2

DIRECTION Solve the following problems 1. You will invest P 30 000 into an investment that will earn 10% every year for 5 years a. How much would you receive after 5 years if the 10% is a simple interest rete? b. How much would you receive after 5 years if the 10% is a compound interest rate? 2. ABC Company expects to receive P 1 000 five years from now and wants to know what this money is worth today. Calculate the value today of P 1 000 discounted at 10%. 3. Find the amount of P 5 000 ordinary annuity payable quarterly for 3 years. Money is worth 12% converted quarterly. 4. Consider the given annuities: A: P 1 000 deposited at the beginning of each month for 3 years at 12% compounded semi-annually. B: P 3 000 deposited at the beginning of each quarter for 3 years at 12% compounded quarterly. Calculate the amount of each annuity. Compare the two annuities. 5. A mortgage of P 80 000 is to be paid by annual payment over a period of 10 years. If the interest rate is 15.8% effective. a) calculate the annual payment; b) construct an amortization schedule; c) find the total payment made; d) find the total interest paid 6. A project requires an initial outlay of P 100 000. The relevant inflows associated with the project are P 60 000 in year one and P 50 000 in years two and three. The appropriate discount rate for this project is 11%. Compute the net present value. Should the company accept the project