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Economics 2

The document contains a series of financial problems and their solutions, including calculations for loan payments, investment returns, and annuities. Key figures include annual payments to extinguish debts, monthly amortizations, and future values of deposits. The answers provided involve various interest rates and compounding methods.

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naba.alcantara.up
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31 views1 page

Economics 2

The document contains a series of financial problems and their solutions, including calculations for loan payments, investment returns, and annuities. Key figures include annual payments to extinguish debts, monthly amortizations, and future values of deposits. The answers provided involve various interest rates and compounding methods.

Uploaded by

naba.alcantara.up
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Homework No.

2
1. Find the annual payments to extinguish a debt of P 10,000 payable in 5 years at 12%.
Answer: P 2,774.10
2. An employee obtained a loan of P 10,000 at the rate of 6% compounded annually in order to build a house. How
much must he pay monthly to amortize a loan within a period of 10 years?
Answer: P 110.24
3. How much money would you have to deposit for 5 consecutive years starting one year from now if you want to
be able to withdraw P 50,000 ten years from now? Assume the interest is 14% compounded annually.
Answer: P 3,928.60
4. A man invests P 10,000 now for the college education of his 2 year old son. If the fund earns 14% effective, how
much will the son get each year starting from his 18th to the 22nd birthday?
Answer: P 20,791.64
5. During the first 10 years of the life of a certain machine the following were spent for its maintenance: During the
first 5 years, P 3,000 was spent each year; during the second 5 years, P 5,000 each year was spent. In addition, P
8,000 was spent for overhauling at the end of the fourth year and P 10,000 also for overhauling at the end of the
ninth year. If money is worth 9% compounded annually, what is the equivalent uniform annual cost for the 10-
year period?
Answer: P 5,388.36
6. A certain annuity pays P 80 at the end of every 3 months for 12 years. If the present value of the annuity is P
1,200 and the accumulated amount is P 2,000 determine the nominal rate.
Answer: 10.67% compounded quarterly
7. An annual deposit of P 1,270 is placed on the fund at the end of each year for 6 years. If the fund invested has a
rate of interest of 5% compounded annually. How much is the worth of this fund at the end of 9 years?
Answer: P 10,000
8. A man owes P 10,000 with interest at 6% payable semi-annually. What equal payments at the beginning of each
6 months for 8 years will discharge his debt?
Answer: P 772.92
9. A farmer bought a tractor costing P 12,000 if paid in cash. The tractor may be purchased by installment to be
paid within 5 years. Money is worth 8% compounded annually. Determine the amount of each annual payment
if all payments are made at the beginning of each year of the 5 years.
Answer: P 2,782.85

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