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EXERCISE NO. 5
Annuity Due
Bruan, Kimberly C. 2A Engr. Lilian A. Lerios
Name, Year & Section Instructor
ECON 11 June 30,2020
Subject, Date
1. A farmer bought a tractor costing P125,000 payable in
10 semi-annual payments, each installment payable at
the beginning of each period. If the rate of interest
is 26% compounded semi-annually, determine the amount
of each installment.
Given Solvtion:
Pe aC 000 uri
Racer
14 ou19)*
125 000 = A ee] +A
A+ P 20, 360
2.4 certain manufacturing plant is being sold and was
submitted for bidding. Two bids were submitted by
interested buyers. The first bid offered to pay
P1,000,000 each year for five years, each payment
being made at the beginning of each year. The second
bidder offered to pay 600,000 the first year,
900,000 the second year, and P1,350,000 each year for
the next 3 years, all’ payments being made at the
beginning of each year. 1f money is worth 12%
compounded annually, which bid should the owner of the
plant accept?
ven*
"Ar (960 020 fe tear Be (ae ct)
+ 1350000 (P/A B43Y(P/F, 2,1)
= (20,00 400 ow (| + 0.12)"
+ 1950000 jecsoy" ] (irony!
ors
F oMOVOt LOSS TL, AULT ZAC G4. 475 |
Solution’ = 4299635: 404
FARR, Im), FatPAy ene,e>¥-00
Hove or fig MET
R= P4037, 349.35 1 ThE ownee oF the mamCachring
plot should aczept the second 3.As rental for a building, the owner received two
offers:
(1) P250,000 a year for 8 years, the rental for each
year being paid at the start of each years
(2) P150,000 the first year, P200,000 the second
year, P250,000 the third year, and P300,000 for
the next 5 years with all rentals paid at the
beginning of each year.
If money is worth 12%, which is the better
ofter?
e089
AUTO] = 250 020 tampon fey]
7 ot
P=? 1, 340, 434.16
(2) p> 300000» 300 apo |
P=@ 1,811,204-80
we ln the qunee's perepective, Offer member 2 is better.
4.A contractor bought a concrete mixer at P120,000 if
paid in cash. The mixer may also be purchased by
installment to be paid within 5 years. If money is
worth 8%, compute for the amount of each annual
Payment, if all payments are made at the beginning of
each year.
‘Solution ©
Poe = PUM c-cd (Yam)
= np v0 Te/e1- eet] (7¢ non)
Pe P27, 828-0 5.Mr. Barnes borrowed P100,000 at 10% effective annual
interest rate. He must pay back the loan over 30 years
with uniform monthly payments due on the first day of
each month. How much does he pay each month?
Given! Regia:
P= 180.000 wer
Lt 10%
at wo
SoWtion*
Gay «ete
(oud ir dey
Tne 0+ 807974
TOTAL + A +P ~
10 000 A +A [180-0078 74) Mi 19
O-ooa7H (1.0078 14)
P o2a.ia
6.How much must be deposited at 6% each year beginning
on January 1, year 1, in order to accumulate P50,000
on the date of the last deposit, January 1, year 6?
Given’ Req'd?
FF 50 00 As?
ote
pee
SoleHon*
Fe af eory
5° to = A [uresate]
O06
A PAB
