this, she


hs. If the fund earns interest at 8% compounded

S(k)
15076.19025080
30755.42811162
47061.83548688
64020.49915715
81657.50937424
100000.00000000

S(k)

uyer opted to pay this now and

t = 1 year n = 12
PV

unded semi-annually. How much money

arterly was it invested?


RATE
6.99%

every 2 months. How long will it take her

NPER
years
58,738.20 total condo related expenses per month

ter paying monthly expenses related to condo ownership, how much is available to pay for other expenses
e food, transportation,clothing, dental bills, telephone bills, car bills, etc?

take home pay monthly 100,000.00


total condo expenses per month 58,738.20
remaining money per month PHP 41,261.80

hat percent of your monthly net pay are condo related expenses?

condo related expenses % 58.74%

mortization schedule on sheet 2

h the P5000 you are setting aside every month for your Europe trip with your spouse, do you think you can s
to P350,000 in time for your 10th year anniversary? (5 years from now)
s per month

pay for other expenses

e, do you think you can save


period k R I(k) at 0.0075 RP(k)
0
1 PHP 49,150.2002150966 29100.0000000000 20050.2002150966
2 PHP 49,150.2002150966 28949.6234983868 20200.5767167098
3 PHP 49,150.2002150966 28798.1191730115 20352.0810420851
4 PHP 49,150.2002150966 28645.4785651958 20504.7216499007
5 PHP 49,150.2002150966 28491.6931528216 20658.5070622750
6 PHP 49,150.2002150966 28336.7543498545 20813.4458652421
7 PHP 49,150.2002150966 28180.6535058652 20969.5467092314
8 PHP 49,150.2002150966 28023.3819055459 21126.8183095506
9 PHP 49,150.2002150966 27864.9307682243 21285.2694468722
10 PHP 49,150.2002150966 27705.2912473728 21444.9089677238
11 PHP 49,150.2002150966 27544.4544301148 21605.7457849817
12 PHP 49,150.2002150966 27382.4113367275 21767.7888783691
13 PHP 49,150.2002150966 27219.1529201397 21931.0472949568
14 PHP 49,150.2002150966 27054.6700654275 22095.5301496690
15 PHP 49,150.2002150966 26888.9535893050 22261.2466257915
16 PHP 49,150.2002150966 26721.9942396116 22428.2059754850
17 PHP 49,150.2002150966 26553.7826947954 22596.4175203011
18 PHP 49,150.2002150966 26384.3095633932 22765.8906517034
19 PHP 49,150.2002150966 26213.5653835054 22936.6348315911
20 PHP 49,150.2002150966 26041.5406222685 23108.6595928281
21 PHP 49,150.2002150966 25868.2256753223 23281.9745397743
22 PHP 49,150.2002150966 25693.6108662740 23456.5893488226
23 PHP 49,150.2002150966 25517.6864461578 23632.5137689388
24 PHP 49,150.2002150966 25340.4425928908 23809.7576222058
25 PHP 49,150.2002150966 25161.8694107242 23988.3308043723
26 PHP 49,150.2002150966 24981.9569296914 24168.2432854051
27 PHP 49,150.2002150966 24800.6951050509 24349.5051100457
28 PHP 49,150.2002150966 24618.0738167255 24532.1263983710
29 PHP 49,150.2002150966 24434.0828687378 24716.1173463588
30 PHP 49,150.2002150966 24248.7119886401 24901.4882264565
31 PHP 49,150.2002150966 24061.9508269416 25088.2493881549
32 PHP 49,150.2002150966 23873.7889565305 25276.4112585661
33 PHP 49,150.2002150966 23684.2158720912 25465.9843430053
34 PHP 49,150.2002150966 23493.2209895187 25656.9792255779
35 PHP 49,150.2002150966 23300.7936453269 25849.4065697697
36 PHP 49,150.2002150966 23106.9230960536 26043.2771190430
37 PHP 49,150.2002150966 22911.5985176608 26238.6016974358
38 PHP 49,150.2002150966 22714.8090049300 26435.3912101666
39 PHP 49,150.2002150966 22516.5435708537 26633.6566442428
40 PHP 49,150.2002150966 22316.7911460219 26833.4090690746
41 PHP 49,150.2002150966 22115.5405780039 27034.6596370927
42 PHP 49,150.2002150966 21912.7806307257 27237.4195843709
43 PHP 49,150.2002150966 21708.4999838429 27441.7002312537
44 PHP 49,150.2002150966 21502.6872321085 27647.5129829881
45 PHP 49,150.2002150966 21295.3308847361 27854.8693303605
46 PHP 49,150.2002150966 21086.4193647584 28063.7808503382
47 PHP 49,150.2002150966 20875.9410083808 28274.2592067157
48 PHP 49,150.2002150966 20663.8840643305 28486.3161507661
49 PHP 49,150.2002150966 20450.2366931997 28699.9635218968
50 PHP 49,150.2002150966 20234.9869667855 28915.2132483111
OB(k)
3,880,000.00
3859949.799785
3839749.223068
3819397.142026
3798892.420376
3778233.913314
3757420.467449
3736450.920739
3715324.102430
3694038.832983
3672593.924015
3650988.178230
3629220.389352
3607289.342057
3585193.811907
3562932.565282
3540504.359306
3517907.941786
3495142.051134
3472205.416302
3449096.756710
3425814.782170
3402358.192821
3378725.679052
3354915.921430
3330927.590626
3306759.347340
3282409.842230
3257877.715832
3233161.598485
3208260.110259
3183171.860871
3157895.449612
3132429.465269
3106772.486044
3080923.079474
3054879.802355
3028641.200657
3002205.809447
2975572.152803
2948738.743734
2921704.084097
2894466.664512
2867024.964281
2839377.451298
2811522.581968
2783458.801117
2755184.541911
2726698.225760
2697998.262238
2669083.048990
period S(k-1) I(k) at (0.012/12) D S(k)
1 0.0000 5662.9985 5662.9985
2 5662.9985 5.6630 5662.9985 11331.6601
3 11331.6601 11.3317 5662.9985 17005.9903
4 17005.9903 17.0060 5662.9985 22685.9948
5 22685.9948 22.6860 5662.9985 28371.6793
6 28371.6793 28.3717 5662.9985 34063.0495
7 34063.0495 34.0630 5662.9985 39760.1111
8 39760.1111 39.7601 5662.9985 45462.8698
9 45462.8698 45.4629 5662.9985 51171.3312
10 51171.3312 51.1713 5662.9985 56885.5010
11 56885.5010 56.8855 5662.9985 62605.3851
12 62605.3851 62.6054 5662.9985 68330.9890
13 68330.9890 68.3310 5662.9985 74062.3185
14 74062.3185 74.0623 5662.9985 79799.3794
15 79799.3794 79.7994 5662.9985 85542.1773
16 85542.1773 85.5422 5662.9985 91290.7180
17 91290.7180 91.2907 5662.9985 97045.0072
18 97045.0072 97.0450 5662.9985 102805.0508
19 102805.0508 102.8051 5662.9985 108570.8544
20 108570.8544 108.5709 5662.9985 114342.4238
21 114342.4238 114.3424 5662.9985 120119.7647
22 120119.7647 120.1198 5662.9985 125902.8830
23 125902.8830 125.9029 5662.9985 131691.7844
24 131691.7844 131.6918 5662.9985 137486.4748
25 137486.4748 137.4865 5662.9985 143286.9598
26 143286.9598 143.2870 5662.9985 149093.2453
27 149093.2453 149.0932 5662.9985 154905.3370
28 154905.3370 154.9053 5662.9985 160723.2409
29 160723.2409 160.7232 5662.9985 166546.9627
30 166546.9627 166.5470 5662.9985 172376.5082